Why is a Carbon Tax so important?

When carbon emissions are free, there is no (financial) motivation for companies to not emit carbon. A carbon tax charges companies for emissions caused by their products. The amount depends on the amount of CO2 emitted through a product [13,16]. Carbon taxes can be charged during production or during use [13]. For example, a tax on use would mean that when you use gas to heat your home, you pay extra money to the government [13]. This would encourage you to use renewables instead. Now, importantly, you don’t just throw this money into a deep hole. The money collected through a carbon tax could be redistributed evenly among the population and companies [18].

The effects of a carbon tax at a company-level is even more interesting:

What happens if fossil fuels are taxed and climate friendly alternatives are, relatively, cheaper? It encourages people and companies to buy less fuel – in the end, what they care most about is money [13]. What will they do instead? Buy low-carbon energy like wind and solar [13]. This helps companies that work on renewables grow and improve their technologies, and encourages fossil fuel ‘giants’ to invest in renewable energy [14,15].

Money is not the only source of major change [10], but it’s a very effective and reliable one. For instance, coal use decreased in recent years because the alternatives are cheaper [7,8,9]. Watch these videos [11,12] of a solar farmer and a city representative from the US explain that they adopted solar because it is cheaper and fuels economic growth and stability of the area more than what they had before. This is reality, and a carbon tax is a way to deal with it.

The choices we want businesses to make must be the most profitable ones, otherwise they simply won’t happen. A carbon tax presents itself as a very robust and direct method for this. Some countries have already implemented a carbon tax, including the UK [3,4,5,6] and we need to support this around the world!

References

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