Carbon tax and dividend: a solution to climate change?
Artwork by Louis Malik
Elisha Malik evaluates the potential of a carbon tax to reduce global emissions and address the climate crisis.
It may not be the ‘big C’ that we are currently focusing on globally, but climate change is still an ever growing issue, with huge potential for global damage. As world leaders pull out all the stops to make the impossible possible - housing the homeless in London, promising wireless connection for all, providing stimulus cheques for the unemployed - their lack of action in another, arguably much larger issue becomes strikingly clear.
Climate change is the invisible enemy. Despite the warnings of thousands of environmentalists, scientists, and politicians worldwide, there is a shocking lack of action towards preventing the biggest crisis humanity has faced yet. The psychology behind this is not unlike the initial response to coronavirus, making the pandemic the best metaphor or warning for us to date. To quote the Sunday Times’ savage article on Boris Johnson’s lack of action in the 38 days in which he “sleepwalked into disaster”, missing five Cobra meetings and taking a vacation with his pregnant fiancé - “failings in February have cost thousands of lives.” How many lives is the current global failing to combat climate change going to cost?
Psychologically, climate change is an invisible, abstract and slow moving threat that doesn’t trigger any of our “evolutionary risk lamps”. People don’t want to interrupt their day-to-day lives to deal with an issue that doesn’t even seem to be happening yet. We are more compelled to change things that are right in front of our eyes, such as the floods in Northern England and the EU withdrawal, which distracted Johnson’s attention away from the impending pandemic. However, in the case of climate change and coronavirus, once the effects are changing our day to day lives, it is already too late. I’m sure many would agree that we wish both the government and ourselves had taken action on preventing and isolating the spread of COVID-19 earlier - so let’s apply this to climate change.
Global temperatures are projected to rise by roughly 4°C above pre industrial levels by the year 2100. The 2015 Paris Climate Agreement aimed to reduce this warming to 2°C, with an ideal goal of 1.5°C. However, most countries are not on track to achieve these targets and the US are even planning to formally withdraw from the Paris Agreement in 2020. 4°C doesn’t sound like much, especially given that in most countries the temperature fluctuates by many degrees from day to day. But a 4°C global change is a significant change because it takes a huge amount of heat to increase all of the oceans, atmosphere and land by 4°C. To put it into perspective, a temperature decrease of 1-2°C was all it took to plunge the Earth into the Little Ice Age. In the case of climate change, we are still within the preventative period. But we need to take action quickly and effectively - there is no time to spare.
Artwork by Louis Malik
Carbon dioxide accounts for two thirds of the greenhouse gases warming our atmosphere; it is by far the most abundant greenhouse gas, and is produced by the consistent burning of fossil fuels. In order to avoid the worst consequences of climate change we need to swiftly convert from using fossil fuels to using renewable energy. One critical way to encourage governments and large companies to do this is to place a carbon tax on every greenhouse gas emitted, therefore making renewable energy economically competitive. In the US, the Congressional Budget Office estimates that with a tax of $25 per ton of CO2, emissions would be 11% lower than predicted in 2028, in addition to generating $1 trillion which could offset energy costs for low-income families and fund infrastructure for renewable energy. “Carbon tax is the single most powerful way to combat climate change,” claims the IMF.
Carbon tax is the only way to charge carbon users for the damage they are doing to the environment by releasing CO2 into the atmosphere, and the air that we all need to breathe. If carbon tax is high enough, it will become a strong monetary incentive for companies to start using sustainable forms of energy.
Fossil fuels are a huge source of atmospheric carbon dioxide. They are formed from the remains of animals and plants which lived millions of years ago, and are composed of many organic compounds containing hydrogen, carbon, and oxygen. The energy essence of fossil fuels are the carbon and oxygen atoms, which when oxidised (during combustion), release heat into the atmosphere and convert carbon into the dangerous forms of carbon dioxide and carbon monoxide. Since we know precisely the carbon content of every type of fossil fuel, we can easily tax them according to their carbon content. This means natural gas, with a lower carbon content, will be taxed less than coal.
The biggest argument against carbon tax to date is the effect it will have on working-class families, who rely on fossil fuels to run their homes and commute to and from work. Therefore, the carbon tax and dividend plan includes a dividend which would be paid towards every family, in order to counteract the increasing price of energy bills. In the US the Climate Leadership Council predicts this will be $2,000 a year for a family of four, sourced from the $1 trillion a year that will be generated from taxing carbon. In this way, the carbon tax and dividend plan simultaneously helps save the environment whilst allowing normal people to change to renewable energy sources without any effect on their own finances.
Regular middle and working-class families will not suffer from rising energy bills or the consequences of carbon tax, only large, highly polluting companies will have to reevaluate their energy sources. A large carbon tax will hopefully encourage many of them to turn to renewable, sustainable energy sources such as solar or wind power. We only have one planet, and, as highlighted by the current global pandemic, human life is precious and shouldn’t be taken for granted. We are already seeing sea levels rise, glaciers melt, and more intense heat waves globally. If this continues, we will see millions of ‘climate change refugees’, searching for new homes as theirs become uninhabitable, many species of animals and plants becoming extinct, as well as a costly socio-economic crisis.