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But before the word "tax" sets off alarm bells, consider the effect of combusted fossil fuels on the environment. They cause ground-level ozone, acid rain, global climate change and a myriad of other problems. Carbon tax is one of two major market-based options to lower emissions, the other being cap-and-trade schemes. While cap-and-trade seems to have won over most politicians, many economists and consumers prefer carbon tax for its simplicity and impartiality.
Because the tax makes using dirty fuels more expensive, it encourages utilities, businesses and individuals to reduce consumption and increase energy efficiency.
Carbon tax is based on the economic principle of negative externalities. Externalities are costs or benefits generated by the production of goods and services. Negative externalities are costs that are not paid for. When utilities, businesses or homeowners consume fossil fuels, they create pollution that has a societal cost; everyone suffers from the effects of pollution. Proponents of a carbon tax believe that the price of fossil fuels should account for these societal costs. More simply put -- if you're polluting to everyone else's detriment, you should have to pay for it.
Economists like carbon tax for its predictability. The price of carbon under cap-and-trade schemes can fluctuate with weather and changing economic conditions. This is because cap-and-trade schemes set a definite limit on emissions, not a definite price on carbon. Carbon tax is stable. Businesses and utilities would know the price of carbon and where it was headed. They could then invest in alternative energy and increased energy efficiency based on that knowledge. It's also easier for people to understand carbon tax.
Even for those who do not believe CO2 emissions cause global warming, there's another big reason why CO2 emissions matter: Ocean acidification. When CO2 levels rise in the atmosphere, most of that CO2 gets absorbed by the planet's oceans. Because CO2 is slightly acidic, this causes the oceans to become more acidic, too.
Ecological footprinting is a new technique to measure the environmental impact of a population on nature. It can be used by national, regional and local governments. An ecological footprint calculates how much land area is required for an average citizen for everything they consume (products and resources) and produce (waste and emissions) per year.
A footprint is expressed in global hectares (gha) of 'earthshare'. If we divide the bio-productive land and sea on the planet by the number of people who need to use it, we currently get an earth-share of only 1.89 gha per person (WWF 2004). This is basically how much natural resource there is to go around. Footprints of countries show how unsustainable our western lifestyles are. An average United States citizen has a huge footprint of 9.5 gha which is 5 times their fair earth-share. An Indian citizen only has a footprint of 0.8 gha, well within their fair earthshare.
An average United States citizen has a huge footprint of 9.5 gha which is 5 times their fair earth-share.
Instead governments are retreating to feckless “cap-and-trade”, a minor tweak to business-as-usual. Oil companies are so relieved to realize that they do not need to learn to be energy companies that they are decreasing their already trivial investments in renewable energy. They are using the money to buy greenwash advertisements. Perhaps if politicians and businesses paint each other green, it will not seem so bad when our forests burn.
It seems that we need a three-point strategy: