The Indian Economy Blog

March 30, 2007

The Case For A Carbon Tax – II

Filed under: Business,Energy,Environment — Kiran @ 9:42 pm

This is a follow-up post to the “The Case For A Carbon Tax”. There were some very valid points raised in the comments which I will try to address here. The concerns have essentially been clubbed into two points.

Should the carbon tax pinch?

Lets start with the power plants. Lanco recently won the Sasan Ultra Mega Power Project deal where they offered to sell power to the SEB at just Rs 1.19 per unit. This is coal-based power – located at pit-head it involves some of the worst form of environmental pollution (CO2 and fly ash among others), besides some rather inhumane working conditions for very poor manual laborers, besides exposing them to huge risks to limb and life.

Dabhol on the other hand has a deal with the Maharashtra Govt to sell power at Rs 3.3 per unit and at current gas prices they just cannot do that. Lets assume that a more reasonable price would be Rs 3.55. Now, Dabhol is practically the anti-thesis of a coal-based plant. Much less CO2 pollution (since it runs on natural gas), no fly-ash and relatively good working conditions. At the other end of the spectrum Madhya Pradesh pays Rs 3.97 per unit (the highest in India) for wind-power, which is even cleaner than natural gas.

So if we set the price of gas-based power as the bench-mark, then consumers must pay around 3.55 for their power (ignoring the SEB’s margins for now). The difference between the cost of production at coal-based plants and the selling price would be collected by the Govt as Carbon Tax. In the case of the Lanco power for instance, the Govt would collect 3.55 – 1.19 = Rs 2.36 per unit as tax. Similarly if the benchmark is the MP rate for wind power (Rs 3.97), that tax will go up to Rs 2.78 per unit, while Dabhol would pay a tax of Rs 0.42 per unit.

Thus taking gas-based power as the benchmark would mean we should price power at above Rs 4.00 per unit (after the SEB’s charges), which is still lower than what industrial consumers pay, but much more than residential consumers do.

Automotive fuel on the other hand is already severely taxed in India. It is my firm belief that this tax should be phased out. Sources of energy should not be seen merely as wealth, but as the means to create more wealth. At the same time, removing tax on petrol/diesel should not bring the prices down, as consumption will shoot up, further discouraging energy efficiency. This is where the carbon tax should come in. Essentially what I am suggesting is that the carbon tax should replace all other forms of tax on automobile fuel (except a few targeted ones like the education and highway fund taxes). The difference is that the carbon tax will get used exclusively to get rid of our carbon addiction.

So the only group that would have to take a hit would be the residential electricity consumers. But they too will benefit enormously in the longer run, as we shall see below.

The argument for per-capita emission limits

This argument is seriously flawed. Air pollution works broadly at two levels: the local level and the global level. At the global level air pollution might cause drastic climate changes resulting in droughts, floods, hurricanes and all sorts of resultant human disasters. Even if the rich nations stop polluting today, the environment is still in a mess. And if the developing nations don’t stop, the environment is doomed anyway. Arguing that the rich nations should themselves stop polluting first, and then pay the poor nations to stop too, is fine. Only the practicality is zero.

However, while thinking global we have the option of acting local. And acting local on this issue makes tremendous economic and environmental sense. For instance the air in Delhi became much more pleasant once natural gas became the rule for public transport vehicles. Plus since natural gas costs less, the transport operators also make more money. Electricity will reduce the cost of operation even more, and pollute even less (even if the electricity comes from coal).

Talking of electricity, a fully depreciated wind power plant can produce electricity for as little as Rs 0.50 per unit, which is cheaper than the cheapest coal power. In time solar power will get there too. Better still, eventually we will all be able to afford our own solar panels which will pay back their cost in less than 5 years, and then we will not have to pay for electricity at all. And if we are already driving electric vehicles we wont have to pay for fuel either. In addition to all that we could also have a strong economy built on hi-tech industries and a strong entrepreneurial culture.
We can either opt to spend (a relatively little) more money today to get to the free energy utopia outlined above, or we can all go down in a blaze of fossil-fuel fires.


  1. “We can either opt to spend (a relatively little) more money today to get to the free energy utopia outlined above, or we can all go down in a blaze of fossil-fuel fires.”

