The authors say the levy could be easily administered within existing tax systems. They calculate that if the tax were introduced in OECD countries in 2024 at an initial rate of $5 a ton of CO2 equivalent, increasing by $5 a ton each year, it would raise a total of $900 billion by 2030.
Of that $720 billion would go to the loss and damage fund with the remaining $180 billon earmarked as a “domestic dividend” to support communities within richer nations with a just climate transition.
This idea is DOA.
Fossil fuel companies have lobbied hard against it. But we almost got it included in the Inflation Reduction Act here in the U.S.
Unfortunately, after the IRA, there’s not a huge appetite for more big climate legislation. But we will keep pushing for it.
I’m all fr taxing fossil fuel extraction, but I don’t think we can buy our way out of climate change.
Why not?
Raising prices for fossil fuels shifts demand to renewables and provides money for investments into green energy. If you want to see less of something, tax it. If you want to see more of something, subsidize it.
A market solution to climate change is impossible at best, but normally used as a distraction. Just look at the actual impact that carbon credits have had. The biggest polluters get to pollute ever more because they can just issue more “carbon credits” which are nothing more then accounting sleight of hand while still releasing just as much, or more, pollution into the atmosphere. There is no way to save the planet, while still allowing the industries whose existence rely on public externalities operate.
If you tax fossil fuels (which won’t actually ever happen btw), all you do is shift the supply curve so that fossil fuels that previously weren’t economically viable to extract now are. You have to restrict supply, globally, period. If you aren’t willing to do that, you aren’t serious about stopping climate change.
Just look at the actual impact that carbon credits have had.
Well yeah, carbon credits suck.
The proper solution, IMO, is a Piguovian tax on emissions. Start with something relatively small, and increase every year for 5-10 years until the tax pays for whatever a reasonable cost is for that pollution (i.e. the cost to remove those pollutants). Then either the emissions will come down, or we’ll be able to fund cleanup efforts instead. Assign the tax for all imports as well, with a (high) estimate for the amount of emissions that product makes, which can be narrowed by the supplier providing proof of actual emission numbers and/or a similar tax paid in the source country.
What this does is push for a phase-out of fossil fuels while funding efforts to compensate for the emissions. That makes competing products more attractive since they don’t need to pay the tax, so you’ll get customers shifting purchasing decisions, which also encourages companies to change. I think that can be quite effective.
IMO, we should consider handing the tax revenue back as a credit instead of actually using it to fund cleanup efforts. That way we neutralize the price increase impact on the average person, while still signaling the true cost of products in the market.
