Why didn’t we tax typewriters?

An interesting section of Bjorn Lomborg‘s testimony to the U.S. Senate Committee on Environment and Public Works Subcommittee on Clean Air and Nuclear Safety caught my eye.

One of the most ridiculous problems created by the standard political reaction to ‘Climate Change’ is the way old technology (coal power stations) has been unfairly taxed, and new technology has been unfairly subsidised (wind farms), when it comes to energy generation. This analogy about taxing typewriters in order to force computers onto people is an excellent one. We are in a most ridiculous era of high energy bills and of power cuts because of this inane policy. Lomborg said:

“The only way to move towards a long term reduction in emissions is if green energy becomes much cheaper.   If green energy was cheaper than fossil fuels, everyone would switch. This requires breakthroughs in the current green technologies, which means focusing much more on innovating smarter, cheaper, more effective green energy.

The metaphor here is the computer in the 1950s.   We did not obtain better computers by mass producing them to get cheaper vacuum tubes.   We did not provide heavy subsidies so that every Westerner could have one in their home in 1960.   Nor did we tax alternatives like typewriters.   The breakthroughs were achieved by a dramatic ramping up of R&D, leading to multiple innovations, which enabled companies like IBM and Apple to eventually produce computers that consumers wanted   to buy.

This is what the US  has done with fracking.   The US has spent about $10bn in subsidies over the past three decades to get fracking innovation,  which has opened up large new resources of previously inaccessible shale gas.   Despite some legitimate concerns about safety it is hard to overstate the overwhelming benefits.   Fracking has caused gas prices to drop dramatically and changed the US electricity generation from 50% coal and 20% gas to about 40% coal and 30% gas.

This means that the US has reduced its annual CO₂ emissions by about 300Mt CO₂ in 2012.   This is about twice the total reduction over the past twenty years of the Kyoto Protocol from the rest of the world, including the European Union.   At the same time, the EU climate policy will cost about $280 billion per year, whereas the US fracking is estimated to increase US GDP by $283 billion per year.”