Minimal Costs, Major Benefits: The Carbon Tax

Image via strategy+business

***

Since the early 1980s, the combined temperature of the earth’s land and oceans has exponentially increased at unprecedented rates. As experts searched for an economically sound and efficient solution to global warming, the concept of the carbon tax emerged. 

The carbon tax requires a government to set a price on each ton of carbon, or other greenhouse gases, emitted by individual consumers and businesses. Presumably, the tax would motivate people to find ways to reduce their carbon emissions. These methods include lowering hot water usage, taking public transportation, turning off appliances, and purchasing a low carbon vehicle. 

Many wonder, where would the government allocate the money raised from a carbon tax? The possibilities are enticing: the money could be put toward a cut in income taxes, households that struggle to afford increased energy prices, and industries like agriculture which are unaffected by the tax but still produce major carbon emissions. 

In 1990, Finland became the first country to ever introduce a carbon tax. According to the International Monetary Fund, 46 countries currently implement some variation of a carbon tax, but prices are set far too low. Carbon taxes cover around 30% of the global emissions, so higher prices are necessary to see substantial improvements in global warming. As of late March, the United Nations’ International Maritime Organization agreed upon a landmark proposal to tax shipping companies for every ton of carbon they emit by burning fuel. Though such news feels promising, shipping only accounts for 3% of global greenhouse gas emissions. 

China, the world’s largest carbon emitter, began to shrink its carbon footprint by replacing their primary energy source of coal with wind and solar power. The nation’s emissions trading system went into effect in 2021 and grants companies a certain amount of emissions, or allowances, per annual compliance cycle. Companies can then buy, sell, and essentially trade allowances amongst each other, but failure to observe an allowance results in penalties. 

The United States, the second largest carbon emitting country, has no national carbon tax. 

While American politicians across the aisle have pledged support for a carbon tax in recent years, opposition remains fervent. Over half of House and Senate Republicans deny climate change in spite of the record-breaking extreme weather and wildfires that have devastated lives. These same elected officials have also pocketed tens of millions of dollars in total lifetime contributions from coal, oil, and gas industries. 

Aside from corrupt global warming denial, the displacement of jobs in fossil fuel industries poses a serious concern against a nationwide carbon tax. While U.S. President Joseph R. Biden promises to create new jobs in sustainable manufacturing sectors, this plan may take a few years to come into fruition. President Biden would have to be reelected, and sustainable energy industries need to expand. In the meantime, crude oil production in the U.S. continues to skyrocket. 

At the core of political resistance to environmental causes lies the United States’ centuries-old oil dependence. American foreign policy is evermore defined by the demand for oil, a majority of which is imported from Canada, Mexico, Saudi Arabia, Iraq, and Brazil. Keeping up with unlimited levels of consumption means more time and resources are allocated toward promoting geopolitical relationships than combating climate change. 

The carbon tax would help to offset the capitalist-consumerism of the American citizenry, redirect our attention to the overheating of the planet, and motivate us to live more sustainably. If federal officials found consensus upon a version of the carbon tax, the expansion of green industrialization would naturally follow. Although adverse economic effects may arise temporarily, the long-term impacts of a carbon tax could save the earth—and our lives. 

***

This article was edited by Sarah Davey.