Monday, July 21, 2008

Tax Nudge versus Tax Free?

An anonymous comment on the last post speculated that a "tax nudge" might be sufficient to solve our present problems, rather than the complete tax elimination that is here proposed on green energy. While a "nudge" is certainly a step in the right direction, it is not enough. Here is my reply to anonymous explaining why:

I doubt a mere tax nudge is sufficient. If we want to reach the point where clean, renewable energy accounts for 50% to 100% of the US and global market in 10 - 20 years, we need to raise global green energy investment by about 500%, from the present $150 billion annually, to $750 billion. The only way to do that is with a massive reallocation of private investment, which will need to be driven by some major incentives such as proposed here. If the US makes green energy 100% tax exempt, I have no doubt that not only will we reach those investment goals in a few short years, but that most of global green energy investments will funnel through the US, making us the leader in a new era of prosperity driven by clean technology. If we do less than that, the leadership will be taken by others, the transition will take many more decades, while global warming and our national foreign oil addiction proceed apace.

Remember, the incentives must be of sufficient magnitude to persuade the carbon industry to diversify, happily and without backlash, to carbon-free sources.

I will explore this point more in future posts. NickName, commenting on the first post, made an excellent point about the need to define green energy. I will flesh that out a bit more in future posts.

If any of you have information of interest regarding green energy or proposals to promote it and end global warming, please post them in the comments, and I will try to explore them, in future posts.

Coming later this week: analysis of the energy proposals of John McCain and Barack Obama.

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