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Billionaire Richard Branson Calls For a Global Carbon Tax

| Friday December 10th, 2010 | 10 Comments

Sir Richard Branson

Sir Richard Branson, the brash, suave, billionaire adventurer has suggested that a carbon tax can stave off a global climate crisis, as long as it is systemically and equitably implemented. In Cancún for the UN climate talks, Branson suggested that businesses and entrepreneurs could reach emission reduction goals if world governments were unable to reach substantive agreements, but we would be better with governmental frameworks taking the lead.

“The ideas are out there,” Branson told reporters. “But if the worst came to the worst and governments did not get their act together, industry should be able to solve the problems themselves. If governments set a framework in which clean energy was not taxed and dirty energy was, then there is a chance. That’s what government has to do.”

What he is suggesting is known as a “Pigovian” tax. This type of tax is imposed on companies that pollute the environment or cause other type of social harm with their product, and its purpose is to encourage more socially and environmentally responsible behavior through financial incentives. It is meant to counter the externalization of negative costs, which in today’s economy currently go unaccounted for. The taxes levied on the negative externalities would be used to mitigate the problems caused by the product. Some classic examples of a Pigovian tax are cigarette taxes that are used for cancer research and smoking awareness campaigns, or taxing gulf-based oil companies and directing the revenue towards spill remediation.

These types of taxes are being used sparingly, but unfortunately they are not being framed well enough in the public debate to gain widespread support. Industrialists claim that any tax will cause consumer prices to rise, which of course is a death knell to a politician that would support this nowadays. The carbon tax debate, specifically, has been dominated by industrialists and business-friendly politicians who incorrectly claim that any tax on businesses will be entirely passed on to the consumer; anyone that has taken an introductory economics class knows the price-quantity supply-demand curve dictates that taxes are shared between the supplier and the demander, no matter who the tax is imposed upon. What is missing from that curve are the social costs of negative externality remediation, which are paid for by society as a whole, i.e. taxpayers, but the suppliers in this case are not being held responsible. Ultimately, by avoiding taxing negative externalities we are continuing the practice of privatizing profits and socializing the costs and losses of private industry.

The fact remains, Americans do not pay the true costs of the products we are consuming, especially energy sources (and especially especially electronics – see the newest “Story of Stuff” video for more on that subject). In the US we handed out more than $72 billion to fossil fuel companies from 2002-2008 compared with $29 billion to renewable energy, which included $16.8 billion for corn-based ethanol – not exactly the most eco-friendly alternative. So less than half the subsidies for renewable power went to wind, solar, hydro, geothermal and non-corn based biofuels, while only $2.3 billion of the $72 billion in fossil fuel subsidies went towards carbon capture technology; the rest went to oil and coal.

Much of the subsidies take the form of tax breaks and credits, which don’t even include the taxes avoided by these companies through loopholes and off-shore shelters. For example, according to a 2005 Congressional Budget Office report, capital investments such as oil field leases and drilling equipment are taxed at 9 percent, ridiculously lower than the 25 percent levied on virtually all other businesses, especially considering oil companies break profitability records on a nearly quarterly basis. Often, small and mid-sized oil companies are taxed so low on capital investments that the can use other credits and loopholes to have a higher return on these investments after taxes.

Taxpayers are paying companies to pollute, and paying to clean up after them. Just like the war on terror, we are funding both sides of the climate fight. This needs to stop, but it’s unlikely to happen anytime soon, unless we can figure out a way to frame the argument in a way that makes the American public understand this is not a tax on them, rather a cost mitigation on the damage we are currently paying for. Estimates suggest that including environmental costs in GDP assessment, as India plans to start doing by 2015 could decrease growth by 2.5 percent in the short term. As the famous Stern Report conducted by World Bank chief economist Lord Nicholas Stern notes, inaction will cost anywhere from 5-20 percent of GDP, while taking aggressive steps to stabilize and eventually decrease atmospheric CO2 would cost only 1 percent of GDP. This seems like a worthy investment.

Branson seems to think so as well. As the founder and chairman of the Virgin Group, he does not take the climate crisis lightly. He has committed 100% of Virgin Airlines’ profits towards developing alternative fuels and energy efficiency, and believes he can have his fleet flying on biofuels in three to five years. Supporting global carbon taxes is one sign that Branson can think systemically with a greater understanding of the role business plays in society than his counterparts in the dirty energy sector.


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  • FrankTrades

    This un-knighted earth scientist remains serially unconvinced that global warming is a man-induced or man-supported phenomenon with the likelihood our human intervention as a remedy.

    • Darian Spalgin

      Sorry what? He remains convinced or unconvinced? What are you saying?

    • http://nickpalmer.blogspot.com Nick Palmer

      Well that’s just an opinion. Science and reality differ from your assertions.

  • Josh Gelfand

    What would it take to convince you? How long should we wait before we act? Even if humans are not causing climate change, doesn’t it make more sense to switch to a non-polluting energy economy? Do you also not believe that oil drilling can cause environmental disasters? How about diesel emissions causing and exacerbating asthma (http://goo.gl/93h4N)? Global warming or not, our dirty energy system is causing widespread environmental, health and social costs that the profiting industries are not responsible for mitigating.

    • The Shrimper

      Well Josh … I think we should first start with ALL the facts and data… not the cherry-picked, selectively applied data and “computer models” that by the way, have not even been able to be verified or validated by actual historic data. That’s just for starters. The East Anglia email revelations can be ignored or ratioanlized all you want but they should tell you all you need to know. At least it should make one at least somewhat more skeptical… apparently, not convenient for you, huh.

