The policy prescriptions being chosen guarantee higher prices. There is no way around that fact, it is the goal.
Reducing temperature is not the goal. If a person asks the question, "How many degrees will this policy decrease the temperature" you get blank stares, followed by handwaving, followed by vilification.
Yet it is very straightforward, if the goal is to limit temperature rise, there is this tool that scientists (and others, many others) use called math that would give us the answer but you never see things put in terms of degrees. We have targets expressed in degrees (stay below 2° or 1.5° or whateber, we have targets that reference megatonnes of carbon but we never get the answer to the question "How much, in degrees Celsius, will $200 carbon reduce the temperature?"
....This has helped form my personal belief that carbon trading is not going to lower world temperature by even a half-a-degree.
For example, in an October 1998 article in Nature, Martin Parry (Co-chair of the IPCC's Working Group II) said the effect of the Kyoto Protocol (and it's associated carbon trading, CDM etc. [articles 6,12 and 17 of the protocol]) would be a reduction of –0.05°C by the year 2050.
Tom Wigley of the National Center for Atmospheric Research estimated that Kyoto would result in a reduction from baseline of 0.06°C to 0.21°C . (under one Kyoto scenario 0.06 to 0.11°C, under another 0.11 to 0.21).
And the headline story from Quartz, January 21:
For decades, the global supply chain has been powered by the dirtiest, cheapest fuel, a sludgy byproduct of oil refineries, called bunker fuel or marine fuel oil. Black smoke billowed from the world’s fleet of 50,000 cargo vessels, accumulating to 3% of annual global carbon emissions, a larger share than all but six countries. But cheap fuel meant cheap shipping, and there was little incentive to do anything about it.
In the last two years or so, the drumbeat has grown for the shipping industry to decarbonize and the path to zero-emissions shipping had begun to coalesce around hydrogen-derived fuels—which emit no carbon when burned—and its carriers, like ammonia or methanol.
However, hydrogen generation is a nascent industry, and the fuel is currently being produced in small quantities at prices expected to be two to five times more expensive than marine fuel oil. For cargo ships, which fuel up with more than a 1,000 tons at a time, those prices are unattractive, if not prohibitive.
As long as fossil fuels are cheap, zero-carbon fuels won’t take off. A carbon tax changes the calculus of which fuel an industry uses by making fossil fuels more expensive.
Making bunker fuel as expensive as hydrogenAccording to a report (pdf) released this week by the Getting to Zero Coalition, an industry group led by the think tank Global Maritime Forum, to make zero-emissions fuels competitive, each metric ton of carbon emitted by burning marine fuel oil will need to be taxed at an average of $200 per ton of carbon emitted to phase out emissions-belching fuels between 2030 and 2050. For comparison, the European Union’s carbon trading scheme has a price, as of December 2021, of about $100 per ton of carbon.
Burning a ton of marine fuel oil releases 3.2 tons of CO2 into the atmosphere. A carbon tax of $200 per ton would therefore add $640 on top of the price of a ton of marine fuel oil, which today is roughly $600 per ton, totaling to $1240, more than doubling the cost of fuel at the bunkering station for each ship. There are a lot of moving market forces that will determine the future price of green ammonia fuel, but estimates put it in the range of $1300 to $2400 per ton, once it is being generated at scale.
Government policy, such as tax credits per ton of emissions reduced, could help bridge the gap further.
The technology is there, but not the political willThe Forum’s report lays out multiple market and regulatory scenarios around effective carbon prices.
For now, $200 is the average price, based on beginning as low as $11 and potentially climbing to as high as $360, depending on what other mechanisms are in place. Kasper Søgaard, head of institutional strategy at the Global Maritime Forum, says that a carbon price lower than $200 could be effective, particularly if the funds are funneled to building out and scaling green hydrogen and ammonia production, driving down the price. Eventually, perhaps around 2040, once a global green hydrogen infrastructure is built out, banning fossil fuels may be more efficient than disincentivizing its use with carbon prices....
....MUCH MORE
If you can find where they answer the introductory question, send up the Bat Signal.
Wait. On second thought, no bats.
