Clean Energy Conversion (Par 4): We Must Wisely Invest the Dividends of Re-Pricing Dirty Energy

So far we’ve focused on two realities: dirty energy is is cheap, and that’s a problem. And the best way to deal with this problem is through re-pricing dirty energy.
The idea of re-pricing dirty energy can be summed up in this either-or statement:

A. Either energy-extracting corporations keep all their profits for themselves, leaving the public at large to deal with the negative and costly consequences of dirty energy…
B. Or energy-extracting corporations repay the public for having to deal with those consequences. (Another way to say this is to say these corporations pay rent to the public – they rent the right to pollute their air, dismantle the Appalachians, or put the Gulf of Mexico at risk, for example.)

Four important questions come to mind when we imagine re-pricing dirty energy:
1. Where do we re-price dirty energy – at the point of extraction, or the point of pollution? It makes the most sense to add a surcharge on dirty energy at its point of extraction. After all, there are only a few hundred major extractors, but their are hundreds of millions of users.
2. When and how would the surcharge be added? The surcharge would be phased in gradually over time so as not to shock the economic system – especially at a fragile time when the economy is still recovering from a near-meltdown. The re-pricing would have to happen gradually enough so that everyone could adjust, but quickly enough that people wouldn’t simply stick with business as usual. By announcing a firm, clear plan, businesses would be able to project impacts accurately, and entrepreneurial creativity would be unleashed.
3. How would we invest the dividend from re-pricing dirty energy?
The income from this surcharge should be used for three main purposes:
A. As a dividend paid back to taxpayers, helping them cope with the rise in dirty energy prices. This, by the way, is what the State of Alaska does: every taxpayer gets an annual rebate – a check in the mail – representing their share in the rent of the Alaskan ecosystem by oil companies.
B. As support for research and development of clean energy. The goal is to bring the cost of clean energy down as the cost of dirty energy goes up. When clean energy is as affordable as dirty energy, we will reach a historic tipping point, and everyone will be better off.
C. As aid for those who suffer the most from dirty energy’s unintended consequences. For example, the poorest people in the world – in Africa and Asia – are suffering the most from changes in the global climate. As sea levels rise and deserts spread, hundreds of thousands of people will be displaced.
4. How do we prioritize these three possible uses for the dividend?
That’s an argument worth having, because if we foolishly squander the dividend, it will be what its critics fear: a tax without a benefit.
Various proposals are out there. My personal sense is that fifty to sixty percent of the dividend should go back to taxpayers, twenty to thirty percent should go to clean energy research and development, and ten to twenty percent to aid. A 60-20-20 split would make a lot of sense to me, or a 60-25-15 split.
Knowing how politics works, politicians will probably race to promise one-hundred percent to taxpayers, thus shortchanging our children and grandchildren (who would benefit most from our investment in clean energy) and the poorest among us (who are already suffering disproportionately). It will take people like you and me to resist this cynical possibility.
Sadly, right now, many people are still arguing whether we need to deal with dirty energy at all, when the real debate should be about the wisest way to invest a dirty-energy dividend. Let’s all try to move this conversation forward!
It’s important to point out that a huge investment in clean energy development will create millions of needed jobs. If human beings made trillions of dollars plundering the planet, we have to imagine making hundreds of trillions of dollars through good stewardship. Destruction may make a killing short-term, but long-term it’s foolish. Wise stewardship is the best long-term investment, as we’ll see in more depth in our next installment.
To review:
Dirty energy is cheap, and that’s a problem.
We must re-price dirty energy.
We must wisely invest the dividends of re-pricing dirty energy.