Carbon Pricing simply explained with PALcarbon
PAL’s carbon pricing system PALcarbon is a scientifically robust way of putting a realistic and sustainable price on past and present carbon emissions. But more, much more than that, it provides the basis for footing the bill for man-made climate change damage for our children’s children too!
It works today and will work even when carbon emissions cease entirely, whenever that may be.
Historical, current and future emissions have caused, and will continue to cause damage by climate change for centuries, and their accumulative damage will still need paying for by future generations, even if the entire world stopped producing emissions today.
PALcarbon not only focuses on the carbon cost of fossil fuels – because that is today’s main energy source – but it also gives the carbon cost of every other fuel type, even including the renewables: nuclear, wind and solar. Why?
Well, the whole point of putting a price on CO2 emissions is to incentivise emitters to reduce their emissions and switch to cleaner, low carbon alternatives. Let’s assume that by putting a price on carbon we achieve just that. The result is that revenues from carbon taxing will dwindle and disappear as fossil fuel usage declines and disappears. But the cost of dealing with the historical damage they have already caused doesn’t go away.
Thus, we must keep our revenue stream going, in order to keep paying for that ongoing damage. Here’s where PALcarbon comes to the rescue. As the transition from fossil fuel use to alternative fuel use evolves, the tax on carbon in effect becomes a tax on all energy types – including nuclear, wind or solar renewables – indeed all energy sources in current use and even those yet to be discovered and developed.
In this way, revenues are maintained for future generations to fund the costs of continuing damage from our historic and current emissions; developing economies and communities are not unfairly penalised by using whatever fuel type they choose; and a stable, future-proof base for investment is created, which benefits everyone.
Carbon Pricing for the Climate Change Professional with PALcarbon
PALcarbon offers the certainty of a future-proofed pricing scheme for carbon and all other energy types that will work even after the last giga-tonne of CO2 has been emitted.
PALcarbon is a smart phone app that gives real time carbon prices for different fuel/energy types. It addresses the ‘consequences of carbon’ that will remain in the atmosphere for hundreds of years, causing on-going damage by climate change, even if the world were to stop producing all carbon emissions right now.
The PALcarbon app is the data and calculation vehicle for what Predict Ability Ltd offers as the world’s first independent, scientifically robust scheme for a meaningful approach to dealing with past, present and future carbon emissions. It has a major advantage over existing Cap and Trade systems: it is not vulnerable to manipulation by governments or other factors.
If taken up and implemented by the UN, or World Bank for instance, this scheme would not only have a significant impact on behaviour patterns of CO2 emitters, it would simultaneously create a level playing field across all energy types, both currently in use and yet to be developed. This list can be added to at any time. The scheme is described in Richard Clarke’s new book, ‘The Price of Carbon‘, which is being serialised on the main Predict Ability Ltd website.
Despite all the efforts developing renewable energy sources, most energy today is still derived from fossil fuels. But renewables are here to stay, so we should plan for their eventual market dominance. The key to this is to base carbon pricing on energy itself – be it coal, gas, solar or wind. In this way, the energy transition from fossil fuels to renewables is built in to the PALcarbon pricing system, so that carbon pricing is completely future-proofed.
“Two things are apparent”, explains Richard Clarke, PAL’s Director of Research. “First, we must incentivise the move from ‘dirty’, carbon intensive fuels to ‘clean’, low-carbon fuels. That requires a strong price signal, whatever pricing system is implemented. And secondly, it’s vital that a carbon price reflects units of energy, rather than units of actual carbon, to take account of current and future trends across energy types and their usage. This needs to be incorporated in the form of a scientifically robust, yet completely transparent pricing formula”.
“Taxing carbon fuel usage heavily might well prompt its rapid decline, particularly in the electricity sector. However, if all the resultant revenue is allocated to carbon fuels alone, there will be escalating prices and price volatility and the revenue stream will become erratic. It would also penalise unfairly those developing countries, like China, India and Indonesia, whose energy-hungry economies rely heavily on coal consumption”.
“In PALcarbon we have devised the tools and policies to ensure there is fairness – in other words ‘carbon justice’ – for the vulnerable in both developed and developing countries and communities. Even if the IPCC obtains global agreement on emissions, or the world completely decarbonised immediately, the CO2 heritage would still need paying for into the future. This data and the form of calculation is the basis of PALcarbon”.