The Death Of Fossil Fuels

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bjn
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Re: The Death Of Fossil Fuels

Post by bjn » Sun Oct 17, 2021 8:33 pm

Grumble wrote:
Sun Oct 17, 2021 8:24 pm
bjn wrote:
Sun Oct 17, 2021 6:13 pm
Oh FFS.

So basically subsidising underperforming nukes via financial shenanigans and betting on unproven SMR technologies. Totally nuts.

A massive opportunity cost.
The storage issue for renewables isn’t fully sorted yet though, and so there is a negative availability price there. I think the storage problem might be resolved by the time SMRs are ready, but governments like certainty.
Then why are they investing in SMRs?

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Re: The Death Of Fossil Fuels

Post by lpm » Sun Oct 17, 2021 9:01 pm

It would be nice if nukes were coming on stream now, despite being so expensive.

I wouldn't be surprised if someone on some forum in 2040 says "It would be nice if nukes were coming on stream now, despite being so expensive."
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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Sun Oct 17, 2021 9:05 pm

The best time to start building nukes was thirty years ago, as the old Chinese proverb goes.

But the question is, is the second best time to start building nukes "today" or "never"?
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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Sun Oct 17, 2021 9:06 pm

Presumably they'll be using the latest fusion technology.
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Re: The Death Of Fossil Fuels

Post by lpm » Sun Oct 17, 2021 9:31 pm

If you take a world view, you'd choose to place nukes in only a handful of countries. Rich, stable places with poor solar for example. The global mix will have a tiny amount of nuclear, but the UK is a good place for them.
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Re: The Death Of Fossil Fuels

Post by Woodchopper » Sun Oct 17, 2021 10:03 pm

Grumble wrote:
Sun Oct 17, 2021 8:24 pm
bjn wrote:
Sun Oct 17, 2021 6:13 pm
Oh FFS.

So basically subsidising underperforming nukes via financial shenanigans and betting on unproven SMR technologies. Totally nuts.

A massive opportunity cost.
The storage issue for renewables isn’t fully sorted yet though, and so there is a negative availability price there. I think the storage problem might be resolved by the time SMRs are ready, but governments like certainty.
Yes, governments are concerned about security of supply. That’s a problem for renewables without adequate storage and for imports via fixed pipelines or cables.

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Re: The Death Of Fossil Fuels

Post by bjn » Sun Oct 17, 2021 10:15 pm

lpm wrote:
Sun Oct 17, 2021 9:01 pm
It would be nice if nukes were coming on stream now, despite being so expensive.

I wouldn't be surprised if someone on some forum in 2040 says "It would be nice if nukes were coming on stream now, despite being so expensive."
Any nukes we start planning to build now probably won't be coming onstream until 2040.

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Re: The Death Of Fossil Fuels

Post by IvanV » Mon Oct 18, 2021 10:54 pm

bjn wrote:
Sun Oct 17, 2021 6:13 pm
Oh FFS.

So basically subsidising underperforming nukes via financial shenanigans and betting on unproven SMR technologies. Totally nuts.

A massive opportunity cost.
The Rolls Royce SMR isn't the 50MW reactor in a box that the term SMR usually conjures up. Rather RR are talking about 220 to 440 MW PWRs.

About half of the reactor sets in France are around 900MW, and they are all PWRs. So we are talking about something that is a quarter to a half the size of a normal PWR. Something that looks like a normal nuclear reactor.

Nevertheless we are going to have to get ourselves back up the learning curve of building nuclear reactors, having not built one in a generation. And also up the learning curve of building them to post-Fukushima standards. And generally speaking whatever we build it would be good to build about 50-off of them, as then we can get really slick at it like they did in France in the 80s and 90s.

Someone was discussing whether the second-best time to build reactors is now or never. Let us also recall that the correct number of reactors to build in a human generation is never 2 either. Though if the correct answer to the first question was never, and you nevertheless built 2, then stopping is perhaps still sensible, and the 2 you built in that human generation, like at Sizewell C, can be the badge of your earlier folly.

It is possible that post-Fukishima standards in Europe have made any kind of nuclear reactor unbuildable, and RR are looking for a big public handout. But let us least consider that RR SMR is less risky than the 50MW reactor in a box.

I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.

