SolarCity CEO Lyndon Rive wants to put a tax on carbon -- but he says it shouldn’t cost the taxpayer an extra cent.
He said any strong deal out of the COP21 climate talks concluding in Paris this week must require companies to pay for the right to produce carbon emissions, which alter the climate by warming the planet.
“Right now, we are incentivizing the world to pollute,” the solar panel company boss, who is meeting with officials and potential business partners in Paris this week, told The Huffington Post by phone. “If you pay people to pollute, they’ll pollute. We are paying people to pollute now.”
But taxpayers should not shoulder the added burden.
“It’s not an increase in taxes, you just need to move dollars around,” said Rive, the cousin of entrepreneur and SolarCity Chairman Elon Musk. “If you’re in a country with a sales tax of 14 percent, for example, you reduce that down to 13 percent and raise the carbon tax by that 1 percent.”
In the parlance of wonks, such policies are called revenue-neutral carbon taxes. They work. Fiscal conservatives like them because they lower other taxes. Environmentalists like them because they reduce carbon emissions.
In 2008, British Columbia imposed a carbon tax and lowered income taxes. By 2011, greenhouse gas emissions in the Canadian province fell 10 percent. That compares to just 1.1 percent for the rest of the country. Meanwhile, the province’s economy kept pace with national growth. About 64 percent of British Columbia residents support the tax.
Fossil fuel producers and investors are, for obvious reasons, the chief critics of such a tax.
Right now, the world spends about $5.3 trillion on tax subsidies for energy projects that overwhelmingly use fossil fuels, according to a study published in July by the International Monetary Fund. Eliminating such subsidies could reduce deaths related to fossil fuel emissions by over 50 percent, the study found. It would also boost budgetary bottom lines. The United States alone would gain $2.9 trillion in revenue.
“This offers huge potential for reducing other taxes,” the organization noted in July.
All that money could fund even more generous subsidies for renewable energy, or at least keep current policies in place.
A federal investment tax credit for installing solar panels is due to expire at the end of next year. The policy provides a 30 percent tax credit for solar systems installed on residential and commercial buildings. If Congress fails to renew the nine-year-old legislation, credit will fall to 10 percent for commercial installations and next to nothing for residents.
Such a move could cost the U.S. solar industry 100,000 jobs and reduce solar capacity by nearly 8 gigawatts from 2016 to 2017, according to a Bloomberg New Energy Finance analysis completed in September. To put that into perspective, solar capacity hit 22.7 gigawatts in the U.S. earlier this year.
Right now, SolarCity’s panels can produce energy for about $2.50 per watt. Its new panels, which went into production in October, could eventually reduce that to 55 cents per watt. But the analysts at Bloomberg’s energy division still estimate it will take about a decade for photovoltaics to rival fossil fuels on price.
“The last thing we want to do, as humanity, is slow things down when we’ve got to increase adoption,” Rive said. “The idea that we would curtail it is mad.”
Money spent on energy subsidies could also be diverted into renewable energy projects.
It’s simply a better investment, both morally and financially. Emissions from burning oil have ravaged the climate by making the planet hotter. Oil revenue fills the coffers of oppressive, violent rulers, such as the monarchy in Saudi Arabia or the terrorist group claiming to have established an Islamic state on land it controls in Syria and Iraq.
Oil is a finite resource with wild price fluctuations based on supply or demand. Plummeting prices over the past year have put a major strain on oil giants. Citing cost concerns, Royal Dutch Shell canceled its Arctic exploration earlier this year. Solar producers don’t have that problem.
“It has no volatility, the sun will always come up,” Rive said. “You don’t have to go to crazy places to get oil. You don’t have to create wealth for crazy individuals who want to kill people. It solves so many problems.”