VH Award Winner – April 2019

The climate change debate has progressed – global warming is real. We’re past discussions concerning the causes. Now it’s about how we solve it.

Under the 2015 Paris agreement, signatories agreed on a ‘target’ to reduce carbon emissions and to prevent global temperatures rising to 1.5C above pre-industrial levels. But the 1.5C threshold is now looming. Mechanisms for implementing this ‘Paris target’ are weak and many are predicting that rises of 3C or more are likely by the second half of this century. Last year global carbon emissions rose by over 37.1bn tonnes. Scientists reporting for the UN’s Intergovernmental Panel on Climate Change (IPCC) warn that in order to meet the target of 1.5C, global carbon emissions need to be reduced by 45% by 2030. The solutions span technologies, behaviours, and policies that encourage less waste and sustainable resources.

One solution is the introduction of a Carbon Tax (CAT). A set price on the carbon released from fossil fuels. A price on carbon outputs will hopefully result in a decrease in fossil fuel use and the resulting harmful emissions released. CAT would make fossil fuels like oil and coal more expensive and this will, in turn, drive investment in cleaner technology (e.g.: wind and solar power). The reason why we should punitively tax carbon is clear from the dividend collected from the tax as well as the reduction in fossil fuel use. This dividend collected can be used to fund green projects, be returned to citizens as a tax credit or it could even be used to fund sustainable projects in developing countries.

CAT benefits are evident in the few countries who have implemented this carbon tax. In Sweden a carbon tax was enacted in the early 1990s and despite a roughly $135-per-ton tax GDP has grown by nearly 80% and emissions have fallen by 25%. This Swedish success suggests that, if properly implemented, taxing carbon does not have to be detrimental to economic growth – a key concern for some opponents. In the Province of British Columbia, Canada, CAT was introduced in 2008. The dividend generated led to an annual Climate Action Tax Credit for every citizen. Together with a strong communication strategy it has won broad support for the tax.

The problem is that such taxes tend to be resented by citizens or large manufactures. In Canada several Provinces started legal proceedings against a federal carbon pricing framework. Recent protesters in France known as the Gilets Jeune (typically rural French citizens engaged in low-paid jobs, pensioners, artisans and small businesses) think it is unacceptable that the diesel they use to travel to work is taxed more than the jet fuel that the French President Mr Macron and the wealthy use to reach their long haul holiday destinations. Aviation fuel use must be addressed as in the 2018 Atmosfair Airline Index no airline received an A for efficiency and only two airlines were ranked in the efficiency class B. The protestors are not against actions on climate change but believe it is being pursued at the expense of those least able to bear the cost.

CAT is key to combating climate change and to incentivise the transition to low carbon usage. But for it to work, carbon taxation must be planned to ensure success. The economic benefits (dividend) must be visible for all to see and the money must be allocated in a way that is fair. At the 2018 Climate Change Conference in Poland, the overriding theme of the summit was for a fair distribution of any climate change policy so, as we plan our low-carbon future we must be sure to achieve a ‘just transition’. People must be informed of increases to the tax and these should be gradual increases. Low-carbon energy supplies need to be affordable so people are offered alternatives. Investment is needed in innovation and infrastructure, such as public transport, electric vehicles and charging stations- the latter woefully lacking in the UK currently. Crucially, Carbon taxation policies must be ambitious (the High-Level Commission on Carbon Prices has suggested a carbon tax of $40-80/tonne by 2020 and $50-100/tonne by 2030) if they are to be beneficial.

If appropriately introduced, the punitive taxation of carbon can reduce fossil fuel use and harmful emissions and this, together with other strategies may be enough to slow our rising global temperatures and preserve our planet for future generations.