Martin Wolf: Green energy will require a green tax code


FT columnist Martin Wolf argues, quite persuasively, that Copenhagen follow-through will be essential to end climate change. And by follow-through Wolf means incentives -- big subsidies -- for green technology and new technology.

First, Wolf effectively refutes any confidence climate change doubters may have: it's not enough to question the science, because the risks of you being wrong far outweigh the risks if climate change is not occurring. That's because, if the doubters are wrong, there is a climate catastrophe up ahead: a destructive and irreversible climate shift. Conversely, if fossil fuel-based climate change is not occurring, the consequence from cleaner technologies will be the universal use of green energy and renewable energy resources.

And as Wolf also notes, there's no 'repeat the experiment' with the planet. As we say in New York, this is not a case where if you fail the New York State Bar Exam, you can take it again: for now (and, so far as we know, for the foreseeable future), we have only one planet.

That's why Copenhagen must serve as a starting point: real follow-through is the key, and that must involve the tax code, Wolf notes. He's right: Nations must encourage green energy and new technologies by subsidies and tax credits. Solar, wind, nuclear, and other lower-emission/no-emission energy forms cannot gain market share in power generation at a fast enough rate to reduce greenhouse gases without tax code incentives.

Energy Analysis: From an international relations standpoint, climate change is a classic example of one of the most difficult policy reforms on the world stage. Many of my undergraduate students know exactly where to put climate change on the chart: 'long-term consequences, benefits diffuse.' It's very hard to marshal political support for this type of reform: it's much easier to marshal support for 'immediate consequence, I benefit' policy reforms. But reform, the U.S., and the world must, because, as Wolf and the majority of the scientific community have documented -- the risk associated with not implementing reforms and being wrong is unacceptable.

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