The November 2015 issue of The Atlantic magazine has an interview of Bill Gates by James Bennet titled “We Need an Energy Miracle.” One of Gates’ efforts has been to reduce pollution from carbon fuels enough to reduce destructive climate change. He is promoting, and helping to pay for, a big increase in research on the production of cleaner energy, and Gates also advocates a carbon tax.

The term “carbon tax” is quite unfortunate. The tax is on the carbon content of coal, oil, and natural gas, but the term does not tell us whether the tax is on the input, or the consumption, or the output. The most effective charge is on the emissions, the output. What harms the planet is not the consumption of energy but the output of toxic emissions.

The term “carbon tax” is quite unfortunate. The tax is on the carbon content of coal, oil, and natural gas, but the term does not tell us whether the tax is on the input, or the consumption, or the output. The most effective charge is on the emissions, the output. If the tax is on an input such as gasoline, then there is little incentive to reduce the output, such as by capturing the carbon. What harms the planet is not the consumption of energy but the output of toxic emissions.

Unfortunately, it is unlikely that research will discover an energy miracle. The physics of energy are well known, and the law of conservation tells us we can’t get something out of nothing. Human beings are continuously reducing the potential energy of the earth when they convert fuel into kinetic energy plus waste. The sun does provide the earth with new energy, and solar radiation is indeed a good avenue for research, but progress is likely to be more incremental than miraculous.

While the generation of solar energy stops at night, since the earth is always half day and half night, a global energy grid could potentially generate continuous electricity from the sun. Likewise, wind in a particular place comes and goes, but a global grid could spread continuous energy from wind globally.

A global electricity grid would require much more political integration than is now feasible. Also, a global grid, like today’s large national grids, could be vulnerable to terrorist sabotage. The greatest priority today should be to protect existing grids from attack as well as from solar storms. The ideal would be a global system that can be quickly decentralized in case of a disruption. Thus every building and neighborhood would have local generators that can kick in when the grid is disabled.

The government chiefs of developing economies such as China and India claim that they cannot limit pollution by much because that would slow their economic growth. This is a false argument, because these countries are already slowing their growth with value-added taxes and other impositions. A green-tax shift, replacing destructive taxes with land-value taxation, would improve both the environment and their economies.

Gates says that a free market will not solve the pollution problem because “there’s no fortune to be made.” He is right that there is little incentive for innovators without a substantial carbon tax. But a levy on emissions is not only within the market but required for a truly free market. If pollution is limited by regulation but the emitters are not legally require to pay compensation for their total damage, then in effect the polluters get subsidized.

Gates says that a free market will not solve the pollution problem because “there’s no fortune to be made.” He is right that there is little incentive for innovators without a substantial carbon tax. But a levy on emissions is not only within the market but required for a truly free market. If pollution is limited by regulation but the emitters are not legally require to pay compensation for their total damage, then in effect the polluters get subsidized. What Bill Gates and his colleagues need is a deeper insight into economic freedom and justice.

The two great pernicious subsidies are land rent and pollution. Governmental public goods generate land rent paid by taxing wages, a subsidy to land. Polluters and their customers get subsidized by not paying the environmental costs. A green tax shift that replaces all of today’s taxes with levies on pollution and land value is the free-market removal of subsidies. A truly free market is free of both arbitrary taxes and of subsidies.

The two great pernicious subsidies are land rent and pollution. Governmental public goods generate land rent paid by taxing wages, a subsidy to land. Polluters and their customers get subsidized by not paying the environmental costs. A green tax shift that replaces all of today’s taxes with levies on pollution and land value is the free-market removal of subsidies. A truly free market is free of both arbitrary taxes and of subsidies.

I would finance placing remote sensing devices in streets and freeway entrances. They measure emissions as cars go by. Cars, identified with pictures of their plates, could then be charged when they pollute on the road, replacing gas and engine regulations, emission caps, and time-consuming smog tests vulnerable to cheating.

If I were Gates, I would finance placing remote sensing devices in streets and freeway entrances. They measure emissions as cars go by. Cars, identified with pictures of their plates, could then be charged when they pollute on the road, replacing gas and engine regulations, emission caps, and time-consuming smog tests vulnerable to cheating.

Bill Gates is right that humanity is now conducting a global 2-degree experiment, watching what happens when the world is two degrees or more warmer. Every degree of higher temperature implies a huge increase in global heat, disrupting air and water currents, and most likely generating much greater destructive turbulence. It’s good that Bill Gates and The Atlantic are raising public attention to this “potentially cataclysmic climate change.”

© Text Copyright Fred Foldvary, Ph.D. rights reserved.
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