A United Nations report from 2018 shows that climate change is happening a lot faster than scientists originally predicted. As a result, there’s a renewed interest in carbon taxes as a way to slow the effects of climate change. The problem is, it’s not always a popular solution as opponents argue it would unfairly hurt the poor- as we’ve seen play out in France lately with the Yellow Vest protests.
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What is a carbon tax?
Simply put, it’s a tax on greenhouse gas emissions. When we use energy from fossil fuels– like coal, oil and natural gas, we release carbon dioxide and methane into the air. These gases are “greenhouse gases” that trap heat in the atmosphere and contribute to global warming. They are also known as carbon emissions because they contain the element carbon. With a carbon tax, people and business would have to pay a fee for their carbon emissions.
How would a carbon tax fight climate change?
The idea with a carbon tax is to make energy from fossil fuels super expensive, so people won’t use it as much. Examples of this would be really high taxes on gasoline, jet fuel, your monthly electricity bill. If fossil fuel use become expensive, businesses would be more likely to invest in cleaner energy sources like wind, solar, hydro, etc.
What are the pros of carbon taxes?
It’s one if the easiest ways to decrease carbon in the atmosphere. In some places where a carbon tax has been implemented– like Sweden and British Columbia, it’s led to a decrease in greenhouse gas emissions.
What are the arguments against carbon taxes?
One of the main arguments against carbon tax is that it will unfairly hurt the poor. It’s a tax on things that are pretty essential for daily life, like heat for your home, or transportation. So, if you tax these things, it could really be bad for those that are already struggling with their bills.
How is a carbon tax different from cap and trade?
Like the carbon tax, cap-and-trade policies aim to reduce greenhouse gas pollution by making it more expensive. But instead of a tax, cap-and-trade rules put a limit on how much carbon big industries like oil refineries, power plants and factories can release into the air. The government makes businesses buy permits, called allowances, for each ton of carbon they emit. And, there’s a financial incentive to be clean: if a business has any allowances leftover, it can sell them to another business that may be going over its limit, and make some extra money.