    Kiran, you do have vivid imagination! Your proposal of carbon taxes will do nothing to stop pollution now (it’s like Al Gore maintaining his mansion and heated swimming pool while buying carbon credit off sets – such absurdity). Why not install pollution control devices to capture pollution now at the Sasan power plant instead of a convoluted route of using the government to spend our tax money wisely (like that’ll happen).

    “Arguing that the rich nations should themselves stop polluting first, and then pay the poor nations to stop too, is fine. Only the practicality is zero.”

    I don’t think you should summarily reject the idea. Polluters paying is not a novel concept and is used practically daily in most countries.

    Finally, carbon tax is bad idea because normal people pay for bad decisions made by companies and governments. Carbon tax doesn’t punish the company for not installing pollution control equipment – in fact, according to your proposal, their profit margins are safe, a further disincentive for them to do anything to stop pollution – we will always pay! And government spending our tax money for intended purpose never happens – cabals who have access will usurp it.

    It’s best to keep people’s money in their own pocket. And design a fair carbon trading system (based on per capita energy usage of, say, EU or US when caps will be implemented) where non-polluting countries/companies can sell their credits to polluting countries/companies so that everyone has an incentive to lower pollution and energy usage. That way low energy using countries, like India, can get paid from high energy using countries until India’s energy consumption comes up to par. We won’t have to pay for someone else’s profligacy, historic and current, and everyone has an incentive to look at alternatives energy sources – some more than others; some sooner than later.

    Comment by Chandra — March 30, 2007 @ 11:44 pm

  2. Chandra

    I fail to see your basic premise here, but I will try to address your points as best as I can.

    “Why not install pollution control devices to capture pollution now at the Sasan power plant” – the technology to bring down the pollution of a coal powered plant by 90% exists. Only it is so ridiculously expensive that solar and wind is cheaper. So clean-coal will make power even more expensive for the customers.

    “the government to spend our tax money wisely” – I am not requiring the govt to be overly efficient here. We are looking at channeling a given tax to a given purpose. The govt has shown that it can do that with the education cess and the highway fund tax. If you are arguing that the Indian Government will definitely mess up with the carbon tax given its past record, then that is besides the point of my post.

    “Finally, carbon tax is bad idea because normal people pay for bad decisions made by companies and governments.” – Not really. If people pay the same for power coming from coal powered plants as well as wind powered plants, there will be a strong incentive to set up more wind-powered plants. Plus the tax on the power from coal will go into bringing down the cost of wind power (and solar power) further. In the not-so-longer run, people will end up paying significantly less.

    “It’s best to keep people’s money in their own pocket.” – I disagree. It is best to invest that money into a better future.

    The Carbon credit exchange system you mention already exists as the CDM, and despite the success stories it is doing precious little to make a difference. My point is, going green will help us ensure a better future for ourselves. So why cant we help ourselves get to that future, rather than wait for “historically profligate nations” to do it for us? (assuming of course that they will).

    Comment by Kiran — March 31, 2007 @ 5:54 pm

  3. Or perhaps, atleast we can use energy efficient bulbs(Compact Flouroscent Bulbs) to reduce energy consumption per house and so electricity could be cheap and more houses would be lit up per kilowatt of energy so more efficiency and more usage of environmentally friendly power stations. You see, if we want environmentally friendly power station, we too have to be environmentally friendly by using energy efficiently.

    Comment by Nipul — March 31, 2007 @ 6:32 pm

  4. Nipul

    There is no doubt that we have to do that.

    But there is a problem with energy efficiency, in that as it reduces costs to the consumer, the consumer tends to spend more power using other devices. For example, the cost of automotive fuel is inversely proportional to the efficiency of vehicles. So vehicles in Japan and Europe are far more efficient that vehicles in the US. Indian cars are far more efficient than cars in the Middle East. However as fuel prices started rising, more and more US consumers started buying more fuel efficient cars.

    The market for electricity works similarly though I cannot give a simple enough elucidation here. But the point is that price is the key. All said and done, CFLs certainly are a step in the right direction.

    Comment by Kiran — April 1, 2007 @ 7:10 am

  5. While considering about pollution, we should also consider about how much Indian economy could afford. A young kid cannot be expected to take a full moral responsibilities as a fully grown adult. In the same way, a country whose per-capita carbon emission is among the lowest in the world should focus more on economic development rather than a narrow focus on pollution. I’m an environmentalist and I’m not saying here that India should keep spewing out trash into the system. But, a double in energy prices will keep Indian poor in even more energy inefficient things like raw cow-dung and fire wood. So, the priorities of a scandinavian country should not be artificially imposed on a growing country like India.

