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Mary Mazzoni headshot

3p Weekend: These Stakeholders Support a Carbon Tax -- And You Should, Too

By Mary Mazzoni

With a busy week behind you and the weekend within reach, there’s no shame in taking things a bit easy on Friday afternoon. With this in mind, every Friday TriplePundit will give you a fun, easy read on a topic you care about. So, take a break from those endless email threads and spend five minutes catching up on the latest trends in sustainability and business.

As the Paris Agreement moves tantalizingly close to implementation, conversations turn to one element not present in the agreement -- a carbon tax. A carbon tax is what it sounds: a tax on carbon emissions from fossil fuels. It’s a Pigovian tax – or a tax levied with the intention of reducing use, much like a cigarette tax.

Not to be confused with a cap-and-trade scheme (which limits allowable emissions and transfers unused emissions to an auction system), a carbon tax imposes a direct fee on all emissions. In some schemes, revenue from carbon taxes fund research and development of renewable energy. In others, revenue is returned to taxpayers via a 'dividend' check. Surprisingly, voters actually prefer the former, while politicians find the latter makes for a better soundbite.

While American politicians continue to debate the efficacy of such a tax (the 2016 Republican platform says the party "oppose[s] any carbon tax"), external stakeholders are lining up in support. Check out what they have to say before you make up your mind.

The majority of American voters

Despite snowballs in the Senate and manufactured political debates about the reality of climate change, the majority of American voters actually support a carbon tax.

More than half (51 percent) of self-proclaimed Trump voters support a carbon tax on businesses, according a survey conducted in May by the Yale Program on Climate Change Communication. Add to this 70 percent of registered Democrats, according to polling from the Carbon Tax Center, and the picture becomes clear. It seems we may not be as divided as we thought.

Climate scientists and economic researchers

In a paper published earlier this year in the Journal of Economic Perspectives, a trio of professors from MIT and the University of Chicago argue:
“Our conclusion is that in the absence of substantial greenhouse gas policies, the U.S. and the global economy are unlikely to stop relying on fossil fuels as the primary source of energy.”
They argue that a carbon tax is necessary if the U.S. is going to be serious about addressing carbon emissions. This adds to the findings of a 2012 study by the Congressional Research Service, which showed the U.S. deficit could be reduced by 50 percent in 10 years through the adoption of a $20/metric ton carbon tax.

Elon Musk

Clean-tech visionary Elon Musk, CEO of Tesla Motors and SpaceX, isn't shy about his support for a carbon tax. And he reiterated this sentiment earlier this month during an interview about Tesla’s gigafactory in Nevada.

This time around, Musk's case appeared arguably libertarian. When asked about subsidies for his company -- and the clean-energy industry in general -- Musk fired back at fossil fuel subsidies, which totaled $13 billion last year.

“With respect to some of the other elements for solar panels and [electric vehicles], the big issue we have is that in reality if you accept the scientific consensus, every oil-burning activity is subsidized — dramatically,” Musk told the Reno Gazette-Journal.
The solution, Musk went on, is to correct this “fundamental economic error” by establishing a carbon tax.

Energy giants...

According to CDP (formerly the Carbon Disclosure Project), 18 major energy firms set an internal carbon price as of last year. Some of these companies went above and beyond by making public calls for a national or international carbon tax.

Leading the list is oil-sands giant Suncor. CEO Steve Williams reiterated this position in March, saying a carbon tax is the type of policy needed in order to move aggressively against climate change — a stance the company says it has taken since 2011. Shell's CEO, Ben van Beurden, also voiced support for a carbon tax last year.

Surprisingly, the list also includes ExxonMobil. CEO Rex Tillerson first said the company would be open to a carbon tax back in 2009, and Exxon continued to fall back on this position. Critics point to the company's continued funding of climate-denial organizations as evidence that this stance is mere lip service. But the fact that a company of ExxonMobil's scale publicly purports to support such a tax indicates it may soon be inevitable.

... And hundreds of other multinationals

As of last year, more than 1,000 companies had set an internal carbon price, according to the CDP. This list includes sustainability darlings like Seventh Generation, which established an internal carbon tax at the start of this month.
“The carbon tax anchors our greenhouse has reduction strategy in the heart of our business, activating our entire organization in support of our 2020 goal to obtain our energy from non-fossil fuel sources,” said Seventh Generation CEO John Replogle.
It also includes companies focused on more than going green, including software giant Microsoft. The multinational tech firm established an internal carbon fee in 2012, which was charged to individual business groups using Microsoft services. The funds were used to invest in energy-efficiency initiatives, renewable energy and carbon offset projects.

Since 2014, 100 percent of Microsoft’s energy consumption was sourced or offset due to these projects, Hugh Jones, managing director of advisory for the Carbon Trust, wrote in an op/ed on TriplePundit.

The International Monetary Fund

The International Monetary Fund is about as stodgy and penny-wise a group as one can find. But it still supports a carbon tax, as its managing director, Christine Lagarde, articulated last year.

To get it right, we have to price it right,” Lagarde exhorted during 2015 IMF-World Bank meetings held in Lima, Peru. Criticizing global energy subsidies, which she said total $5.3 trillion annually, or 6.5 percent of the world’s GDP, Lagarde insisted now is the time to eliminate such price supports and tax incentives, as the current price of energy is low.

Governments (like... a lot of governments)

A growing list of nations around the world are adopting carbon taxes or other market-based mechanisms to curb emissions. Carbon taxes or emissions-trading schemes are either operational or planned in the EU, U.S., China, Japan, South Korea, Switzerland, Norway, Turkey, Mexico, Chile, Thailand, Ukraine, Kazakhstan and South Africa, Jones of the Carbon Trust wrote on TriplePundit.

Such taxes are present even in unconventional locations like British Columbia, the third most populous province in Canada and home to vast oil and gas reserves. The province established a carbon tax in 2008, and studies show its efforts are working: B.C. reduced carbon emissions 3.5 times faster than the rest of Canada, the Carbon Tax Center found earlier this year.

So, what is your stance on a carbon tax? Do you think it's the best way to reduce emissions while preparing for a low-carbon future, or do you have a different solution in mind? Tell us about it in the comments section. 

Image credit: Pexels

Mary Mazzoni headshot

Mary has reported on sustainability and social impact for over a decade and now serves as executive editor of TriplePundit. She is also the general manager of TriplePundit's Brand Studio, which has worked with dozens of organizations on sustainability storytelling, and VP of content for TriplePundit's parent company 3BL. 

Read more stories by Mary Mazzoni