What RAB finance is about is trying to prevent the bankers making so much money out of the projects. Currently something like half the quoted build cost of Hinkley Point C is going into the pockets of bankers and other capital providers. This is because the government insists on a certain capitalistic righteousness. But it makes it heinously expensive, in the same essential way that PFI made schools and hospitals heinously expensive when that was considered the capitalistically righteous way of financing them, now utterly discredited. I think it is better if our capital intensive public infrastructure is financed by a cheap method rather than capitalistically righteous method, which results in bankers making a lot of money out of it. And I think you'll find most countries on the continent worked that out a long time ago, and do not do it as we do it here.

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Re: The Death Of Fossil Fuels

Post by Grumble » Tue Oct 19, 2021 5:57 am

IvanV wrote:
Mon Oct 18, 2021 10:54 pm
bjn wrote:
Sun Oct 17, 2021 6:13 pm
Oh FFS.

So basically subsidising underperforming nukes via financial shenanigans and betting on unproven SMR technologies. Totally nuts.

A massive opportunity cost.
The Rolls Royce SMR isn't the 50MW reactor in a box that the term SMR usually conjures up. Rather RR are talking about 220 to 440 MW PWRs.

About half of the reactor sets in France are around 900MW, and they are all PWRs. So we are talking about something that is a quarter to a half the size of a normal PWR. Something that looks like a normal nuclear reactor.

Nevertheless we are going to have to get ourselves back up the learning curve of building nuclear reactors, having not built one in a generation. And also up the learning curve of building them to post-Fukushima standards. And generally speaking whatever we build it would be good to build about 50-off of them, as then we can get really slick at it like they did in France in the 80s and 90s.

Someone was discussing whether the second-best time to build reactors is now or never. Let us also recall that the correct number of reactors to build in a human generation is never 2 either. Though if the correct answer to the first question was never, and you nevertheless built 2, then stopping is perhaps still sensible, and the 2 you built in that human generation, like at Sizewell C, can be the badge of your earlier folly.

It is possible that post-Fukishima standards in Europe have made any kind of nuclear reactor unbuildable, and RR are looking for a big public handout. But let us least consider that RR SMR is less risky than the 50MW reactor in a box.

I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.

What RAB finance is about is trying to prevent the bankers making so much money out of the projects. Currently something like half the quoted build cost of Hinkley Point C is going into the pockets of bankers and other capital providers. This is because the government insists on a certain capitalistic righteousness. But it makes it heinously expensive, in the same essential way that PFI made schools and hospitals heinously expensive when that was considered the capitalistically righteous way of financing them, now utterly discredited. I think it is better if our capital intensive public infrastructure is financed by a cheap method rather than capitalistically righteous method, which results in bankers making a lot of money out of it. And I think you'll find most countries on the continent worked that out a long time ago, and do not do it as we do it here.
The RR SMR isn’t the only game in town though. The USNC is further along I think, (https://usnc.com/mmr-energy-system/) and another U.K. developed one is called U Battery (https://www.u-battery.com/)
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Re: The Death Of Fossil Fuels

Post by Sciolus » Tue Oct 19, 2021 8:34 am

IvanV wrote:
Mon Oct 18, 2021 10:54 pm
I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.
We've been through this a dozen times, but let's try once more. The fallacy in this position is assuming that the only parties are the supplier, the customer and the government. If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs. Domestic piped gas is subsidised by people in Bangladesh and Nigeria and Afghanistan, because they are paying for it even though they aren't getting any benefit.

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Re: The Death Of Fossil Fuels

Post by Millennie Al » Tue Oct 19, 2021 11:07 pm

Sciolus wrote:
Tue Oct 19, 2021 8:34 am
If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs.
That is not what many people would agree is a subsidy. So if you use the word in that way, at best it causes confusion and misunderstanding.
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Re: The Death Of Fossil Fuels

Post by Bird on a Fire » Wed Oct 20, 2021 12:50 am

Millennie Al wrote:
Tue Oct 19, 2021 11:07 pm
Sciolus wrote:
Tue Oct 19, 2021 8:34 am
If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs.
That is not what many people would agree is a subsidy. So if you use the word in that way, at best it causes confusion and misunderstanding.
It's how the IMF use it, for instance.

