Tax CO2 to Fund Renewables: Nobel Winner

ABU DHABI - The best way to pay for costly renewable energy projects is to finance them by taxing polluters that emit carbon dioxide, a Nobel Laureate and energy expert says.

By T. Ramavarman

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Published: Sat 11 Jul 2009, 12:09 AM

Last updated: Thu 2 Apr 2015, 7:35 AM

Dr. Rajendra Pachauri, chairman of the Intergovernmental Panel on Climate Change, argues that users of coal, gasoline and other fossil fuels have avoided paying for the environmental impact of their use.

By taxing carbon emissions, governments can eliminate the unfair advantage that such polluters have long enjoyed of not having to pay for environmental damage — an unconsidered cost that economists call an externality. These tax revenues can then go toward developing renewables and expanding them into a significant share of the global energy mix, he said in an an e-mail interview with Khaleej Times.

The International Energy Agency has estimated that the renewable energy sector will need $5.5 trillion in investmentby 2030.

Pachauri said that flaws in the pricing mechanisms for fossil fuels and renewable fuels often make it appear that fossil fuels are cheaper than renewables.

“Fossil fuels and their use impose huge externalities on the environment both at the local and the global levels. If these were taken into account, the cost of fossil fuels would be substantially higher and would become progressively so.”

“With adequate investments in R and D, the cost of renewables on the other hand would keep declining,” said Pachauri, who works as director-general of The Energy and Resources Institute, a non-profit research institute based in New Delhi.

Emphasising that the “projected scope of renewables is very bright,” he said that the UAE has substantial renewable resources, including solar, wind and the potential for biomass such as Jatropha, a plant that can grow on degraded land and with very little moisture.

Jatropha seeds produce an oil that can be used in biofuels.

The UAE is a stable business destination and would be able to attract large-scale investments in the renewable energy sector, he added. Renewables accounted for 18 per cent of global energy consumption in 2006, Pachauri said, quoting from the “Renewables 2007, Global Status Report” from the Renewable Energy Policy Network for 21st Century.


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