    Wind energy is not all pure and great. A lot of regions have started to notice its environmental impacts in affecting wind speed and thereby affecting local climatic patterns, leave alone its massive use of virgin land (near coastlines and environmentally sensitive locations).

    And regarding transportation tax, Diesel is not taxed at all by India if you consider the fact that the taxation is added back as subsidy by the PSU distributors. Petrol has to be taxed at current level or even slightly higher level given its greater pollution capacity and its usage increases overall energy inefficiency by moving resources towards private transportation and also putting great stress on scarce infrastructure.

    Solar and Fusion are the ultimate forms and both have a long way to go before achieving anything commercial & practical.

    Comment by Balaji Viswanathan — April 2, 2007 @ 12:28 pm

  6. Balaji

    Agreed that a young kid cannot afford what the adult can. But what we are talking is of a young kid not making the same mistakes that the adult made as a kid.

    As we are building up a new economy and a new industry we have a chance to do things right – we can grow in an environmentally friendly manner. For example what would it take to have every roof in Indian cities get a solar water heater? This is already a cost-effective technology and a little push/legislation can go a long way. Legislation will also allow a Reliance to emulate a Google and cover its parking lots with solar panels, and avoid running up huge diesel bills on running generators.

    The solar PV industry in India is manufacturing like crazy – to export to Germany. This is fine for we are at least setting up a manufacturing base – thanks to Germany. Solar PV will beat coal within the next 10 years. We have moved from a capital cost of $40,000 per watt in 1950 to $3.5 today. We should pull that to below $1 within 5 years which will let solar compete with coal without subsidies. In another 5 years, that will reach less than $.5.

    Now the question is, where will India be when that happens? Will we have an industrial base and infrastructure setup all set to take advantage of it? Or will we have built up for a carbon-based economy and get overtaken by other economies that are all set to exploit this vast and new clean source of energy?

    It will be as if we are at the beginning of the 20th century and petroleum is about to become the main source of energy in the world – and we are running all our power stations, all our automobiles, our entire economy on coal. So a nimbler economy that is better prepared to embrace petroleum will leapfrog over us.

    Comment by Kiran — April 2, 2007 @ 4:56 pm

  7. @Kiran:
    I definitely agree to the benefits of solar energy and I feel it is one of the sources of energy that has the least side-effects on the world, probably someday even offset global warming by absorbing enough sunshine that is reflected from earth surface.

    So, instead of screwing up with the current system we can make a policy that sets up Solar energy as a national priority and that is much easier than tinkering up a host of pricing mechanisms (practically even a Re1 increase in Diesel/Kerosene price is impossible, given India’s realities, leave alone changing the pricing mechanism altogether). We can set up a dedicated cess on Gasoline (the dirtiest fuel) and to some extent coal and use this to fund advanced research and development in solar energy. A lot of nano-layering development could be supported and someday it could be made a very viable fuel and its production would not be affected by global oil prices etc, and so more energy investors can use this as a hedge.

    Btw… coal is over chastised by the Western world for pollution. First, most of coal is used in dedicated power stations that are away from thick habitation, while gasoline is used everywhere, particularly in over habited regions. Second, if you compare the pollution caused by a tonne of coal that could be used to transport thousands of people in trains (indirectly through electricity) an equivalent amount of gasoline in cars would be atleast 20 times more in quantity and alteast 5-6 times more pollution. And all that is black is not necessarily bad.

    Comment by Balaji Viswanathan — April 3, 2007 @ 6:34 am

  8. Kiran is absolutely right about a kid should not repeat its elder’s mistake. Like any child who wishes one step better than its dad, India should leapfrog other developed countries. Like China, India can seriously reduce manufacturing costs and with some investment to make it even cheaper and better, India would become the giant exporter of these new energy source that will fuel the entire world. If India wants to be there, we do need radical thinkers like Kiran and implementer such as the head of the Delhi metro project. Excuse me, I forgot his name.

    Comment by Nipul Pravin — April 4, 2007 @ 2:35 am

  9. Kiran,

    “I fail to see your basic premise here, but I will try to address your points as best as I can.”

