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Editorial: Another plug for a carbon tax

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Posted on April 1, 2013 |
By Angelo Lynn



Here’s another reason a tax on carbon dioxide emissions (a carbon tax) makes good economic sense: According to a study done for the International Monetary Fund, governments throughout the world are subsizing cheap energy to the detriment of the world economy (not just the environment) to the tune of $2 trillion in 2011.

The enormous negative impact — that $2 trillion annually — is not just cash subsidies used minimize fuel costs, but also, as a Washington Post editorial said on Sunday, “what policymakers are refusing to do. Burning fossil fuels produces a range of negative side effects, such as pollution. The only economically rational response is to build those costs into the price of energy through an efficient tax… Government policies that make prices artificially low encourage people to use too much energy, resulting in pollution that dirties local environments, congested streets and global warming. At the same time, subsidies distort investment; instead of allowing capital to flow to where it would do the most good, they push it toward fossil-fuel production — and away from enterprises that would more usefully employ some of the money, such as clean energy. Supports also hurt government budgets by diverting resources away from worthier state spending… Every country in the world would benefit from the honest pricing of energy. The Group of Eight recognized this in its summit at Camp David last year, when its member countries recommitted eliminating fossil-fuel supports.”

 What’s difficult to negotiate is getting buy-in from the global community so one country isn’t punished economically by implementing the tax while others benefit by not implementing something similar. That’s a tough nut to crack, but it needs to be a top concern of the Obama administration if it is to help lead the world in solving the problems caused by a warming planet.

Angelo S. Lynn

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