The Case for a Carbon Tax

Bill Gross, the founder and CEO of eSolar, made the case for a carbon tax during an interview with Business Insider. Gross said there should be a tax on fossil fuels “only when it went down too low, to stabilize the price.” The tax could be refunded “in some form, whether it were payroll taxes or some other taxes.” Gross added, “If people knew there was a fixed price, that would be very helpful. I don’t think that’s going to happen.”

“A carbon tax must be the central mechanism for reducing carbon emissions,” the non-profit organization, Carbon Tax Center states on its website. The costs associated with climate change are not presently included in the prices of fossil fuel which “suppresses incentives to develop and deploy carbon-reducing measures.” A carbon tax would also “infuse these incentives at every link in the chain of decision and action.”

A carbon tax is preferred by Robert Shapiro, Under Secretary of Commerce in Clinton administration and chairman of the U.S. Climate Task Force and Sonecon, an economic advisory group. A fixed price on carbon, according to Shapiro, would increase the carbon price when demand increases, unlike a cap-and-trade scheme. A “known and stable” carbon price would give companies “the powerful incentives they will need to develop more climate-friendly fuels and technologies, and give everyone else real incentives to adopt those fuels and technologies.”

Shapiro pointed out that a carbon tax was adopted by Sweden in 1991, and its carbon emissions decreased by eight percent. At present, the tax is $150 per ton of carbon. Fuels used for electricity generation are not taxed, and industries pay only 50 percent of the tax, but non-industrial consumers pay an electricity tax. Renewable energy sources are not subject to the tax, which has caused biomass for heating to expand.

Emma Lindberg, a climate change expert at the Swedish Society for Nature Conservation, said the carbon tax was “the one major reason that steered society towards climate-friendly solutions.” Lindberg added, “It made polluting more expensive and focused people on finding energy-efficient solutions.”

“It increased the use of bioenergy,” said Professor Thomas B Johansson from the University of Lund. “It had a major impact in particular on heating. Every city in Sweden uses district heating [where steam and hot water are piped to a building in a particular area]. Before, coal or oil were used for district heating. Now biomass is used, usually waste from forests and forest industries.”

Two Congressional members favor a carbon tax

Senator Chris Dodd (D-CT) said during the CNN/YouTube Democratic Presidential Debate, “Until you deal with the issue of price, until you impose a corporate carbon tax, we will never get away from fossil fuels. It’s the only way this can be achieved. You have to advocate that if you’re serious about global warming.”

Rep. Bob Inglis (R-SC) co-authored an opinion piece published in the New York Times  in 2008 with economist Arther Laffer, which called for the Congress to enact a carbon tax. “Oil will continue to have an advantage over emerging fuels in the marketplace” without a carbon tax, the opinion piece said.

Gina-Marie Cheeseman

Gina-Marie is a freelance writer and journalist armed with a degree in journalism, and a passion for social justice, including the environment and sustainability. She writes for various websites, and has made the 75+ Environmentalists to Follow list by