this post was submitted on 10 Sep 2023
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Carbon offsets fund subsidies to make companies that do choose to use cost-innefective tech able to do so.
The idea is that once people are actually using the tech, it will allow those industries to get more efficient, letting them close the gap in deployment costs. Eventually making it so it isn't cost prohibitive anymore with or without the subsidies.
It's a carrot and stick system, instead of simply a stick system as you describe.
The advantage with a carbon tax with rebate is that the tax comes from the entities that pollute, but the rebate goes back to everyone equally since everyone is harmed equally. Politically, it also means that there is a large group that is invested in that rebate remaining in place. Efforts to lower the tax or introduce loopholes must contend with widespread opposition. Unfortunately, uptake has been slow.
I disagree that providing the rebate to everyone equally is ideal if the intention is to incentivize development and uptake of otherwise cost-innefective systems.
I speak from experience. I live in Canada, and I get carbon rebate cheques. They just show up. They don't incentivize me to do anything at all.
However we also have carbon credits. I'm in the process of installing rooftop solar on my home. The carbon credits I can sell to subsidize the cost of the solar system.
So, in an environment with both, the tax didn't change my behavior at all. The credits however were a meaningful part of my calculus to "put my money where my mouth is" and invest my own money and choices into green tech.
So, I acknowledge that it's anecdotal, but the carrot helped drive my behaviour into a more eco-friendly direction