I think people need to get better at thinking about externalities and who pays for them, because it's quite an important issue at the moment.
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Re: The Death Of Fossil Fuels

Post by El Pollo Diablo » Wed Oct 20, 2021 8:27 am

The graph partway down this article suggests that EV sales have gone through the roof, I presume at least partly because of the fuel issues recently.

https://www.theguardian.com/business/20 ... servations
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Re: The Death Of Fossil Fuels

Post by lpm » Wed Oct 20, 2021 9:14 am

El Pollo Diablo wrote:
Wed Oct 20, 2021 8:27 am
The graph partway down this article suggests that EV sales have gone through the roof, I presume at least partly because of the fuel issues recently.

https://www.theguardian.com/business/20 ... servations
No, that was before the fuel crisis. It'll be a couple of months till that feeds through into sales. September will be the return to commuting..

There are very few EVs available to buy at the moment, however. The VW wait is 26 weeks from order to delivery. I ordered late September, official delivery is end Jan, probably be March.
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Re: The Death Of Fossil Fuels

Post by El Pollo Diablo » Wed Oct 20, 2021 10:23 am

Presumably also the fact that new 71 number plates are out in September. Some of the spikes align with the new number plate releases.
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Re: The Death Of Fossil Fuels

Post by Sciolus » Wed Oct 20, 2021 10:30 am

Millennie Al wrote:
Tue Oct 19, 2021 11:07 pm
Sciolus wrote:
Tue Oct 19, 2021 8:34 am
If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs.
That is not what many people would agree is a subsidy. So if you use the word in that way, at best it causes confusion and misunderstanding.
If many people ignore key stakeholders in a transaction, then they are causing confusion and misunderstanding.

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Re: The Death Of Fossil Fuels

Post by jimbob » Wed Oct 20, 2021 10:31 am

Bird on a Fire wrote:
Sun Oct 17, 2021 9:05 pm
The best time to start building nukes was thirty years ago, as the old Chinese proverb goes.

But the question is, is the second best time to start building nukes "today" or "never"?
<checks the date>

Yup, 30 yrs ago is probably safe.

40 yrs ago or earlier looks to have been a very bad time to start building nukes given the nuclear incidents that have happened. And even the idea of building Dungeness on a rapidly-eroding shingle beach.
Have you considered stupidity as an explanation

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Re: The Death Of Fossil Fuels

Post by bmforre » Wed Oct 20, 2021 4:48 pm

See NYTimes today:
Shell game:
How Chemical Companies Avoid Paying for Pollution

DuPont factories pumped dangerous substances into the environment. The company and its offspring have gone to great lengths to dodge responsibility.
Sciolus wrote:
Wed Oct 20, 2021 10:30 am
Millennie Al wrote:
Tue Oct 19, 2021 11:07 pm
Sciolus wrote:
Tue Oct 19, 2021 8:34 am
If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs.
That is not what many people would agree is a subsidy. So if you use the word in that way, at best it causes confusion and misunderstanding.
If many people ignore key stakeholders in a transaction, then they are causing confusion and misunderstanding.

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Re: The Death Of Fossil Fuels

Post by IvanV » Wed Oct 20, 2021 5:15 pm

Sciolus wrote:
Tue Oct 19, 2021 8:34 am
IvanV wrote:
Mon Oct 18, 2021 10:54 pm
I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.
We've been through this a dozen times, but let's try once more. The fallacy in this position is assuming that the only parties are the supplier, the customer and the government. If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs. Domestic piped gas is subsidised by people in Bangladesh and Nigeria and Afghanistan, because they are paying for it even though they aren't getting any benefit.
Nuclear power has a relatively low externalities in comparison to industries that emit large quantities of gases, so I doubt this argument is particularly relevant to whether nuclear power is being subsidised.

Most of the much-publicised large quantifications of how much "subsidy" the fossil fuel industry gets, major on the "lower tax than something else" kind of "subsidy". At least the IMF does not include this kind of non-standard subsidy. More relevant to the nuclear industry would be an argument over whether "financing by means other than putting the private sector on full risk and paying the interest rate resulting" is a subsidy, but that seems to be an argument rarely made outside Britain.

The IMF distinguishes three kinds of subsidy, producer subsidy, pre-tax consumer subsidy, and post-tax consumer subsidy. The first two are the commonly recognised kind of subsidy, that involve a cost, direct or indirect, on the exchequer of the country involved to reduce the price of the item to below the international price, or else to increase the profitability of their producers. These two kinds are what most people would normally understand as a subsidy.

The "subsidies of the third kind", that IMF has defined, the post-tax consumer subsidy, are what you might call a more academic concept of subsidy. By their definition, a post-tax consumer subsidy exists where insufficient taxes are charged to cover the externalities of consumption.* Though consumers asked to pay externality taxes tend to stop viewing it as a kind of subsidy at the point they find they are being charged a tax for it.