    My basic premise you are not giving incentives for existing energy companies to clean up their act – based on your carbon tax idea.

    Also, even if one were to ignore affordability for vast majority of Indians, if you are proposing tax that government would use to funds R&D wisely, I am not sure how that becomes besides the point? Taxing (apparently for newer technology) but no accountability – I think I’m missing something. Unless the tax is just the sake of it.

    “The Carbon credit exchange system you mention already exists as the CDM, and despite the success stories it is doing precious little to make a difference. ”

    Precisely my point. Imagine if the trading system, which was implemented improperly in EU, I think anyway, has failed, how much success you would expect from carbon tax based transition to expensive greener technologies when the end consumer is neutral to the source of power.

    Comment by Chandra — April 4, 2007 @ 11:21 am

  10. Balaji

    I am not advocating policy :) . I am just elucidating a very simplistic hypothetical model of how a carbon tax could be put to work in India. Agreed that alternatives exist.

    On automotive fuel, I kind of recommended that some of the existing taxes be reduced and replaced by the carbon tax, which could be used to create a dedicated fund to go green in an economical manner.

    Trains running on electricity from coal-fired plants emits less pollution than those same people using petrol cars. But coal-powered electricity is not being used to run cars – the cars will still run on petrol and diesel. Also if the power was generated using petrol instead of coal, the power plant would pollute even less. (Of course it would be more expensive.)

    Coal competes with clean technologies like wind and solar, which are far less polluting. Coal plants mostly dont harm urban populations in India, but they release fly-ash which causes havoc to the health of rural populations living near the coal plants. Coal mining creates jobs, but the jobs are typically under very harsh conditions and miners face great health hazards. Environmentalists also claim that the heat released by coal plants increases the overall temperature of its immediate surroundings. Coal plants are probably better suited for more sparsely populated nations, where they can be kept far from dense human habitation. In India there are people living near most coal plants.

    Comment by Kiran — April 4, 2007 @ 11:01 pm

  11. Nipul Pravin – If you are referring to Mr E Sreedharan, Managing Director of the Delhi Metro Rail Corporation, I would say that while I am very happy that you liked my post, such comparisons would be an insult to a great man like Mr Sreedharan!

    Comment by Kiran — April 4, 2007 @ 11:04 pm

  12. Chandra

    “My basic premise you are not giving incentives for existing energy companies to clean up their act – based on your carbon tax idea.”

    OK. This is not how the carbon tax is always implemented but considering the Indian scenario where power plants are all set to multiply, I suggested it might be enough to just target new companies (as they still have a chance to review decisions on plant technology). However existing companies can still be targeted using a cap-and-trade mechanism instead of a carbon tax – otherwise they will have no real incentive to go clean. New capacity additions can still be subject to carbon tax.

    I intend to ignore neither the affording ability of the Indian populace, nor the accountability of the Govt and there are very obvious ways past both these hurdles. But this is just a blog post and I intended to keep the message simple.

    “Imagine if the trading system, which was implemented improperly in EU, I think anyway, has failed, how much success you would expect from carbon tax based transition”

    Well you suggested a carbon trading mechanism not I :) The carbon tax is something of an alternative, though it can work in sync too.

    The CDM BTW is not limited to Europe – in fact India has been one of the major beneficiaries of the CDM mechanism getting investment from developed nations to set up clean energy generation. However my point is that it is not enough to make a difference. The CDM is based on a cap-and-trade concept which is fine for the more mature markets of the West and Japan. For economies where industrialization is growing as rapidly as in India and China, it could put crippling pressure on an industry unless effective distinctions are made between existing and new companies.

    Comment by Kiran — April 4, 2007 @ 11:30 pm

  13. “But this is just a blog post and I intended to keep the message simple.”

    Kiran, point taken!

    I am usually just wary of anyone proposing more taxes to make behavioural changes, especially regarding environmental causes. (It helps that I am a bit skeptical that computer models, however sophisticated, can predict our climate 50-100 years out. It seems most people bought into without understanding the ifs and buts- ie boundary conditions – associated with the models. But it’s a different debate.)

