I’ve mentioned a couple of times that a commensurate carbon tax would have to be infinite or larger than infinite (and that rationing is a better solution).
Here’s the situation. I’ll use Sweden as the example just to get numbers but similar applies to all lands and realms.
Our plan was to go from 21 Mt CO2e in 2010, through 6.3 Mt CO2e in 2030, down to zero, and then into net negative.
Showing someone just shown the first two points on that line and asking them for a solution they might be like “oh, okay, you want to go 21 Mt emissions down to 6.3 Mt? Let’s use a carbon tax! A commensurate number would be somewhere around 11.55 SEK per liter.”
Now, two problems with this. First, what we did was nowhere near 11 SEK per liter. We did 3.27 SEK. That’s among the highest in the world and still nowhere near enough just for the 6.3 Mt CO2e by year 2030 goal.
As bad as that problem is, second problem is the bigger.
Because as we want to move to zero, and through zero to negative. We didn’t show them whe whole problem. We’re not just trying to make the numbers small. We need to make the numbers go away and even flip.
Now, my original thinking on this was:
Price = Demand / Supply.
At low supply (like a 6.3 Mt emission year 2030 goal compared to a 21 Mt emission year 2010 reality), price goes up. You’re dividing the demand by a lower number.
At a zero supply like a 0 Mt emission goal, you’d have to divide by zero which breaks math. (For a tax where absolute values is what matters, it’d have to be infinite.) It breaks math even more at a negative supply. You’d… pay people to emit? So stupid. It’s a singularity pinch. The tax is beyond infinite.
Turns out that’s not really how they do it with these Pigouvian taxes. They use marginal abatement cost curves.
You want the tax high enough that it can often be cheaper to solve the problem in a way that doesn’t require buying the problematic good. I.e. you want to set the tax high enough so people are like “okay, never mind drilling for this project, solar is cheaper”.
So they put all the possible “abatements” (like switching to solar) on a big old curve and used that to guide the tax value. That’s where the 11.55 SEK number above would come from (and that’s before the flat-per-liter energy tax and VAT).
But we need to go to zero and net negative. Net negative even if everyone everywhere 100% stopped emitting (above what the carbon cycle normally can handle) means some sorta CDR. DACCS (direct air capture) or bio-CCS. Sweden has gone all in on the latter with a current contract to jam 0.9 Mt annually into the floor of the North Sea.
0.9 Mt is still only like less than one fifteenth of what just the Swedish transport section today emits, let alone all industries total. So the sequestering corporations are building out the bandwidth to jam things down there (it requires pressurized tanker boats to ship things there).
If the world doesn’t stop drilling & burning, even if we could figure out a way to jam things down there fast enough, the North Sea floor storage site would be full in just over two years. (At the current 1.5 Mt bandwidth—Sweden bought 0.9 Mt of that—it’d take over fifty thousand years to fill it up. But. Looking at what the world emits total in a year it’s almost half of what can total fit down there. The fifty thou years number is only there as a result of how slowly they can currently squeeze things down there.)
So I’m thinking maybe my original “naive” mental model wasn’t so wrong. Maybe I’m a bit Dunning-Kruger here but the more I think about this, it seems more that the marginal abatement cost curve model is what’s naive.
It’s based on carbon storage deposit amounts so big that we might not ever figure out how to do them. I’m all for CDR to the extent that it’s possible, but it’s not an infinite sponge.
We need to actually stop drilling and leave the fossil fuels in the ground!
Solar, hydro, wind, and bioCCS are all great as a consolation to not wreck our qualities-of-life too horribly when we leave it in the ground, but they’re not and can never be an excuse to not leave in the ground.
That’s what I mean with zero or even negative “supply”. Our “supply” of how much we can afford to drill and burn really is limited, even with CDR tech like bioCSS. Our actual physical supply of oil and LNG is way bigger than what we can afford to actually burn up because the bottleneck is CO2e PPM. That’s why “peak oil” spiels are wrong. It’s already way more pinched than that.