Industry, Innovation and Infrastructure

LET’S DISCUSS – Carbon Taxes

Planetary International CEO, Bob Edwards, weighs in on carbon tax, the pros and cons, and why this could be an important solution for our planet.

“The only things certain in life are death and taxes.” So said Benjamin Franklin, 250 years ago. And perhaps the only thing certain to prevent the demise of our planet is tax… on carbon emissions. A carbon tax that would deter the burning of fossil fuels and motivate the production of less-polluting energy sources. This would limit CO2 emissions, the most destructive and prevalent greenhouse gas. Without such measures, global temperatures are predicted to rise by 4 degrees centigrade by the end of the century, causing low lying states and major cities to disappear and an increase in extreme weather events. It also means that huge numbers of people will need to move around the planet in search of hospitable places to live, away from fires, floods and increasing desertification. So we must ask the question – what is more politically acceptable: taxes on fossil fuels or trying to find ways to accommodate mass migrations of people?

What are carbon taxes?

Carbon taxes would be levied by governments around the world on products such as coal, oil and
gas in proportion to their carbon content. This would mean higher prices for electricity, gasoline,
heating oil and all by-products and services. This would encourage both producers and consumers to
reduce energy consumption and consciously shift to renewable energy sources, for vehicle
propulsion, to heat our homes and businesses.

What are the pros & cons?

Taxes of any type are generally unwelcome as they reduce income and contributors rely on good
governance to disburse the revenues. However, there are other benefits, such as reducing deaths
that result from local air pollution. This means less pressure on health systems, on doctors and
hospitals due to fewer respiratory diseases, thus diverting resources to other critical care

Carbon taxes can also raise significant revenue for governments, revenue they can use to counteract
economic harm caused by higher fuel prices. For example, governments could use carbon tax
revenue to ease the burden of taxation on workers by lowering personal income and payroll taxes.
Carbon tax revenue could also fund productive investments, including in renewable energy, to help
achieve the United Nations Sustainable Development Goals, including reducing hunger, poverty,
inequality, and environmental degradation (see the SDG goals under our Learn section).

Carbon taxes can also play a key role in achieving the pledges of all countries that were signatories
to the 2015 Paris Agreement Under the United Nations Framework Convention on Climate Change,
which lays the foundation for international action to combat global warming.

How can these taxes be achieved?

Carbon taxation can be politically very difficult, although as young people move into higher
education and then employment, the need to make difficult choices to save the planet might be
reflected by affirmative action, including during government elections. There also needs to be some degree of international price coordination. A group of large-emitting countries (the heavy coal users of China, India and South Africa) could agree to impose a minimum price on carbon taxation, for example, while advanced economies could accept more responsibility for mitigation through a higher minimum price requirement, with flexibility built in to allow for emission trading systems and various existing trade agreements.

Are they needed now?

More than 50 carbon tax and emission trading systems now operate at the regional, national, and
sub-national levels, but the global average carbon tax is still only US$2 a ton, far short of what is
needed. The International Monetary Fund proposes a price that starts at between US$6 and US$20
per ton of CO2 and reaches between US$40 and US$150 in 2050.  Countries throughout the world will need to be strong, through the implementation of sound policy packages to provide mitigation incentives, truthful accounting of national achievements, resourceful redistribution of carbon tax income and clear, definable benefits for their entire populations.

Politically very difficult, but necessary if we want to stop emitting the gas that is causing our planet to warm to unpalatable levels.

Posted by Bob Edwards 19 October 2020

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