I’m deeply curious about the implementation of a carbon tax on large corporations, as it seems like an economically straightforward means of beginning to combat climate change on a larger scale. However, I’m not certain of the specifics/variety of carbon taxes which have been proposed and also lack a sufficient knowledge of economics to know if there are any difficult-to-discern downsides to the concept (My education is in ecology so I’m only seeing benefits of such an idea). I’d love to be more educated on the topic, and know why it hasn’t received widespread acceptance yet.
In: Economics
Leaving aside the practical issues of implementation, the economic idea behind a carbon tax is to properly price the economic consequences of carbon emissions. Right now, if you pay for a gallon of gas, you’re covering the cost to pump it out of the ground, refine it, and transport it, but there are other costs that ought to be considered. Using that gallon of gas emits carbon, which has negative environmental effects. If rising ocean levels force the Chinese government to erect dykes, someone has to pay for it, but there’s no coherent system right now to ensure that everyone pays for it in proportion to their responsibility for the problem. Adding an extra tax to the gas (especially if the tax revenue is put into a fund for repairing damage done by climate change) is the most straightforward way to adjust that price. In turn, this would reduce people’s use of fossil fuels.
A carbon tax would make a lot of stuff more expensive. Basically everything spends some time being transported in a vehicle that burns gas to move. This isn’t an issue per-se, because again, the main argument for a carbon tax is that these things already *are* more expensive, but just in ways that don’t manifest in the price you pay at the pump. However, one sticking point is that reasonable people can come to extremely different conclusions about how big the tax ought to be. You need estimates of not just the path of climate change, but the human-scale consequences of that change *and* the cost to put everything right. Underestimating is bad because it will allow negative consequences of climate change to go untreated. Overestimating is ALSO bad. This isn’t just about the profits of fossil fuel companies; we’re talking about consumer-level prices for lots of basic goods. Making that stuff more expensive for no good reason would cause a lot of unnecessary suffering.
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