[sokoloff]

You think that bribing oil companies to not extract oil temporarily is a more effective financial lever than taxing emissions on an on-going (and escalating, if policy goals require that) basis? That seems as if we’d be prioritizing the needs of the oil companies and shareholders over those of the actual humans on the planet.

[ahepp]

I think the arguments for leaving oil in the ground have more to do with path dependence than prioritizing the needs of oil company shareholders.

Markets have a limited ability to look ahead. It's like a greedy algorithm. You're finding a local maximum, but not necessarily a global one (or even one that won't melt the planet).

The most efficient choice at any given moment (even incorporating a correctly priced carbon tax) may be to continue drilling. But due to the very long term capital investments, investing in drilling today because it's the best option, also guarantees it will be the best option tomorrow. So maybe additional interventions are required to reset the path dependence?

I think a purely market based solution would probably figure things out eventually, but we should also consider ways to help the transient response be as minimally disruptive as possible.

[ahelwer]

All modeling suggests that applying both of these tools together (incentives & disincentives) is multiplicatively more effective than applying either on its own. Taxing emissions means those emissions still happened.

[maxerickson]

If it works, it doesn't end up being temporary, it becomes economically unattractive to go drill.

[sokoloff]

At the cost of perpetually paying the oil companies to not extract that oil this year either...

[maxerickson]

No, if you get off carbon the oil likely becomes worthless, or at least, not worth the direct cost of extraction.