Wednesday 06 Oct 2021 | 20:46 | SYDNEY
Wednesday 06 Oct 2021 | 20:46 | SYDNEY

The clean coal initiative


Sam Roggeveen


19 September 2008 15:43

When those with a free market orientation talk about how governments should tackle climate change, they tend to argue that the best thing is to create the right incentives for the private sector to act responsibly. If governments have to take direct action, it should only be to invest in basic research that business and industry would not themselves have any reason to pay for. Any more than that, and the government is 'picking winners', and interfering in the market. For instance, It seems pretty self-evident that the $35 million gift to Toyota to encourage it to build hybrid cars in Australia falls squarely into the 'picking winners' category. It's a subsidy, pure and simple, and does not meet the simplest test of economic logic.

So what about this newly-announced clean coal plan? It does seem to have the same flaws. After all, if there was a price on carbon, wouldn't the coal and energy industries have plenty of incentive to invest in this technology themselves? The counter-argument would seem to be that government has to offer subsidies as an incentive for those industries to stay, because the carbon price would otherwise encourage them to move to countries without a price on carbon. But how do you ship a powerplant and a coal mine overseas?

Photo by Flickr user Dallas75, used under a Creative Commons license.