Wednesday, October 24, 2007

Green Bubble

Thomas Friedman, author of The World is Flat and a columnist for the New York Times, wrote an editorial piece in the New York Times recently about greentech and the green strategies of governments which ended with these words:

“We have a multigenerational problem that requires a systemic, multigenerational response, and that can happen only if we get our energy prices right. Only that will guarantee green innovation and commercialization at scale. Anything less is wasted breath and wasted money — and any candidate [for the Presidency] who says otherwise is only contributing to global warming by adding hot air.”

His point is that many of the “solutions” being touted to global warming are small scale and that the pace of change is too slow to make a difference.

Key to all of this, in his view, is the pricing of energy – changing behaviour through market is how real change will occur.

Several steps would be needed to make this happen. First, there would be a need to challenge energy producers to reduce carbon emissions significantly – adding costs to the supply chain, well to wheel. Second, it would be helpful to demand that cars can travel additional km’s from a litre of gas – creating better use of the gasoline or gas-ethanol blends. Third, there would be a need to increase gasoline taxes and reinvest the additional funds in public transport systems and infrastructure. Fourth, there would be a need to increase royalty rates from wells and oil production – adding yet more costs to the supply chain. Finally, a green tax on all forms of air transport – people and goods – would further demonstrate that CO2 emissions - e.g. a tax on air travel that went into a carbon offset fund.

When gas at the pump gets to be $4.50 to $5.50 a litre here in Canada, then social behaviour may change.

So too will other things. Poverty will increase – food prices and costs of almost all goods will increase significantly. Travel will become very expensive – a tank of gasoline for a trip to Calgary from Edmonton would cost $275 – economic activity would slow.

It’s a tough call. No one is willing to make it.

No comments: