Friday, January 15, 2010

Make low-carbon solutions attractive

Welcome back from the festive season. I hope everyone had a good break and is enjoying a positive start to the new year.

We all have high expectations of what 2010 will bring. Of one thing you can almost be sure, in 2010 the world will make big advances in low-carbon solutions.

But the question will remain, "how do we get people and business to shift from high carbon fossil fuels such as coal and oil to low-carbon solutions"? To do that we need to make low-carbon solutions more economically attractive!

One way to achieve the transition is to change the equilibrium of energy by Making low-carbon solutions such as natural gas, wind and solar more economic attractive. It makes a lot of sense. Rather than waiting until “E-day” (the 'End' of easily accessible high grade oil) we can slowly wean ourselves off fossil fuels.

How do we achieve this? We use an already established pricing mechanism to slowly change the price differential between oil and low-carbon energy.

One such pricing mechanism is the European Emissions Trading Scheme. The price is the value of a carbon credit. A carbon credit puts a price on a tonne of carbon dioxide. By purchasing and cancelling a credit you are removing it from a limited pool of credits before it can be used to emit carbon dioxide. The price of the remaining credits will likely rise as a result of the diminishing supply. Emitters will be forced to invest in low-carbon solutions making them more economically attractive – the only way to a sustainable future!

There is a reason that this sounds like simple, transparent and effective way to make low-carbon solutions attractive. It is.