A Price on Carbon

The ingenious reasoning behind the simple plan

Every day, we hear about the impending doom of climate change. We are told that, short of a significant reduction of our carbon footprint, the world will be irreparably degraded and eventually become utterly inhospitable for human life. Luckily, there is a simple effective solution and for most people, it’s basically free.

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The carbon tax is a brilliant idea and easily implementable as have shown the more than forty countries that use it today. The basic idea is that consumers and industries pay for their pollution as a way to incentivize a reduction of carbon emissions. Then, to avoid penalizing hardworking citizens, the money is evenly redistributed in the form of tax credits to the population.

So then why tax at all, right?

The clever part about this system is it provides a means for people to get ahead financially by reducing their carbon footprint without costing them extra in the meantime. In fact, because industries pay into this fund too, most citizens actually benefit financially from this levy. Here in Canada, for instance, 80% of taxpayers save money in this system. The result is that regular people save money and large emitters are targeted.

It gets better.

The price of carbon is initially set relatively low with a clear plan to increase it every year. This incentivises investments into green technology because pollution will eventually be too expensive. However, the carbon tax hardly stifles the economy since businesses have time to lower their emissions before then. Moreover, these investments come without the inefficiencies of government spending or costs to everyday people.

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And now my favourite part.

If the carbon tax were expanded to include all products imported from any country without a similar levy, this would force other governments to follow our example. This would admittedly be harder to administer but it would mean that foreign governments would miss out on revenue if they exported products without taxing their pollution. It would also mean discourage outsourcing because the companies would have to pay for their carbon regardless of where they emit it.

Let’s say that the Canadian government implemented this program. Roughly 15% of American exports go north so it could provide the political will for the United States to do the same simply to end the trade deficit. Now, with the world’s largest economy following suit, other countries would slowly begin to employ their own version of the carbon tax. Thus, such a policy could domino into a full-scale green revolution.

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So, what’s the catch?

One consistent issue around the world has been public messaging regarding this program. Lawmakers regularly trash its merits falsely claiming that it is ineffective, expensive and targets regular people. In fact, many French citizens even rioted when their government attempted to implement a similar plan. This is despite the United Nations having declared this policy the most cost-effective way to transition the economy away from fossil fuels. Many people simply do not understand how the system works and dismiss it as another attempt to take their money.

It is also worth noting that the carbon tax will not singlehandedly solve climate change. While it functions well as the pillar of the overall environmental action, considerable governmental regulation is necessary to protect forests, waterways and public health. However, one thing is certain: any politician who opposes such a policy is either willing to spend more money or lying about the efficacy of their proposal.

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