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View Diary: Putting a Price on Carbon -- Polluting must No Longer be Free (36 comments)

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    I definately support carbon pricing; it is essential in any case to establish market regulation mechanisms and to recover some of the cost of carbon to society.

    What follows, is how best to use the revenue to promote clean energy.

    I don't think there is a single formula or solutions, but rather a budle of measures that must be taken and different stages of development.

    The main point is this money needs to be invested in clean energy capacity; consumers do not product power, they consume it, so handing the money drirectly to consumers makes no sense. for example, suppose a utility A has mixed carbon/renewable generation verses uitility B. In the short term, utility a is put at disadvantage since they must shoulder some high capital investment, increasing their cost. So where is the incentive? If you hand consumers money, it does not help utility A to lower their cost, so they are, in effect, penalized. On the other hand, if they can get feed-in tarrifs for the clean energy produced until their cost is reduced to parity (by depreciatin of the capital assests), then the consumer is sheltered (price for clean energy was not increased).

    To jump start local markets for clean energy, carbon taxation and clean energy feed-in tarrifs have proven to work well, to help clean energy projects survive until they can produce and lower depreciation on assets to the point they can turn a profit. So this can be a temporay or term grant to clean energy projects; once they produce in parity they no longer need the tarrifs.

    The other places carbon revenues should be used are obviously to fund, to some degree, R+D and to provide grants or loan garuntees to producers of clean energy and energy conservation technology/equipment, to mass-transit and as grants, tax rebates or low cost loans to consumers to improve their energy effciency (including self-generation where that works).

    Some other essential ingredients are national energy standards and codes, in particular building codes that mandate new construction be energy efficient, and in energy efficiency/emissions regulations for businesses, including rental properties.

    One special point I would like to rase as well is the renuwables rally require smart grids to operate to full potential. this is a lesson learned in China; we have raced to install quite a lot oc renewable capacity and learned that beyond a certian level in a given area, if there is not a smart grid then the power produced when renewable are operating at maximum effciency is often wasted, so now this problem is being addressed in planning and project rules, but converting to smart grids takes years (in an existing grid).

    In fact, on American company do very well in China now is American Superconductor, who make power management systems tailored for renewables; they are a big winner in wind projects teming with several windmill producers. Another is First Solar, who are leaders in grid-connected pv Solar and won the largest project in China (and the world) Davos City Solar Plat, because their power management effciency is the best in the industry, eanabling them to beat Suntec (China's largest) to capture this project.

    I don't think there is a perfect model to implement clean energy yet, it's highly complex and situation dependant, so the world is feeling it's way and some policy flexibility is very essential.

    I'm intending to write a diary to tackle the subject of the global politics of carbon. This is the present stubling block of the COP negotiation process. Originally, I was intending to write this as a prelude to COP-15 but was too busy at the time. That's lucky, because I don't think it would have had much of a receptive audiance then. Since then, much has changed and I think people are becoming more aware of the problems and complexity of the situation, and that not only do we need global cooperation to the extent it can be managed, but leading nations need to lead and work together in a constructive way since they have benifited the most economically from the carbon economy and have some responsibility for the problems.

    "Life immitates art, but takes license." - ko

    by koNko on Sat Jun 26, 2010 at 01:48:40 AM PDT

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