Bill Totten's Weblog

Monday, March 03, 2008

A market alternative to rationing

Energy tax made easy

Modifying Human Excess with International Non Renewable Energy Taxation

by Peter Salonius

Culture Change (2003)

The labyrinthine political maneuvering that has been associated with the Kyoto Protocol and the regulatory maze that this process will engender, both within nations and internationally, in response to Kyoto's very modest goals indicates that another approach is necessary.

An international agreement, similar to the 1987 Montreal Protocol that addressed the effect of CFCs on stratospheric ozone depletion, should be sought to increase the cost of finite energy (fossil and nuclear) in an orderly fashion.

The starting point for discussions about the implementation of International Non Renewable Energy Taxation would be to take as a benchmark the highest taxation rates for energy, presently imposed by the federal governments of countries with more than 35 million people. Each country with lighter energy taxation rates would be asked initially (year 1) to agree to raise its Non Renewable Energy Tax rates by five percent of the difference between its present rate and the benchmark. This taxation increase on non renewable energy would be most politically acceptable if it were to be revenue neutral so that income from other federal taxes decreased by the same amount as the new non renewable energy taxes increased income (tax shifting).

In this manner countries such as the United States, which has the lowest energy taxes on the planet, would raise federal Non Renewable Energy Taxes by the greatest (though rather modest) amount in the first year, while countries which are already at the benchmark or close to it would not have to to alter their energy taxation at all initially.

After a number of annual renewals (perhaps twenty) of the International Agreement on Non renewable Energy Taxation, when all countries had finally reached similar tax levels for exhaustible energy, then future annual conferences could focus on how rapidly taxation rates should be escalated for all signatory countries in unison so as to achieve climate mitigation and required shifts to renewable energy sources.

This process of international gradualism is designed to effect as orderly a transition as possible from fuel sources that will unquestionably be exhausted, toward those renewable energy sources upon which humanity will ultimately be dependent. Slowly escalating non renewable energy costs will encourage research, development and market intrusion of sustainable renewable energy sources that have very little chance of competing in the present marketplace where all energy is priced according to its cost of production as opposed to its impending scarcity.

[No doubt, some of the subsidy to fossil fuels, for example, would begin to be reduced just by this tax. - editor]

The transition to renewables would be orchestrated by the market forces of trillions upon trillions of purchase decisions based on price as opposed to the command and control arrangements that have proved largely unacceptable in connection with the Kyoto process.

Peter Salonius
Canadian Forest Service
Post Office Box 4000
Fredericton, New Brunswick
Canada E3B 5P7

See also "Ration oil during war - Or is this a War on Conservation?" by Jan Lundberg

Bill Totten


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