A higher carbon price encourages crucial technological innovation

As mentioned in my previous article 'Putting a price on emissions is critical to solving climate change', one reason we need to put a proper price on emissions, is to encourage technological innovation. This article from the Economist is excellent, with the key extract being: “The world has about 2,500 coal-fired power stations and thousands more gas-fired stations, steel plants, cement works and other installations that produce industrial amounts of CO2. Just 19 of them offer some level of carbon capture and storage (ccs), according to the Global Carbon Capture and Storage Institute, a ccs advocacy group. All told, roughly 40m tonnes of CO2 are being captured from industrial sources every year—around 0.1% of emissions. Why so little? There are no fundamental technological hurdles; but the heavy industrial kit needed to do ccs at scale costs a lot. If CO2 emitters had to pay for the privilege of emitting to the tune, say, of $100 a tonne, there would be a lot more interest in the technology, which would bring down its cost. In the absence of such a price, there are very few incentives or penalties to encourage such investment.”