      The real problem I have with this whole debate (and yes the debate is NOT over)is that to read your post, one would think there has been absolutely no attention paid to, or mitigation of environmental impacts (be it diesel emissions, industrial, utility/power plants, whatever) since the beginning of time. Emissions from vehicles have been reduced by something like 80%, since regulations have been promulgated. Industry (or hell, even the individual in many cases) cannot do anything without consideration of environmental impacts. Your last assertion is absurd.

      There is clearly an anti-capitalist, socialist agenda driving many in “the movement” (many of these can be found at the UN), with the goal of fleecing the US … I liken the UN to an organized criminal enterprise. Bottom line…. follow the money; Al Gore has become a multi-millionaire on the basis of a fraud and hoax.

      • http://www.greensmithconsulting.com Paul Smith

        Oh how well these people repeat GOP talking points. Go on, keep digging in your heels, until it’s too late. For your own benefit. Your grandchildren will thank you.

      • Nick Aster

        Al Gore was a multi-millionaire long before he talked about climate change, and as far as I know hasn’t made a dime off it. Where do you get that information?

      • Josh Gelfand

        I particularly enjoy how you started your comment demanding we use “ALL the facts and data” and back that up with not a shred of fact or data, continually supported by conjecture and misdirected vitriol. If you read the article you would understand that this is about the farthest thing from anti-capitalism there is; in fact, by implementing full-cost accounting into our industrial system we are behaving more like a true free market and less like the current system that socializes damages while rewarding the damagers with higher profits.

        You are correct in asserting that emissions from vehicles have been reduced. Do you know why? Because of governmentally mandated regulations – what you would call “socialism.” CARB and CAFE standards have forced the auto industries to create more efficient and lower emissions vehicles as well as lowering the carbon content of gasoline and the sulfer content of diesel. Those industries fought tooth and nail to block those regulations, but progressive governments doing their job – serving the best interest of the citizenry – forced them to implement the changes that have taken place. It has worked, but it is not enough.

        Finally, global warming or not, why does it make more business sense to power our society with finite, dirty and destructive sources of energy rather than infinite, clean and restorative sources? A true free market would favor the latter.

      • http://nickpalmer.blogspot.com Nick Palmer

        Criticising Josh Gelfand, “The Shrimper” wrote “Your last assertion is absurd.”

        No, it isn’t Shrimper – clearly your comprehension of the article was so embarrassingly poor that you think he meant one thing whilst he actually meant something very different. You must have projected your own prejudices onto the words… just the same as others like you seem to have projected their own severe biases and prejudices onto the so-called “Climategate” emails to see what they wanted to see. Nothing else can explain the paranoid thinking and self-delusion of those who claimed to see so much in them that was not really there.

        BTW, the models have been extremely well validated by the historical record. Look up “hindcasting”. No doubt you get your opinions wholesale from Wattsupwiththat and similar disinformation websites.

        The vast majority of improvements in polluting emissions have been driven by the “environmental” mindset. People like you historically have done nothing except erect road blocks to that type of progress and now, in a bizarre piece of self-delusion, you appear to be almost claiming the credit for it, or at least asserting that it somehow happened naturally.

        Government controls and regulations brought in these effects because the commercial world always found it cheaper to pollute than to clean up. Getting the environmental costs of energy, pollution, waste of resources and habitat destruction onto the accountant’s bottom line profit and loss account for any business will allow free market forces to discriminate in favour of the efficient, the clean, the non- polluting, the restorative and the sustainable without heavy government legislation, central control or compulsion. It’s the future, it’s simple. It will work. Get right behind it now and stop sabotaging the future.

  • http://www.facebook.com/people/Alan-MacDonald/1659822186 Alan MacDonald

    While I admire Banson’s call for a negative externality tax on global warming producers (oil, et al), the biggest externality scam thieves since 2007 moved on to the ethereal negative externalities of ‘debt bombs’ — and to paraphrase Nader, ‘the economists are the only ones who can save us now’.

    Modern, that is ‘corporate-captured’, economics is a fraud.

    Just as corporate law is a fraud.

    All principled economists need to force the issue of fraudulent negative externality cost dumping on society into public and political conscientiousness — else they are abetting fraud themselves.

    The financial fraud of 2007 to 2009 (often referred to deceitfully by the MSM as the ‘financial crisis’) was actually a massive new case of looting by means of negative externality cost dumping and pumping.

    The minimum negative externality costs of that fraud within only the US during a two year period was over $17 trillion (although some estimates of US plus global negative externality costs are as high as $196 trillion).

    During that two year period the GDP of the US was approximately $28 trillion.

    That means that the faux profits captured by US banksters caused minimally a US negative externality cost of $17 T, while the US GDP was only $28T — and of course, even if the entire (much lower) fraudulent profits of the banks were ‘clawed back’ they would not cover the externality costs imposed by their scam.

    Principled economists have an obligation to society to construct and report a GNEP Index (Gross Negative Externality cost Product) to compare with the GDP.

    Naturally, the GNEP would contain not only the negative externality costs produced through hidden corporate ‘negative externality taxes’ on our country by this banking externality scam ($17T), but also including the massive negative externality taxes imposed by weapons merchant corporations in the costs of wars, and by coal/oil/gas corporations in terms of the well understood negative externality cost taxes of global warming.

    Within any credible definition of defensible political-economics negative externality costs should be taxed on the corporate mal-producers by the political structure (our democratic government) to account for these real, but oft hidden costs. But today, because of the failure of economists to be candid, honest, and integrate negative externality costs into the supposed modern (corporate-dominated) faux science of economics, the private corporate thieves and destroyers are actually applying the greatest tax of all, a ‘hidden corporate negative externality tax’,on our public government and global society.

    It is the prime responsibility of economists themselves to push forward this truth, knowledge, and required solution to the current “Fraud of Modern/Corporate Economics”

    Alan MacDonald
    Sanford, Maine