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As Shell sells its oil sands it calls for a carbon price

Summary:
As regulars around here will know we've rather annoyed everyone over this past decade. The point being that there's such a head of steam about climate change that the science doesn't particularly matter, something is going to be done. We've thus been insisting that if something is to be done then it should be the sensible thing, a carbon tax to provide a price for emissions.At which point we get the news that shell is selling its oil sands operations:Royal Dutch Shell has agreed to sell most of its carbon-heavy Canadian oil sands assets for .5bn (£7bn) as the chief executive warned that the industry risked losing public support without progress towards cleaner energy.We would happily wager that that's little to nothing to do with emissions and all about money - we're really very sure that it is the folding stuff which motivates. As something much more akin to a manufacturing process shale is still getting ever cheaper and that changes the economics of high fixed costs production like sands, or even the larger deep sea or Arctic projects. The oil world has changed.However, this part hasn't:Van Beurden said that the transition to a low carbon energy system would take decades and government policies including putting a price on carbon emissions would be essential to phase out the most polluting sources of energy such as coal and oil.

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As regulars around here will know we've rather annoyed everyone over this past decade. The point being that there's such a head of steam about climate change that the science doesn't particularly matter, something is going to be done. We've thus been insisting that if something is to be done then it should be the sensible thing, a carbon tax to provide a price for emissions.

At which point we get the news that shell is selling its oil sands operations:

Royal Dutch Shell has agreed to sell most of its carbon-heavy Canadian oil sands assets for $8.5bn (£7bn) as the chief executive warned that the industry risked losing public support without progress towards cleaner energy.

We would happily wager that that's little to nothing to do with emissions and all about money - we're really very sure that it is the folding stuff which motivates. As something much more akin to a manufacturing process shale is still getting ever cheaper and that changes the economics of high fixed costs production like sands, or even the larger deep sea or Arctic projects. The oil world has changed.

However, this part hasn't:

Van Beurden said that the transition to a low carbon energy system would take decades and government policies including putting a price on carbon emissions would be essential to phase out the most polluting sources of energy such as coal and oil.

Quite so, if we want to - and note at the top, we're saying that something will be done, not that necessarily something need be done - change behaviour in this manner then the method to use is putting a price on that externality. A carbon price, a carbon tax. As Nordhaus, Stern,. Quiggin, Tol, Weizman, Mankiw and every other economist on the issue insists.

If anyone actually wants to implement a solution then we know what the correct solution is.

Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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