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Carbon Tax for a Cleaner Tomorrow

Currently, the Earth is undergoing drastic change. The ice caps are melting, heat waves are becoming more severe and frequent, and by 2050, a million species will be threatened by extinction. The Earth is warming at an unprecedented rate, with a myriad of widespread adverse effects threatening the quality of life for this generation, as well as future generations. Science definitively shows that global warming is being caused by increased greenhouse gas emissions from humankind. Because man is causing global temperatures to rapidly increase with the many associated adverse effects, it is imperative that humans take action to curb global warming causing greenhouse gasses. Moreover, climate change is a global issue, and therefore must be addressed on a global scale. The government of each country producing significant amounts of greenhouse gasses must take action to curb their emissions. To do this in an equitable and effective manner, an international framework of greenhouse gas deterring regulations must be established for all industrialized nations. While international regulations to abate climate change have been attempted before, primarily the Kyoto Protocol, each has met insurmountable challenges, and has ultimately been ineffective. Because of this, the world is in desperate need of a new policy to reduce greenhouse gases. This policy must be equitable and beneficial to individual nations, as well as the world. The only effective policy that meets these requirements is a global carbon tax. It is an economic and environmental imperative that a global carbon tax be adopted by all countries that significantly contribute to global warming.

Global warming poses a significant threat to Earth, with far ranging and undesirable economic, environmental, and health consequences. According NASA, the Earth has warmed
.8∘celsius over the last century. Because of the .8∘celsius warming, humans have already begun to experience the consequences of climate change. In 2003, Europe experienced a deadly heat wave that killed more than 35,000 people. Temperatures soared, devastating the lives of thousands, as well as the economies of many European countries. While humans may dislike warm temperatures, carriers of deadly diseases thrive in these conditions. As temperatures increase in normally cool regions of Earth, vectors such as mosquitoes begin to increase, bringing along deadly diseases. According to the UK’s Department of Health, increasing temperatures could lead to more people infected with West Nile Virus and Lyme disease. In fact, it is estimated that Malaria could return to England by 2050. As more carbon dioxide is emitted into the atmosphere by man, the likelihood of such deadly heat waves increases. According to a study by two researchers from Oxford and one from the UK’s Meteorology Office, “past human influence has more than doubled the risk of European mean summer temperatures as hot as 2003.” Even more alarming is that the researchers found that by 2044, the risk that heat waves like the one that devastated Europe in 2003 will occur will “increase 100-fold.”

As the 21st century proceeds and greenhouse gases continue to be pumped into the atmosphere at an unprecedented rate, the effects of global warming will become progressively more severe. The Intergovernmental Panel on Climate Change, a United Nations committee of the world’s preeminent climate experts, predicts that the earth could warm up to 6.4∘ celsius by 2100. The widespread consequences of such warming range from the extinction of more than one million species, to the flooding of the bay area, Florida, the Netherlands, New York City, Calcutta, Bangladesh, and China, among many other areas of the world. At an economic level, Sir Nicholas Stern, former Chief Economist and Senior Vice-President of the World Bank, concluded, in a 700 page report to the British government, that inaction on climate change would result in up to a 20% reduction of global gross domestic product. Although catastrophic climate change is certain if greenhouse gases continue to be emitted at their current pace, it is not inevitable if emissions are reduced. James Hansen of NASA, arguably the world’s leading climate researcher, has warned, “The Earth's climate is nearing... a tipping point beyond which it will be impossible to avoid climate change with far-ranging undesirable consequences.” He emphasizes the point that the Earth is nearing, although has not arrived at, the “tipping point.” There is still time to take action to avoid cataclysmic climate change.

In the midst of these ominous predictions, 166 states signed the Kyoto Protocol, the most prominent international treaty on climate change, which restricts greenhouse gas emissions of signatory nations. While the well-intentioned Kyoto Protocol attempts to significantly reduce greenhouse gas emissions worldwide, it has several defects which make it impotent. One fault of the Kyoto Protocol is the fact that there is no enforcement mechanism. This has led the United States to claim that if it were to sign, it would be compelled to reduce emissions, but other nations would not, and thus America would be put in a disadvantageous position. A second problem with the Kyoto Protocol is that it fails to realistically allow developing countries to fairly participate. Because the Kyoto Protocol’s emission limitations are based on each nation’s emission level in 1990, many developing countries pose the question, “Why should developed countries be allowed to pollute more now simply because they polluted more in the past?” Many critics point out that because developed nations have historically contributed more greenhouse gases than developing nations, developed nations should have to reduce their emissions more, not less. Conversely, some developing nations are exempt from the protocol’s framework, and thus do not have to reduce emissions, which has prompted objections from nations such as the United States. The fact that nations such as China and India are exempted contributes significantly to ineffectualness of the treaty. According to Newseek, by 2012, China and India will build nearly 800 coal power plants, from which the combined carbon dioxide emissions will “be five times the total reductions in carbon dioxide mandated by the [Kyoto] accords.” The world is at an impasse, with the United States refusing to ratify the treaty unless developing nations have their exemptions revoked, and developing nations wanting to be permitted to emit as much per capita as the United States or Europe. Without the participation of the United States, the largest producer of greenhouse gases, and developing nations, such as China and India, the Kyoto Protocol will be only as effective as the League of Nations was after World War I.

