THE HAGUE — Since the beginning of the year, California, the most populous of the United States, has a price on carbon emissions.
The cap-and-trade system known as AB 23 ultimately puts a dollar price on industry carbon emissions (according to our colleague Felicity Barringer, the precise price of $10.09 per metric ton of emissions in the first free-market bidding in November).
“By putting a price on carbon, we can break our unhealthy dependence on fossil fuels,” said Mary D. Nichols, the chairwoman of the California Air Resources Board, according to Felicity’s report.
With the new cap-and-trade system, California joins Ireland, Australia, Norway and many other countries in taxing what most agree is one of the root causes of global warming.
Much like tobacco taxes introduced in the latter half of the last century — and now commonplace in most developed countries — taxes on carbon emissions act both as a deterrent and as a source of revenue with which to finance clean energy solutions, proponents say.
The economist Robert H. Frank, in an opinion piece last year, made the basic case that high carbon taxes on gasoline would lead to more fuel-efficient cars.
Dr. Frank, of Cornell University, suggested that a carbon tax of $300 for a ton of carbon emissions might be enough to structurally change the kind of cars Americans drive. He wrote:
“The price of gasoline, for example, would slowly rise by somewhat less than $3 a gallon. Motorists in many countries already pay that much more than Americans do, and they seem to have adapted by driving substantially more efficient vehicles.”
An excellent article on Ireland’s carbon tax boon points to the other part of the equation — despite three years of recession, the Irish government is managing to balance its books, in part due to carbon taxes on cars, gas and even garbage.
Elisabeth Rosenthal reported late last year that Ireland’s deficit has decreased from 32.4 percent in of gross domestic product in 2010 to 8.3 percent of GDP in 2012 in part due to a new taxes on carbon — despite the economic downturn.
“This is a way to secure competitiveness in the future,” Connie Hedegaard, the European Union’s commissioner for climate action, said in an interview with Elisabeth.
Opponents of carbon taxes are not sure about that claim to competitiveness. Depending on where the carbon tax is applied, it can make transport, utilities and production costs go up.
Last month, the Australian Retailers Association released results of a survey in which they found that 80 percent of Australian retailers say their business has been negatively affected by the new carbon taxes in place in that country since July of 2012.
Russell Zimmerman, the head of the retail organization wrote in a statement:
“The introduction of carbon pricing was a massive legislative change for small business and one which has had a significant impact. In a climate of already suppressed retail spending, retailers are taking the hit of the carbon tax as consumers bypass the stores to pay household bills.
Meanwhile, the cost of doing business has gone up for retailers due to higher utility bills and costs accumulated throughout the supply chain, which eventually fall onto retailers’ bottom lines…”
Join our sustainability conversation. What do you think of Carbon Taxes? What would it take for you to support them?