Elite participants at the annual World Economic Forum in Davos, Switzerland had little or nothing to say about a global carbon tax that could “efficiently shift the world to safer energy production,” Brown University’s Ian Lefond and Timmons Roberts argue in a post for The Energy Collective.
The plan, first put forward in 2016 by the Carbon Pricing Leadership Coalition (CPLC), would better reflect the carbon footprint and other impacts of fossil energy in the price of the end product, the two authors explain. “Currently, fossil fuels receive huge subsidies, especially as their costs don’t include the health impacts, ecological damage, acid rain, and most ominously, the trillions of Euros in damage from rising seas, droughts, and storms that are expected.”
Most economists agree that “raising the price of fossil fuels and lowering the relative cost of renewables would efficiently shift consumption and investment towards low-carbon of energy, more cost-effectively than other policies.”
The resounding silence greeting this policy option at Davos could reflect developing countries’ resistance to paying for a problem they didn’t create, industrialized countries’ fears about losing competitive advantage, and across-the-board worries about the “loss of sovereignty and control over their national economic policy” that could result from adopting a global plan, Lefond and Roberts write.
Other key questions centre on how to divide up the massive revenues from a global carbon tax [global climate finance should always have such problems—Ed.], whether other taxes should be cut or rebated to citizens by equal amounts, whether revenues should be earmarked to climate projects, and the reality that “oil producers fear such taxation, and often unleash strong political campaigns to stop it.”
While the prospects for a global carbon tax look “vanishingly remote” at the moment, “in the future it is possible that haphazard local actions might make the case to large corporations that a consistent rate would facilitate business by levelling the playing field,” Lefond and Roberts write. “This could make a globally coordinated carbon tax all the more appealing.”