We can understand why the IMF might make this definition - they probably think it is good economics to charge externality consumption taxes, and are trying to encourage the general use of such taxes. Though since the classic paper of Martin Weitzmann, "Prices vs. Quantities", Review of Economic Studies, 1974, we have known that for regulating externalities under uncertainty, quantity regulation can be more effective than price adjustment mechanisms. Which is better depends upon the relative nature of the various uncertainties in both abatement costs and externalities. So the IMF is perhaps going a little far if it is trying to suggest that such taxes should routinely be charged, as it far from always the best policy. There are other considerations also, (and see also the footnote on extraterratorial externalities). Highly expert people have argued endlessly over price vs quantity regulation for fossil fuel emissions, without coming to a consensus. It remains a difficult and contested topic.

Of course it is precisely in countries like Nigeria, where the price of fossil fuel has direct consumer subsidy, and certainly no tax, that apparently such "subsidies of the third kind" are maximised. Because such are precisely the countries where charging high taxes on fossil fuels is most politically unacceptable.
----
*A difficult point here is where there are international externalities. Should a government charge a tax for extraterritorial externalities? There is little precedent for reimbursing extraterritorial parties for taxes collected reflecting extraterritorial externality costs. Where treaties exist, they almost routinely take a different approach, typically one of quantity regulation by territory. The Paris Agreement is an example. This then tends to predispose to quantity regulation at a national level. The European carbon market, although it has a price, is in effect a quantity mechanism, a market to transfer fixed quantities of carbon emission permissions from one country to another within an overall European cap. "Carbon offsets" can be considered a kind of voluntary, if typically rather phony, arrangement to pay third countries for your own emissions.

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Re: The Death Of Fossil Fuels

Post by IvanV » Wed Oct 20, 2021 5:23 pm

El Pollo Diablo wrote:
Wed Oct 20, 2021 8:27 am
The graph partway down this article suggests that EV sales have gone through the roof, I presume at least partly because of the fuel issues recently.
Somewhat ironically, given the electricity supply worries that the fuel shortage has given rise to. At present, any additional electricity consumption, especially in winter, will translate pretty much fully to an increase in consumption of fossil fuel by the electricity industry. Stated plans by governments to decarbonise the electricity supply industry tend to skate over any requirement for a large increase in electricity demand, that inevitably comes from decarbonising the other 75% of our energy consumption. (75% is a UK figure that was approximately correct pre-COVID).

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Re: The Death Of Fossil Fuels

Post by bjn » Wed Oct 20, 2021 8:22 pm

A lot to argue with Ivan about above. Just on your last point, you are almost certainly referencing primary energy usage as opposed to final energy usage. A huge amount of primary fossil fuel energy is wasted, that’s what the radiator in a car does, dissipating up to 80% of the energy in your petrol as heat. When electrifying things such, there is often the opportunity to significantly reduce such inefficiencies. Space heating is another example, heat pumps are way more efficient than a gas boiler.

So while we may need to replace the 75% of our primary energy usage currently supplied by fossil fuels, it will need much less primary electricity generation to replace that if not from thermal generation.
Last edited by bjn on Wed Oct 20, 2021 8:34 pm, edited 1 time in total.

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Re: The Death Of Fossil Fuels

Post by bjn » Wed Oct 20, 2021 8:32 pm

This chart should give you a better idea of what I’m talking about.
Image

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Re: The Death Of Fossil Fuels

Post by Grumble » Wed Oct 20, 2021 8:56 pm

Incidentally, if anyone wants a referral code to Ripple Energy so you can own a share of a wind farm please let me know. They estimate payback of your stake in about 14 years and 25 years of operation. Payback will be faster if for example electricity prices go up (who could imagine such a thing?)
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Re: The Death Of Fossil Fuels

Post by Sciolus » Wed Oct 20, 2021 9:19 pm

IvanV wrote:
Wed Oct 20, 2021 5:15 pm
Sciolus wrote:
Tue Oct 19, 2021 8:34 am
IvanV wrote:
Mon Oct 18, 2021 10:54 pm
I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.
We've been through this a dozen times, but let's try once more. The fallacy in this position is assuming that the only parties are the supplier, the customer and the government. If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs. Domestic piped gas is subsidised by people in Bangladesh and Nigeria and Afghanistan, because they are paying for it even though they aren't getting any benefit.
Nuclear power has a relatively low externalities in comparison to industries that emit large quantities of gases, so I doubt this argument is particularly relevant to whether nuclear power is being subsidised.
Indeed. For some reason I missed that your comment was in the context of nuclear power (even though, er, the rest of your post was about that). Sorry for grumpiness.

