I also like the idea of paying out the proceeds of the tax as a dividend per capita. This would help prevent the tax from being regressive. Maybe also cap emissions instead of just taxing so that we can control the total amount of emissions.
You can have a revenue neutral carbon tax where the funds go back into people’s pockets, but the change in consumption pattern would happen because for example renewable energy would not increase in price.
Spend the tax money on building offset mechanisms to recapture Carbon. Though not as cost-efficient as reducing carbon creation, they have the advantage that we can visit these facilities and verify they exist and are working.
I almost don't care where the tax money goes. If things cost more, consumers buy less of them. If carbon-intensive things are more expensive, there will be less carbon-intensive things. This is like market economics 101.
Use some of it to subsidise insulation and better standard buildings, cleaner air and power, better railways etc.
Fund a UBI.
I'm fascinated at downvotes for this suggestion. What's actually wrong with spending part on lower impact infrastructure and part on a replacement for a broken welfare system?
Your heart is in the right place, but what you advocate isn't currently palatable to anyone, left or right, on the political spectrum.
Instead, push for a fee-and-dividend model – not entirely UBI, but similar in spirit. It's what most economists support, and it has enough bipartisan support [0] that there is actually a bill before Congress now that has a chance of passing.
My heart is also the other side of the Atlantic. :)
Being perfectly revenue neutral is NOT the aim. Dramatic and lasting behaviour change is, and enough redistribution that the solution doesn't create other huge problems.
If fee and dividend is what the US is most amenable to, so be it. The biggest advantage (for the US) of fee and dividend is that it seems the most US market friendly of the alternatives that have been widely discussed.
I have only ever heard it proposed in a US context. It's also the mechanism I know least about. Which is no reason at all not to try. Still, I'd be delighted to see the US, or anyone, successfully adopt it. It may even turn out to be the best of the proposed mechanisms.
Nothing whatsoever. Why must it? Taxes are used to move money from where it is to where it needs to be.
The tax would price goods and services relative to their CO2. Hopefully some things like single use plastic, ICE cars, coal power would become impossible or very near so.
If you used some of the proceeds to start a UBI, it might pay to replace an ageing and creaking welfare and pension system. UBI might be suitable for a world with less job security for most, with many jobs potentially automated away and populations that are ageing rapidly.
It's the kind of thing governments do with their yearly budget to provide for citizens.
Spend it all on solar and wind power if you prefer, or the NHS; reopen some libraries. That the tax prices the impact correctly is the more important. Just so long as the govt doesn't decide to subsidise petrol with the proceeds. :p
Norway's oil fund pays pensions. Use this to fund something equivalently useful.
If the assertion that a carbon (or whatever else) tax is to cover the "cost" of externalities, then the money needs to go to actually addressing those externalities. Otherwise, it's just a lie to make a general tax more palatable.
It also runs into the problem that "sin taxes" have, namely that once a government entity has a consistent stream of income from such taxes that it can spend on its general expenditures, said entity has a perverse incentive to not curtail the activity below a certain point to avoid endangering that income stream.
> Norway's oil fund pays pensions.
Norway's oil fund is built up on royalties from exploration and extraction activity in Norwegian territory. It's not a tax on externalities.
> If the assertion ... actually addressing those externalities
No. We can address those externalities by creating low carbon buildings, energy, and other infrastructure. Those are mostly finite projects. Until we know how high carbon taxes must be to induce the required change, we might have far too little to fund even that, or much in excess. Just like it took many years (this time we need to go quicker) to understand the scale of the North Sea oil dividend. After some years we'll have converted much of that infrastructure and need more long term targets for that money. Being perfectly revenue neutral is NOT the aim. Dramatic and lasting behaviour change is.
It needs to avoid promoting extra spending that cancels out reductions achieved by the tax, and enough redistribution to compensate for the regressive nature of a big carbon tax on goods and services. We don't want people starving as a result. UBI seems it could fit nicely. Doing both seems in the best interest of the planet and UK. There may be better ways of achieving those two aims.
> It also runs into the problem that "sin taxes" have
Yet the UK has had no problem whatsoever, on both sides of the political divide, campaigning against smoking whilst having public health policies to promote quitting and increasing "sin" taxes way in excess of inflation yearly. Smoking rates have dropped to around 10%. Why can't this be exactly comparable and as successful? Sin taxes have quite definitely not had this problem for smoking. Smokers are an endangered species in the UK. A carbon tax seems perfectly analogous here, and ideally suitable for the European context.
> Norway's oil fund is built up on royalties .. It's not a tax on externalities
I am very well aware of that. I did not claim it was such a tax, and it doesn't matter in the least anyway. It was an example of a more intelligent use of a government windfall income.
Creating a long term fund to benefit the UK beats most of the alternatives, and certainly beats the Thatcherite model of pissing it away on tax cuts and consumer booms. Those are the very last things we need for this issue.
If UBI is funded with carbon tax, it's revenue-neutral i.e. the government can't spend it on general expenditures. No perverse incentive. You can also replace "UBI" with "per person tax credit" that's equal to the carbon tax. The point is to make the carbon tax revenue neutral. Real world example: https://www2.gov.bc.ca/gov/content/environment/climate-chang...
It offers a way to offset the regressive nature of carbon taxes. Poor people don't have to pay much net carbon tax for heating and gasoline, but rich people with massive houses and heated pools will pay more.
I'm not interested in economic viability, but energy viability. Given that we get most of our energy by creating CO2, it doesn't make sense to use some of that energy to remove some of that CO2. The only option is rapid expansion of nuclear and/or solar, but at latter will take a while and the former isn't very popular.
> it doesn't make sense to use some of that energy to remove some of that CO2.
Of course it does, if the price of CO2 is high enough. If I can capture 1.1 unit of CO2 per unit of CO2 released and it still makes me money, I'll use any energy available. This could happen if e.g. the government subsidizes carbon capture credits or simply if an efficient enough process exists.
On top of that, if the price is high enough it would be viable to build renewable energy solely for powering carbon capture.
It doesn't matter how high the price on CO2 is if you can't capture 1 unit of CO2 without emitting >1 unit. There's no guarantee that such a technology exists.
>There's no guarantee that such a technology exists.
I've recently started hearing phrases like that despite technology X existing. What has changed recently that people have become so ignorant?
Have you ever thought of where all those fossil fuels came from? They had to be captured by plants without emitting more CO2 than they captured. The bigger problem with industrial CO2 capturing processes is that they merely capture it, they still have to store them for millions of years just like plants did when they were turned into coal or oil.
This doesn’t make sense. Plants captures CO2 by expending more (solar) energy than is released by burning coal/oil and releasing that CO2. So if we manage to produce enough clean energy to start turning CO2 into oil, we might as well stop burning oil altogether and just use that clean energy instead!
The energy requirements of sequestration processes may be significant. In one paper, sequestration consumed 25% of the plant's rated 600-megawatt output capacity. After adding CO2 capture and compression, the capacity of the coal-fired power plant is reduced to 457 MW.
In carbon capture and sequestration enhanced oil recovery (CCS EOR), carbon dioxide is injected into an oil field to recover oil that is often never recovered using more traditional methods.
I can consume energy coming from clean sources like nuclear (focusing on the CO2) and renewable and I can also consume energy coming from coal power plants. Same thing with many other resources. I can order from Amazon a pen-drive with frustration free packaging which is also less garbage production and I can order the regular one which has insane amount of garbage for no good reason. I can use LED lights or normal ones. People can be smart about consumption. That is the biggest impact on CO2 production, not something like a piece of paper signed by politicians. That is my point.
if you want to reduce emissions stop consuming