Paying for Carbon Cuts: Green Taxes

If and when the international community gets it's act together and starts delivering on the Paris Climate deal of 2015, how do we pay for it?

There are numerous ways of doing this, but they generally have a common theme: Make sure the price of goods and services include the cost of their carbon footprint.

Just about everything we buy has carbon emissions associated with it - Energy was used in processing the raw materials, manufacturing the final product, and transporting it. A large proportion of that energy would have been generated from fossil fuels, and these are contributing to climate change.

You might think that this means that the price of everything will go up to reflect that cost. However, that shouldn't be the case. If the world is to reduce it's emissions, then the industries and companies that emit the most should be taxed the most and these taxes used to subsidise those industries and companies which are being the most efficient.

The general idea being that efficiency is rewarded (subsidies) and inefficiency is penalised (green taxes).

However, green taxes need to be used with care, otherwise you end up hitting the wrong people.

For example, you could put a tax on petrol/diesel to change people's driving behaviour and encourage the take-up of hybrid & electric cars. This sounds reasonable until you realise that this would hit the poor hardest, as they have less (if any) 'disposable' income.

President Macron of France learnt this to his cost towards the end of 2018. He applied a green tax to fuel and sparked off mass protests across France. And it's not as if this wasn't predictable either. Britain had a similar experience a decade or so ago when the UK government tried the same thing.

Using taxes in this way shows how out of touch politicians are with the poorest in society and brings green taxes into disrepute.

The poor around the world are likely to be hardest hit by climate change in the future. If we are to prevent the worst effects of carbon emissions then we cannot afford to turn the poor against our efforts before we've even begun.

They have to be protected or the battle's as good as lost.

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