Carbon dioxide is what economists call an “externality,” something that imposes a cost on somebody other than the manufacturer. At some point, the thinking goes, Congress will force industries to pay those costs, either with a tax or a cap-and-trade system in which allowances will cost money. The consensus in the energy business is that lawmakers will come up with a charge that could start at $10 per metric ton or more. [...]
At $10 per metric ton, the impact is minimal. But at $50 a ton, for example, the cost of a kilowatt-hour produced by coal goes from about 5.7 cents to about 10 cents. Wind power currently isn’t competitive, according to the institute’s calculation, but it becomes competitive when carbon dioxide costs $25 a ton. [...]
At $20 or $30 a ton, the 1.9 pounds of carbon dioxide emitted in producing that kilowatt-hour costs 2 to 3 cents. That cuts into coal’s price advantage and — when coupled with progress in reducing the cost of solar power through manufacturing and economies of scale — gives solar power “a much larger chance to be relevant,” Mr. Gay said. Solar thermal systems, which use mirrors to concentrate sunlight to boil water, might benefit even sooner.
The trick, it turns out, is that the story ran in the Times's business section where they're trying to make sure an audience of interested parties gets the information they need. Were this to run as a "Washington" or "politics" story in the news section, it'd be all full of dueling quotes from political hacks, obfuscation, horse-race stuff, and pretty much anything other than an explanation of the impact of carbon pricing.
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