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Tax the Carbon

“The fastest way to phase down fossil fuel use is via a steadily rising carbon fee collected from fossil fuel companies.“ James Hansen, the famed climatologist, has always been clear on this point. And he emphasises it again in a recent article, “Fighting the Battles, Winning the War”.

One battle in the article’s title is against the US practice of Mountain Top Removal (MTR), a particularly nefarious way to mine coal. But he observes that “Coal is only one of the three big fossil fuels, the others being oil and gas. Fracking to get gas is as bad as coal mining”.

Economists generally agree that a very good way to reduce greenhouse gas emissions is to tax them. William Nordhaus, winner of the 2018 Nobel Prize in Economics and recently author of “The Spirit of Green”, wrote, “Setting the universal global harmonized (carbon) price at the right level is all that is required for an efficient policy for climate change.” Nordhaus points out that by not putting a price on something, we in fact put a price of zero on it. Being extravagant with your carbon footprint costs the same as being careful.

Several climate-related proposals are receiving bi-partisan support in the US Congress. The Energy Innovation and Carbon Dividend Act, including a carbon tax that would start at $15 a ton and rise by $10 a year, has won the backing of 80 House members.

Polluters must pay - from "Let's Save our Planet"

What to do with the dividends from a carbon tax? Many supporters would like the entire receipts to be returned to the public as a dividend. The tax would then be revenue neutral, and would mitigate the socially regressive effects of carbon taxes on lower-income households. Jim Hansen observes, “If the funds are distributed uniformly to the public, the effect is anti-regressive; 70 percent of the public gets more in the dividend than they pay in increased prices.”

But some, like the Nobel Laureate Joseph Stieglitz, think it would be more efficient to spend at least part of the revenue on climate investments such as public transportation and research and development.

-Julie Wornan


“Fighting the Battles, Winning the War” by James Hansen

Carbon Tax Center - Frequently Asked Questions and Answers about Carbon Taxes

Global carbon incentive an elegant economic solution for emissions

“The Spirit of Green: The Economics of Collisions and Contagions in a Crowded World” by William Nordhaus

The Price Is Wrong: Talking to William D. Nordhaus

Americans for Carbon Dividends

Energy Innovation and Carbon Dividend Act

Draft communique: G7 leaders commit to use carbon pricing as a policy lever

Ethics Review of Carbon Taxes

Citizen’s Climate Lobby

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