    Comment by Chandra — April 6, 2007 @ 5:44 am

  14. Here is an example of how an emissions trading scheme actually makes sure emissions are reduced in a cost effective way (i.e. $9,000 instead of $12,000). It’s worth a quick look. It’s just more appealing than a carbon tax, given that there is a risk the newly found tax revenue might be wasted as you point out. Under a “cap & trade” or emissions trading scheme, if I’m the operator of a coal plant and emissions are capped at the natural gas level/unit of power produced and decreasing every year making emissions credits more expensive (it doesn’t have to be that way, it can be an arbitrarily lower number too), I either have to buy emission credits by continually raising prices or invest in technology that will make my plant run cleaner while still raising prices, but this way my bottom line will get better down the road or show that I haven’t produced much power if I wanted to get creative with accounting to keep the amount of credits I need to buy at a minimum. With a carbon tax I can just raise prices and not really have to do anything else. Having such a tax is just regressive.

    In an ideal world, I could offset my per capita emission limit i.e. my car’s CO2 emissions by installing solar panels, or I could buy a smaller car if emissions are capped at Honda Accord-levels for lets say 12,000 miles/year. Those with Hummers would need to buy credits, while those with a Civic might get some sort of a refund. This incentivizes usage of catalytic converters and driving less, while a carbon tax just makes me drive less whether I drive a Civic or a Hummer. Using energy shouldn’t come at a higher price, emitting emissions should. We should seperate those two as much as possible, especially for developing countries. It makes even more sense for manufacturing plants, though there are going to be some processes where there may not be an emission-free way, let the price of those products reflect it.

    There are yearly emissions tests in close to 49 of 50 states here in the US anyway (where you have to take your car to a shop while they make sure the emissions are normal), this system could be implemented by simply checking mileage on those days too and tallying the emission for my car type and sending me a bill. This penalizes old cars, but you can fit semi-expensive catalytic converters to those cars too to reduce their emissions. What am I talking about… this would never happen here, or anywhere. I’m crazy.

    Al Gore’s argument for using an emissions trading system probably had a lot to do with how politically bad levying any type of a tax sounds, even if you name it the “Green Tax”. The good part is an emissions trading system can be just as effective if implemented correctly and there aren’t aren’t any Enron-like manipulators of the system. The majority of the emissions do come from large producers and not cars. You could give emission credits to large fleets, i.e. rental car chains, UPS, Wal-Mart and give them incecntives to make their fleets emit less. Other than that, I like the ~$2000 tax-credit on the Prius (more is some states). It’s just too bad the Hummer (or another SUV) has an effective ~$10,000 tax-credit for business owners. The mind bogles, so much so that I’m going to stop now.

    Comment by Devang — April 6, 2007 @ 3:42 pm

  15. Carbon tax is not proposed by environmentalists and other lefties to reduce CO2 emissions(if that were the case they would be clamoring for nuclear power), but being the lefties that they are, they love taxes.For decades(much before the global warming hysteria) they have been trying to shut down current sources of energy knowing fully well that more expensive energy = more poverty,without providing any viable alternatives.They don’t want cleaner energy, they want lesser and more expensive energy, consequently leading to a massive lifestyle change that they are openly hoping for. And we all know when lefties succeed in their social engineering what happens. Here is what one of them said(at

    ” What we really need is to remake the way humanity lives on the world. We need a Second Industrial Revolution that produces more equitable distribution of resources, greater local and regional self-sufficiency, reduced terrorism, war, and conflict, and above all an immensely reduced ecological footprint.
    That’s the kind of charge that can inspire a generation. That’s the kind of charge that lends itself to narrative and myth. That’s a story a generation can tell about itself. “Fight climate change” is clinical, narrow, and negative. “Remake the world” is inspiring, encompassing, and positive.”

    Comment by Gurmeet — April 7, 2007 @ 5:03 am

  16. @Kiran
    I agree to the point about Coal and not advocating it. Definitely it is much more polluting than most sources. I was just comparing it to gasoline, on a related issue that is running here in US where they just blame India and China for pollution with coal power stations (people in glass houses throwing stones) not realizing the disastrous white fumes from gasoline. In the coal Vs. gasoline battle, I would side for coal, as it is goin 2 be there for much longer time and can give better energy security to India than the middle east gasoline. So, its time to skip the gasoline revolution and move next.

