In the comments to an earlier post, William asks "Is there a way to encourage consumption of green energy without subsidies?" To which I will add "or carbon taxes?"
It's an excellent question, and one worth an extended response. Here goes.
First, let's toss out the term "green energy." It's an emotionally laden, nonsensical, worthless piece of political correctness. Generally speaking, "green" is used for "renewable energy" sources (wind, solar, tides) and the term itself is emotionally loaded. Look, coal and oil are also renewable - go to any landfill and smell the methane emitted by rotting waste. It's just that the renewal time is, shall we say, a bit too long.
Now on to alternative energy sources. Can we encourage the consumption of energy from alternative sources without taxes (e.g., cap & trade) or subsidies? The short answer is (a) no, and (b) it's foolish (read as stupid) to try. The reason is that tax or subsidy - either one - removes the incentive to further develop the technology.
Why would I, as a solar cell manufacturer, try to improve my product if I'm making a healthy (subsidized) profit and my competitors - coal and oil - are taxed (by cap & trade) away from competing with me?
No, the only possible outcome, in either event, is to further delay development - and that's the one thing we don't need.
Now, let's move on to the three other topics that really needs discussion if one is to fully understand the "green energy" dilemma: density, storage and distribution.
Density. Of the three major alternative energy sources - solar, wind, and tides, all are diffuse, meaning that the collector must be quite large for each unit of energy collected. Coal and oil are quite dense by comparison. Take solar power for an example - I don't consider it likely that west Texas, New Mexico, Arizona, and Nevada will take kindly to being covered with solar collectors for the convenience of the other 43 connected states. Wind power? The same is true; wind turbines can't even be installed offshore in Massachusetts for fear of interrupting the view from Hyannisport. (I'll put a wind turbine in my back yard for personal use. Ed: Good luck at the zoning office.)
Storage. Coal, oil, and natural gas can easily be stored until needed. Solar, wind, and tides are intermittent, and storage isn't easy. Which is why the electric automobile is unlikely to ever be more than a niche machine. Battery technology today simply can't give a 300 mile range (20 mpg on a 15 gallon tank) and refueling takes a bit longer than 5 minutes at the pump. Scaling storage to megajoule and higher capacities is an engineering challenge, to say the least.
Distribution. Without a doubt, energy distribution is the most significant problem facing alternative energies. Any alternative, to be economical, will have to either have to have the source sited near the consumers (e.g., in or near the cities), or will have to take advantage of existing distribution systems; that is, transmission lines and oil/gas pipelines. Austin's GreenChoice program (referred to in the earlier post) is in trouble partly because of its distribution problems, and as I noted above, I don't think it too likely that west Texans are going to be very happy with high-voltage power lines running through their back yards to keep Austin liberals' air conditioners running on summer evenings.
All that said, none of the problems noted above are insoluble. They can - and will - be solved, just not easily or quickly, and subsidies/taxes won't speed the solution.
As a final point, let me say that in my view, there are two promising alternative energies.
The first is nuclear; put pebble-bed nuclear reactors in the center of every major city (What? Surely you're kidding. Ed: I'd suggest every college campus, starting with Harvard) and solve the electrical distribution problem. (But it's in my back yard! Ed: Yep; that's the point - if you want the energy, pay the price yourself.)
The second alternative is biomass for transportation fuel. The distribution system is already in place; as is flex-fuel technology for incorporation into new vehicles (and for that matter, retrofitting isn't hard). The only unsolved problem is that of avoiding use of existing farm land and food plants (like corn) for the biomass - and that's already being worked.