Tue, May 07, 2019 - Page 9 News List

A global tax on carbon emissions is urgently needed

By Mats Persson

The problem was staggering, even existential. Global emissions of greenhouse gases — especially carbon dioxide — were rapidly driving up global temperatures, transforming the lives of humans. If those temperatures reached 2°C above pre-industrial levels, scientists said, the results would be catastrophic. An international conference was called in Paris under the auspices of the UN. Politicians declared that the world must curb carbon-dioxide emissions to avoid exceeding the 2°C threshold — and since then, nothing substantial has happened.

The 2015 UN climate conference in Paris was supposed to be different. It produced a document, signed by 197 parties, containing general guidelines for climate policy and memorializing a global commitment finally to address the problem.

However, as usual, emissions have continued to rise steadily, increasing the concentration of atmospheric carbon dioxide at an alarming rate. Last year’s climate conference in Katowice, Poland — which focused on making the Paris commitments more specific and binding — did nothing to change this.

The reason that UN climate conferences keep failing is straightforward: Their agendas — centered on voluntary, quantitative targets — are fundamentally flawed.

Agreeing to quantitative, universally applied emissions-reduction targets at a UN conference is easy, but countries automatically regard adherence to those targets as a sacrifice: In the effort to reduce emissions by x tonnes, the country would lose y million jobs and GDP would fall by US$z billion. Because there are no actual sanctions or penalties for non-compliance, when push comes to shove, governments can simply change their minds.

Even if a government does try to uphold its commitments by imposing, for example, new regulations on high-emitting industries, it might not obtain the desired results. Businesses, too, want to avoid making sacrifices, so they seek any way to avoid regulations, including bribing government officials to look the other way.

Questions of fairness can further weaken incentives to fulfill UN climate commitments. Why should a poor developing country make the same reduction, whether in absolute or proportional terms, as a rich Western country? After all, on their path to high-income status, Western economies emitted with abandon.

Poor countries not only face constraints on development that their rich counterparts never did; it is also much harder for them to cover the costs of creating a low-carbon economy. Compensation is discussed, but countries consistently fail to agree on who should receive how much support, and who should pay — so the debate is pushed to the next conference. Meanwhile, the volume of atmospheric carbon dioxide keeps increasing.

The voluntary quantitative restrictions that underpin the UN climate agenda amount to a weak foundation for a solution to the crisis. A better approach would begin with a uniform tax on carbon-dioxide emissions worldwide — for example, US$100 per tonne.

Virtually all economists agree that, from an economic perspective, such a tax would create a much firmer foundation for climate action, not least because it would generate immediate revenue for governments.

A global tax would also be politically more feasible than national measures — such as the French fuel tax that triggered widespread protests against French President Emmanuel Macron — because consumers would not bear the full cost.

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