    But, here is the issue I’ve with carbon-tax. It is just singling out CO2 emissions as environmentally destructive, while leaving wind and hydro power scott-free. These are also environmentally destructive in different ways, particularly hydro that just submerges gazillion acres of carbon absorbing forests and weakens earth-plates.

    However, I would support an environmental tax that charges various utilities (not just power enterprises) based on their environmental signature and clean up the plethora of local and national taxes, and merge it with the upcoming GST (goods and services tax). In short, you dont need to emit CO2 to attract the tax, but if you could indirectly cause a system to stop absorbing CO2 (like destrying coral reefs or clearing out forests) still you would be taxed.

    This would be easier to implement and it would satisfy your objective of punishing obsolete technologies and rewarding tomorrow’s technologies like Solar, Biomass and Thorium-fission.

    Comment by Balaji Viswanathan — April 7, 2007 @ 6:08 am

  17. @Gurmeet or should I call you an Inhofe supporter?

    Whether the peak oil people are correct or not, we’ll all know soon enough who is advocating for what, sustainable development or keeping the status quo of more Hummers which will lead to no development past a certain point.

    Comment by Devang — April 8, 2007 @ 2:12 am

  18. What the heck is sustainable development? Can anyone define it coherently?
    I have no particular views on peak oil.As for Inohe, there is an interesting bit of conversation with Gore, not very much reported in MSM, here-

    Comment by Gurmeet — April 9, 2007 @ 5:09 am

  19. A quick search on the google for sustainable development comes up with the UN division for sustainable development, a UK government website dealing with it depending on the industry and 64,000,000 other links. Coherent enough? Most universities teach green design or sustainable design in some high level course now. NID in Ahmedabad does.

    Believe it or not, the two things you pointed out are related. We as taxpayers and individuals living in a society need to decide how much we’re willing to pay to deal with the problem, and Gore paying extra for electricity usage, and then buying enough carbon credits to become carbon-neutral is putting his money where his mouth is. I don’t get why it’s this hard to understand for conservatives… He’s willing to pay extra for what he deems sustainable development. The objective is to become carbon neutral and cut down on emissions, not to randomly shutdown coal plants or stop flying. Less use of private jets would be good, but less use of private jets combined with buying carbon credits is even better. Call it the new kind of conservation… carbon neutral conservation. You do pay more for it though, not less. It’s not encouraging to do, certainly on an economic level. Newsbusters is a model rightwing site, I would kindly advise you to stop going to it.

    There is one thing that worries me about peak oil, if all the oil pumping technology (steam injection, blah, blah..) has just been pumping oil out faster and not increasing the percent of oil we an extract out of a known reservior, maybe we are in trouble. We can only recover ~20-30% of oil in reservoirs, it’s that percentage we need to increase. There is plenty of oil, we just can’t get to it for $1/barrel like one can in Iraqs’ oil fields today. The tar sands in Canada cost ~$15 just to mine, refining is harder to do than with crude and the whole things probably starts more problems than it solves. It’s the price that’s the constraint, not “availability” per se. If you’re willing to pay $80/barrel then there is plenty. The economics don’t exactly leave room for “cheap” energy in the future, hence all the calls for a manhattan project to find renewable sources of energy for replacing things like the combustion engine–exclusively from the left side of the political specturm. The right will do the right thing here, after it’s tried all the wrong things first.

    Comment by Devang — April 9, 2007 @ 12:16 pm

  20. Your UK link says- “(Sustainable Development is defined as) ‘development which meets the needs of the present without compromising the ability of future generations to meet their own needs’ – Globally we are not even meeting the needs of the present let alone considering the needs of future generations.”
    This definition is NOT COHERENT.If you can explain it please do so clearly in a few paragraphs.Define ‘needs of the present’. Define ‘needs of the future generations’. How do you determine each?Who decides?And what if He(capital H because only God can be so omniscient)who decides is wrong?

    In fact, globally ‘the needs of the present’ have never been met in history but have increasingly been met in those places which have adopted free markets(and to the extent they adopted them).So by your own definition, pre-industrial age was totally unsustainable.

    In your links all efforts(i.e. ‘solutions’) to promote Sustainable Development are one of top-down government command and control, in other words socialism disguised as ‘concern’ for the planet.Only this time this is socialism not inside a country but on a planet wide scale run by unaccountable NGO’s and international, jet-setting bureaucrats.However, the greenest and the cleanest means of using resources are provided by the free markets, since free markets promote greater profit for the more efficient, that is,he who produces more for the less.Tom DeWeese is right, Sustainable Development means SUSTAINING SOCIALISM.(

    The cleanest viable energy has been available for decades- nuclear. Why do greenies run away from it?