Perhaps the most effective and beneficial alternative to the Kyoto Protocol is a global carbon tax. A carbon tax is a set amount of money that is tacked onto carbon emissions, the primary greenhouse gas, much like a sales tax. It would be payed by everyone, and would be tacked on to the price of fossil fuels. Utilities would pay it according to their smokestack emissions, and then pass the cost down to consumers. A carbon tax would increase the cost of burning fossil fuels, which emit carbon dioxide. Ways of producing energy that produce more carbon pollutants would, after the implementation of a carbon tax, be more expensive. For instance, coal-fueled power plants would become an expensive way to produce energy due to taxes on the high amounts of carbon emitted from burning coal. Therefore, developing nations would instead turn toward the cheaper, cleaner alternatives as a way to produce energy. A carbon tax would not only stimulate the use of cleaner fuels in developing countries, but would also reduce fossil fuel use in countries globally, as well as cause a host of other benefits. These benefits can be illustrated by the effects of high gasoline taxes in Europe. Gasoline taxes are essentially limited forms of carbon taxes in that they tax a fuel source based on its carbon emissions, although they do not extend to all sources of carbon, such as coal, as carbon taxes do.

High gasoline taxes in Europe provide a case study of the benefits of carbon taxes. Europe is notorious for having the highest gasoline prices in the world. The high tax on gasoline in Europe, causing gas to cost upward of seven dollars in some countries, has forced people to adapt. According to Stephen Glaister, professor of transportation at London’s Imperial College, people use fuel more efficiently by accelerating less aggressively and buying fuel-efficient vehicles, saying high gasoline prices “change people’s behavior.” In fact, higher gasoline prices have been attributed to reducing traffic in many countries. Moreover, Glaister found that if fuel prices rise ten percent, fuel consumption decreases by approximately seven percent . According to Jos Dings, Director of the European Federation for Transportation and the Environment, the single most effective measure in reducing fuel use Europe has been elevated gasoline prices. The overall effect of increased efficiency and reduced fuel use is a decrease in transportation related carbon dioxide emissions.

A carbon tax would work as a Pigovian tax, or a tax that reduces negative externalities, by reducing carbon dioxide emissions. Simultaneously, it would promote development of greener technologies and boost the economy. A carbon tax would, as was demonstrated in Europe through a gasoline tax, increase research into alternative technologies, energy efficiency, and the use of green technologies. Perhaps the easiest and most efficient means to conduce a flourishing green energy and technology market is to increase the price of more orthodox energy sources. When a rule or regulation is put into place that concerns the economy, the market will often come up with solutions. If the cost of carbon emitting energy sources were increased, the market would produce hundreds of new cheaper green technology. Challenge breeds innovation in the marketplace. Furthermore, as affluent financial speculator and philanthropist, George Soros, described, the green energy market would grow significantly after a carbon tax was implemented as investments reoriented towards clean energies. Because of this, a carbon tax would both be beneficial to the environment, and, in many cases, beneficial to the economy as well.

The most crucial elements of a carbon tax, leading to its success or failure, are its framework and specifics. The carbon tax, which was recently suggested by a United Nations commissioned study on climate change policy, would be implemented, as with the Kyoto Treaty, through the United Nations. The monetary amount of the carbon tax should equal the social cost, or the total costs of carbon dioxide emissions. To decide the social cost, an international panel of experts, similar to the Intergovernmental Panel on Climate Change, would be organized and meet annually to determine and adjust the tax rate as costs of global warming become clearer. The monetary gains from a carbon tax would be significant. It would be quixotic to assume that world governments would allow the revenue to allocated to world health, poverty, education, and research. Realistically, governments would require that they be allowed to keep revenues. While governments would have a reasonable amount of jurisdiction over where to spend the revenue, there would also be regulations from the United Nations. A substantial amount would be mandated to go towards researching alternative energies and implementing the technologies throughout the country. Moreover, countries would be required to use the revenue to replace a certain amount of taxes on capital and labor in order to reduce the economic burden on citizens. As nobel laureate and professor of economics at Columbia University, Joseph Stiglitz, described, “It makes much more sense to tax the ‘bads’ (pollution, like greenhouse gas emissions) than to tax the ‘goods,’ like work and saving.” Through a detailed policy, a global carbon tax can succeed where the Kyoto Protocol failed.

John Holdren, a member of a United Nations’ panel on climate change policy, recently warned, “We don't think ultimately society will get it right in terms of the full range and scope of activities needed to reduce greenhouse gas emissions, until there is an additional incentive in the form of a price on greenhouse gas emissions... through a carbon tax...” Looking into the future, there are two possible scenarios. The first is a world of scorching heat waves, spread of disease, extinction of more than one million species and other disastrous events of immense proportions. The other scenario is a world preserved for future generations, untainted by the negligence of past generations. Unless governments and society take action soon, it will be impossible to avoid the consequences of climate change. While governments of the world have already attempted a multilateral policy to abate climate change, it is clearly a failure. The most viable and effective means of reducing worldwide greenhouse gas emissions is a global carbon tax. Instead of persevering with the failed Kyoto Protocol, world governments should agree on and implement a global carbon tax. It is only with a carbon tax that governments can reduce greenhouse gas emissions, preserving the environment, without hampering economic growth. Because of the threats posed by global warming, countries which produce a significant amount of greenhouse gases must take action to reduce their emissions through a globally implemented carbon tax.

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