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.
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?