The problem is, just taxing CO2 emissions doesn't let you control who gets hit by the price increases. It could very well lead to increases in food and transportation costs that would be disproportionately burdensome to the poorest part of the population. Raising the cost of those items is politically very unpopular since it tends to cause unrest.
So I think what we'll get instead is some complex system of first taxing everything and then subsidizing some forms of consumption (again, food and transportation), while trying to incentivize switching over to renewable energy sources.
The earnings of the CO2 tax could be equally distributed to all citizens on a monthly basis. That way, while consumer prices would increase, all those citizens who contribute below average to the country's CO2 emissions (and those are the vast majority and especially includes people who are poor) would, in sum, have more money available than before.
There's no guarantee that a "CO2 tax" would be equally distributed itself. For an extreme case, imagine if we put a universal CO2 tax on all products. A producer might chose to slash the price of luxury goods, instead funneling the cost to lower end options. That would cause the prices the poor pay to rise more than the you subsidy would offset.
Distributing the cost equally to the producer doesn't mean they carry over equally to consumer cost.
>So I think what we'll get instead is some complex system of first taxing everything and then subsidizing some forms of consumption (again, food and transportation),
or just tax everything, then giving it back to everyone via a flat dividend?
So I think what we'll get instead is some complex system of first taxing everything and then subsidizing some forms of consumption (again, food and transportation), while trying to incentivize switching over to renewable energy sources.