Carbon dividends bad – magnifies economic disruption in the short and long term
Roumeen Islam, January 19, 2022, "what a carbon tax can do and why it cannot do it all”, https://blogs.worldbank.org/energy/what-carbon-tax-can-do-and-why-it-cannot-do-it-all, Roumeen Islam is Economic Advisor for the Infrastructure Global Practice, which covers digital development, energy and extractives, transport and logistics, and disruptive technologies. She has worked in countries in multiple regions, the most recent being the Europe and Central Asia Region. She also served as lead economist in the Development Research Group, in the office of the Chief Economist.///SMS MA 😊
Letting market prices of fossil fuels rise immediately to reflect social costs may not be desirable for other reasons too. as people, capital and other resources do not flow seamlessly into new sectors. During the transition, resources can be unemployed for long periods, and the larger the immediate price increase, the larger the potential disruption in the short term. Some of the resources used in other sectors will flow into the renewable energy and supporting sectors where both investment and jobs will increase. Yet, this too, will not automatically and immediately make up for disinvestment in fossil fuels, as is already evident. Supply- demand mismatches will happen in the short run. Add to this substantial uncertainty regarding several economic variables, such as the size of fuel reserves, the size of stranded assets, the harshness of winter, the future direction of climate policy, the pace of innovation in the renewables sector, or demand risk, and it is clear how economic disruption may be magnified.