<blockquote>
<p>Why we’d need carbon tax when we have nuclear plants?</p>
</blockquote>
<p>The point of carbon tax is to discourage companies from investing and producing carbon goods. Carbon tax is how you incentivize companies to build nuclear or renewable energy power plants.</p>
<blockquote>
<p>Isn’t it simpler and less painful for a country to have its State invest massively in nuclear plants or renewable energy to produce non polluting energy?</p>
</blockquote>
<p>No. First, carbon taxes have no deadweight loss (see Mankiw Principles of Economics ch 10). Hence, in economic terms these are the least painful taxes that exist. Second, state does not magically gets its money out of nowhere. If state wants to invest in renewables or nuclear energy it has to first raise money either through taxation or monetary financing. Hence what you propose would require that we replace extremely efficient carbon tax that does not distort economy (in fact it corrects distortions in the economy) with some other taxes such as income tax or general consumption tax both of which are highly distortionary to the economy. Or if the state goes the route of monetary financing this would contribute to inflation which can be also distortionary. Corrective taxes such as carbon tax are the least distortionary option for government to get its revenue, so if you care about economic 'pain' they are the best option.</p>
<p>Second, the point of environmental policy is not to completely eliminate CO2 production. There might be places where having a gas powered plant might simply be the most optimal choice for the society. I can say with perfect certainty that if there would be some omniscient social planner that could organize society, under no commonly accepted social welfare function, CO2 emissions would be completely eliminated. Carbon tax helps us to discover where using production that still emits CO2 emissions might be optimal, because in places where there are available clean substitutes carbon tax will give companies incentive to switch to them.</p>
<p>Third, power production is private good. Private goods are typically most efficiently provided private companies (see Mankiw Principles of Economics pp 226). There government directly investing into building and operating power plants, as opposed to let's say just subsidizing renewables or nuclear would likely lead to even more inefficiencies and deadweight loss for the economy.</p>
<p>Fourth carbon tax is not only about energy production, it affects production of all goods and services that emit carbon (e.g. construction, agriculture etc). Consequently, even if state would maintain nuclear and renewable power plants it would still have to levy the same carbon tax.</p>

CC BY-SA 4.0
2022-04-12T09:56:32.840Z
2022-04-12T09:56:32.840Z
1muflon1
<p>Why would we ever need a carbon tax to reduce our emissions ? Isn’t it simpler and less painful for a country to have its State invest massively in nuclear plants or renewable energy to produce non polluting energy?</p>

CC BY-SA 4.0
2022-04-12T09:20:41.020Z
Come to think of it, wouldn't it be simpler to have to state run everything? I am not sure what you mean by "less painful".
Giskard
CC BY-SA 4.0
2022-04-12T09:22:09.053Z
Follow up question: why do we need regulation to make sure nuclear waste disposal is safe? Wouldn't it be simpler and less painful to have the State invest massively in fracking and gas turbine energy plants?
Giskard
CC BY-SA 4.0
2022-04-12T09:23:09.077Z
P.s.: There is a real conversation to be had on the role of nuclear energy in the fight against climate change, but please make your question very clear and narrow.
Giskard
<taxation><energy-economics><climate-change>
Why we’d need carbon tax when we have nuclear plants?
BAL
# Why we’d need carbon tax when we have nuclear plants?

(Asked by: username_0 on 2022-04-12)

Why would we ever need a carbon tax to reduce our emissions ? Isn’t it simpler and less painful for a country to have its State invest massively in nuclear plants or renewable energy to produce non polluting energy?

**Tags:** taxation, energy-economics, climate-change
> **Comments:**
> **username_1**: Come to think of it, wouldn't it be simpler to have to state run everything? I am not sure what you mean by "less painful".  
> **username_1**: Follow up question: why do we need regulation to make sure nuclear waste disposal is safe? Wouldn't it be simpler and less painful to have the State invest massively in fracking and gas turbine energy plants?  
> **username_1**: P.s.: There is a real conversation to be had on the role of nuclear energy in the fight against climate change, but please make your question very clear and narrow.  

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## 1 answers

### Answer by username_2 on 2022-04-12. Score: 2

> Why we’d need carbon tax when we have nuclear plants?

The point of carbon tax is to discourage companies from investing and producing carbon goods. Carbon tax is how you incentivize companies to build nuclear or renewable energy power plants.

> Isn’t it simpler and less painful for a country to have its State invest massively in nuclear plants or renewable energy to produce non polluting energy?

No. First, carbon taxes have no deadweight loss (see Mankiw Principles of Economics ch 10). Hence, in economic terms these are the least painful taxes that exist. Second, state does not magically gets its money out of nowhere. If state wants to invest in renewables or nuclear energy it has to first raise money either through taxation or monetary financing. Hence what you propose would require that we replace extremely efficient carbon tax that does not distort economy (in fact it corrects distortions in the economy) with some other taxes such as income tax or general consumption tax both of which are highly distortionary to the economy. Or if the state goes the route of monetary financing this would contribute to inflation which can be also distortionary. Corrective taxes such as carbon tax are the least distortionary option for government to get its revenue, so if you care about economic 'pain' they are the best option.

Second, the point of environmental policy is not to completely eliminate CO2 production. There might be places where having a gas powered plant might simply be the most optimal choice for the society. I can say with perfect certainty that if there would be some omniscient social planner that could organize society, under no commonly accepted social welfare function, CO2 emissions would be completely eliminated. Carbon tax helps us to discover where using production that still emits CO2 emissions might be optimal, because in places where there are available clean substitutes carbon tax will give companies incentive to switch to them.

Third, power production is private good. Private goods are typically most efficiently provided private companies (see Mankiw Principles of Economics pp 226). There government directly investing into building and operating power plants, as opposed to let's say just subsidizing renewables or nuclear would likely lead to even more inefficiencies and deadweight loss for the economy.

Fourth carbon tax is not only about energy production, it affects production of all goods and services that emit carbon (e.g. construction, agriculture etc). Consequently, even if state would maintain nuclear and renewable power plants it would still have to levy the same carbon tax.


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