Energy Monitor Discusses the Carbon Takeback Obligation

Energy Monitor’s Oliver Gordon sat down for a conversation on the Carbon Takeback Obligation with PACE’s President Hugh Helferty and Advisor Myles Allen. The article discusses the CTBO, Helferty and Allen’s recent article on Extended Producer Responsibility, and what it means to have a “backstop” policy.

From the article:

“A carbon takeback obligation future-proofs your climate policy, because if you are requiring the industry to get rid of the CO2, it doesn’t really matter what happens to the cost of renewables or fossil energy in the meantime, you will still get to net zero,” says Allen. “Whereas, if you are relying on a carbon tax, the fossil fuel industry has only to drop its prices and it will undermine the whole system. Or if you are relying on a cap-and-trade system, then a situation like the Ukraine war comes along and suddenly everybody is saying, ‘lift the cap because we are a bit short of gas at the moment’. So, a progressive ramp up of stored fraction is a much more predictable outcome.”

Another alternative is to apply a windfall tax on producers, with the proceeds spent on subsiding low-carbon development. However, that would disadvantage domestic oil and gas producers, increasing reliance on overseas producers and reducing energy security. Subsidies also provide less incentive to innovate and lower investment security than a simple licence-to-operate regulation. In addition, subsidising low-carbon energy without specifically requiring CO2 disposal does not stop fossil fuels from causing global warming unless complemented with a global ban on fossil fuel extraction – a geopolitically tricky proposition.

“A big disadvantage of the taxpayer paying for it is it doesn’t send a signal to the consumer or the producer,” says Hugh Helferty, a co-author of the carbon takeback obligation paper, and president of Producer Accountability for Carbon Emissions, a non-profit comprising former oil industry executives and energy experts. “A carbon takeback obligation sends a signal to the producer and the consumer that less production and less consumption would be better.”

The full article can be accessed here.

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