Tax Carbon to End Global Warming

The Kyoto Treaty, intended to decrease global warming, is set to expire in 2012.  Leaders from around the world are meeting in Bali, Indonesia to discuss what will replace it.

The Kyoto Treaty has largely been a failure for a number of reasons.  Its “cap and trade” system is too complicated and allows tricky means of evasion.  It also exempts developing nations such as India and China, which have huge populations and swelling economies.  Indeed China is set to shortly replace the U.S. as the number one emitter of global warming gases.  The U.S. is still far ahead of any other country in global warming emissions per person, however.

Therein lies the other reason for Kyoto’s failure.  The U.S. has refused to ratify the treaty or provide any kind of leadership for a workable international system to alleviate global warming.  This is part of a pattern of contempt for international law and diplomacy, under Bush.  In the past seven years, the U.S. has moved from being, in Madeleine Albright’s words, the “indispensable nation,” respected around the world, to a kind of pathetic joke version of its former self.

The recent Middle East summit indicates that this leadership vacuum might be changing, although it is probably too little too late.  Regarding global warming, it seems likely that the U.S. will continue to come up short, as the Bush administration remains staunchly opposed to mandatory emissions controls.  With its insistence on voluntary standards with no teeth, the U.S. is simply keeping itself out of the process.

What should the U.S. be doing?  We should demand a better treaty, one with consistent standards that treat every country, every corporation, every business, every polluter the same.  While doing so we should also work to build a world system, a version of globalization, that helps the environment and is more equitable to the rights of workers and local communities.

The best way to do this is through an international tax on carbon and other global warming gases (which I’ll refer to as a “carbon tax” for short).  The current international cap and trade system by its nature does not treat everyone the same.  It starts from a baseline that rewards countries and companies that have been inefficient in the past while penalizing those that have been highly polluting.

Economist William Nordhaus explains that the Kyoto Treaty, which uses a 1990 baseline, “penalizes efficient countries (like Sweden) or rapidly growing countries (such as Korea and the United States). It also gives a premium to countries with slow growth or with historically high carbon-energy use (such as Britain, Russia, and Ukraine)” (After Kyoto). 

A cap and trade system can be “gamed,” used to make money without actually lowering global warming, in a variety of ways (Lipow).  Special interests will lobby to increase their cut of the credits (Vencat).  Critics claim that by cutting down trees and replanting, one can get credit for the replanting (Guyana) and that polluters can build  or maintain dirty factories, then get credit for cleaning them up.  (Huessy, Mongoven) A carbon tax, by contrast, would penalize high polluting factories as they burn fuel, so the incentive would be to build them clean in the first place.

A carbon tax means that polluters all pay the same per unit of pollution.  There is no incentive to game the system.  The only incentive is to emit fewer global warming gases.

Countries will thus move to conserve energy and to develop alternative energy sources, such as wind, solar, and biofuels.  A sudden, huge carbon tax would not be viable, however.  The U.S. would pay more per person because we pollute more, while China and India would also pay far more than currently.

An international carbon tax would have to start small and gradually rise over the span of decades.  This would give us time to plan and prepare, to implement in the most economically sensible way.  In the long run, it would actually help us, since we’d move away from a dangerous dependence on international oil and environmentally devastating coal.

To sweeten the pot, to make the deal advantageous for everyone, technology sharing should be built into any new agreement, for instance from Europe which is advanced in energy conservation.

An international carbon tax would have other benefits.  It would encourage more local commerce, and in doing so alleviate some of the problems of the current version of globalization.  To an extent, it would replace some trade barriers that have been coming down.  This is because transportation of goods uses fossil fuels, increasing global warming.  By contrast, making polluters pay for the damage they cause means that goods shipped around the world would cost more.

Immigrant labor would also become slightly more expensive, due to the increased cost of moving workers.  Someone would need to pay for the environmental damage caused by moving large populations hither and yon.  Local workforces would thus regain some of the attractiveness that they have lost in recent decades.  A carbon tax would also offset the tendency to move goods from countries with cheap labor costs.

Globalization has changed the balance of power between large businesses and labor, making it more difficult for employees to negotiate.  What tariffs had once done, in an illogical manner with possible pernicious side effects, a carbon tax would do in a more logical manner, through forcing payment for the nasty environmental side-effects of movement of goods and workers.

An international carbon tax would bring the world together in terms of governance and technology sharing.  It would move the world a bit apart, however, in terms of goods and labor, thus returning to local places a bit of the power they have lost in recent decades.  It would help create a more egalitarian version of globalization while fighting global warming, the greatest long-term challenge of the 21st century.

Ethan Goffman, Politics and Environment Correspondent:

Ethan’s column, Environmental Connections, published on the 1st and 3rd Tuesday of every month to Gather Essentials: Politics is a discussion of environmental matters from local to global, covering transportation, smart growth, environmental justice, green buildings, climate change, energy independence and other topics.

Ethan is a writer and editor based near Washington, DC
Keep up with Ethan’s other postings and Gather activity by joining his Gather network -- just click here http://www.egoffman.gather.com/ and select the orange “Connect” button on the left-hand side of the page

You’ll find Ethan and other Politics Correspondents, plus celebrity content and plenty of other Politics experts at politics.gather.com