One of the world’s greatest innovators, Elon Musk, says the key to tackling climate change and driving clean energy innovation is a carbon price very similar to the one Australia abolished.



Addressing students at the Sorbonne University on the sidelines of the Paris climate summit, the electric car, powerwall battery and space tycoon said he believed a phased-in carbon price would halve the time it took the world to transition to clean energy, something that would make a huge difference to dangerous climate change.

The obvious solution to runaway global warming was to remove the effective subsidy of not pricing the damage done by carbon pollution, Musk said, urging the students to lobby governments to implement the policy.

“To make it neither a left nor right issue we should make it a revenue-neutral carbon tax – increasing carbon tax and reducing tax in other areas like consumption taxes or VAT and in order to give companies time to react it should be a phased-in approach,” he said.

“If countries agree to a carbon tax and it’s real and it’s not super watered-down and weak, we could see a transition [to clean energy] that has a 15- to 20-year time frame as opposed to a 40- or 50-year time frame. We could probably cut it in half and that would have a huge impact on the … welfare of the world … It really matters whether we do this transition sooner or later.

“For developing economies they could leapfrog the fossil fuel situation with power lines, you could have remote villages with solar panels and a battery pack, just like mobile phones, a lot of countries just didn’t do the landlines, they skipped right over landlines.”

Musk said Australia would be the first mass market for his powerwall battery storage technology because it had “such a large percentage of homes with solar panels and Australia correctly prices energy at a consumer level – people pay more during peak times than non peak – so the economic incentives are aligned for consumers.”

Musk’s firm Tesla has said its 7kWH home energy storage units would be available by the end of the year in Australia.

The businessman and inventor warned that getting rid of the “hidden carbon subsidy … of enormous size, $5.3tn a year according to the IMF” would continue to encounter tactics by fossil fuel companies similar to those used by the tobacco industry for many years.

And he called on governments to “set the rules of the game” to help start-ups to grow into mid-size companies.

Addressing the charge that a carbon tax would also help his electric car and solar companies, Musk said: “If what I really cared about was my net worth I would never have invested in a car company … it has to be one of the dumbest way to invest money, and solar is not far behind it … because we have these crazy rules in place.”

He said his concerns about the climate had been elevated by the widespread use of fracking.

“Fracking has elevated my concern about the carbon problem dramatically … I always thought the scarcity of oil would drive up the price … Unfortunately some smart inventors, I wish they could have invented something else … the net result is the accessible oil and gas reserves are dramatically higher, maybe by a factor of 10, and that is crazy for the climate,” he said.

The businessman and inventor has been calling for a carbon tax to drive clean power investments for years.

His own companies having reportedly received billions in subsidies as startups, but Musk argues a carbon tax is a better policy lever.

The LA Times calculated companies owned by the billionaire, including Tesla Motors Inc, SolarCity Corp and Space Exploration Technologies Corp, known as SpaceX, had benefited from about $4.9bn in government support.

Innovation to drive advances in clean energy technology has been a theme of the Paris meeting, with the billionaires Bill Gates, Mark Zuckerberg, Richard Branson and other high-profile entrepreneurs pledging to spark a “new economic revolution” based around clean energy with an investment drive for renewables, and the US president, Barack Obama, and 20 other leaders promising to double their research and development spending on renewables.

Musk said he had not been asked to join the initiative.

Attending the Paris summit earlier in the week, Malcolm Turnbull said innovation was the key to tackling climate change, but has refused to countenance changing his climate policies.

“We’re optimistic because we believe that we have, as a global community, as humanity, the ability to innovate and imagine the technologies that will enable us to make these big cuts in greenhouse gas emissions and, at the same time, continue to deliver the energy, particularly in countries that have little or no energy resources available to them, enable us to continue to do that,” he told the meeting.

“So this is a time for technology. This is a time for innovation. And that’s why we were so pleased to discuss that with Bill Gates, one of the handful of people that we could truly say has created the modern era. It was great to talk to him today and hear his passion for the role of technology and innovation in meeting this global challenge.”

Turnbull promised to use next week’s innovation statement to double Australia’s spending on clean energy research and development to $200m.