    Carbon offsets are like noblesse oblige of the old. The rich, like Gore, can afford them but the poor and the middle-class cannot.So while Gore will keep burning tens of thousands of tonnes of CO2, jet-setting all over the world to preach to us, a middle-class youth won’t be able to afford an air-ticket to go study abroad or get a job because air travel will be much more expensive.( Carbon Rationing Hurts the Poor -

    I am not a conservative . I am a libertarian.

    Comment by Gurmeet — April 9, 2007 @ 11:39 pm

  21. P.S.-
    how do you make a link on this page without pasting the whole URL?

    Comment by Gurmeet — April 9, 2007 @ 11:42 pm

  22. You use html tags “IEB” without the outermost set of quotes should link to and make the visible link text IEB. The http:// is a must have for blog comments if you don’t want to get comment spam filtered, but then comment spam filtering has seemed random to me at times on certain blogs.

    Comment by Devang — April 10, 2007 @ 6:07 am

  23. This is hard to explain without wordpress thinking I’m trying to link to something: You use html tags, IEB without the outermost set of quotes (the two on nearest of either end) should link to and make the visible link text IEB.

    Comment by Devang — April 10, 2007 @ 6:11 am

  24. Here: IEB should link to and make the visible link text IEB.

    Comment by Devang — April 10, 2007 @ 6:18 am

  25. I give up, this page shows how 1/4th of the way down under the section titled “Endless Links in Comments”

    Comment by Devang — April 10, 2007 @ 6:21 am

  26. Balaji – I did mention covering all industries, including those that make clean power source equipment like solar panels. Cap-and-trade has been rejected by the Indian Govt, but I would like to address that in a future post in more detail.

    Devang/Gurmeet – Sustainable development has several definitions – literally though it would mean development that can keep happening, growth that is not self-limiting. (Sustainability would have a different meaning though.) The classic example is the civilization that was built on Easter Island using timber. The growth of the civilization led to the elimination of the timber that it depended on, thus re-rendering the inhabitants to a more primitive existence.

    Having said that, the point I would like to make is not whether we have cheap oil/coal or not (we do have cheap coal). The point is that oil/coal contributes to spoiling our atmosphere, and secondly the quest for, and the ultimate achievement of, energy independence from oil and other fossil fuel based power sources presents a huge business (and political) opportunity for India. In the long run, the American model of consumption (which environmentalists call excessive and wasteful) is very addictive and we should expect more societies (including in India) tending towards that. Thus we need to tap more reliable and abundant (and non-polluting) sources of energy fully expecting that we are all going to need that much power. Nuclear is not a long-term solution – at least not till we get into nuclear fusion. But for India it is a pretty viable short-term solution.

    Comment by Kiran — April 10, 2007 @ 3:05 pm

  27. “Cap-and-trade has been rejected by the Indian Govt”

    Kiran, are you sure? Because I read in article a while ago that Chinese make the money from selling carbon credit while India makes some.

    Here is a recent article in IE about GOI trying to get carbon credit – apparently all carbon credit sold by India is by private firms.

    Looks like there is good money being made already – a great incentive to reduce C emissions then taxes, I’d think.

    Comment by Chandra — April 11, 2007 @ 11:56 am

  28. [...] In the posts on a case for a carbon tax we saw a deliberate exclusion of existing power plants from the ambit of a “cleanup”. This made sense for a few reasons. Primarily since the plants are already up and running, it would be economically and politically more difficult to get them to cleanup. Since new power capacity is expected to rapidly overtake the currently existing capacity, even targeting only the new capacity would make a significant difference. Moreover, since power from existing plants would remain cheap, the cost to consumer would see a more gradual rise. [...]

    Pingback by The Indian Economy Blog » Would A Cap-And-Trade Mechanism Work In India? — April 23, 2007 @ 3:17 am

  29. [...] What is it? How would it work? Does India need it? Read Kiran’s thoughtful posts here and here. [...]

    Pingback by Carbon tax | DesiPundit — December 27, 2008 @ 5:08 pm

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