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Re: The Death Of Fossil Fuels

Post by dyqik » Wed Oct 20, 2021 9:22 pm

IvanV wrote:
Wed Oct 20, 2021 5:15 pm
Sciolus wrote:
Tue Oct 19, 2021 8:34 am
IvanV wrote:
Mon Oct 18, 2021 10:54 pm
I'm not terribly happy with using the word "subsidy" when the government doesn't actually hand any taxpayers' money out, rather customers pay the full cost and probably some tax on top too. An example of this misuse is saying your domestic piped gas is subsidised because you only pay 5% VAT on it. I don't think that's the meaning of "subsidy" as commonly understood. It's lower tax, but the government takes money on the deal, it doesn't hand it out.
We've been through this a dozen times, but let's try once more. The fallacy in this position is assuming that the only parties are the supplier, the customer and the government. If an industry externalises some of its costs, then it is receiving a subsidy from those who pay those externalised costs. Domestic piped gas is subsidised by people in Bangladesh and Nigeria and Afghanistan, because they are paying for it even though they aren't getting any benefit.
Nuclear power has a relatively low externalities in comparison to industries that emit large quantities of gases, so I doubt this argument is particularly relevant to whether nuclear power is being subsidised.

Most of the much-publicised large quantifications of how much "subsidy" the fossil fuel industry gets, major on the "lower tax than something else" kind of "subsidy". At least the IMF does not include this kind of non-standard subsidy. More relevant to the nuclear industry would be an argument over whether "financing by means other than putting the private sector on full risk and paying the interest rate resulting" is a subsidy, but that seems to be an argument rarely made outside Britain.

The IMF distinguishes three kinds of subsidy, producer subsidy, pre-tax consumer subsidy, and post-tax consumer subsidy. The first two are the commonly recognised kind of subsidy, that involve a cost, direct or indirect, on the exchequer of the country involved to reduce the price of the item to below the international price, or else to increase the profitability of their producers. These two kinds are what most people would normally understand as a subsidy.

The "subsidies of the third kind", that IMF has defined, the post-tax consumer subsidy, are what you might call a more academic concept of subsidy. By their definition, a post-tax consumer subsidy exists where insufficient taxes are charged to cover the externalities of consumption.* Though consumers asked to pay externality taxes tend to stop viewing it as a kind of subsidy at the point they find they are being charged a tax for it.

We can understand why the IMF might make this definition - they probably think it is good economics to charge externality consumption taxes, and are trying to encourage the general use of such taxes. Though since the classic paper of Martin Weitzmann, "Prices vs. Quantities", Review of Economic Studies, 1974, we have known that for regulating externalities under uncertainty, quantity regulation can be more effective than price adjustment mechanisms. Which is better depends upon the relative nature of the various uncertainties in both abatement costs and externalities. So the IMF is perhaps going a little far if it is trying to suggest that such taxes should routinely be charged, as it far from always the best policy. There are other considerations also, (and see also the footnote on extraterratorial externalities). Highly expert people have argued endlessly over price vs quantity regulation for fossil fuel emissions, without coming to a consensus. It remains a difficult and contested topic.

Of course it is precisely in countries like Nigeria, where the price of fossil fuel has direct consumer subsidy, and certainly no tax, that apparently such "subsidies of the third kind" are maximised. Because such are precisely the countries where charging high taxes on fossil fuels is most politically unacceptable.
----
*A difficult point here is where there are international externalities. Should a government charge a tax for extraterritorial externalities? There is little precedent for reimbursing extraterritorial parties for taxes collected reflecting extraterritorial externality costs. Where treaties exist, they almost routinely take a different approach, typically one of quantity regulation by territory. The Paris Agreement is an example. This then tends to predispose to quantity regulation at a national level. The European carbon market, although it has a price, is in effect a quantity mechanism, a market to transfer fixed quantities of carbon emission permissions from one country to another within an overall European cap. "Carbon offsets" can be considered a kind of voluntary, if typically rather phony, arrangement to pay third countries for your own emissions.
To me, this reads like a very long way of saying that you believe that subsidies can only be monetary, not other things of value.

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