The Roundtable
Welcome to the Roundtable, a forum for incisive commentary and analysis
on cases and developments in law and the legal system.
on cases and developments in law and the legal system.
 By Hailie Goldsmith Hailie Goldsmith is a student in the College of Arts & Sciences, University of Pennsylvania. Substantial research has already been conducted on climate change, showing that the impending consequences span from rising sea levels to high-intensity storms. These effects, already devastating for environmental and ecological reasons, will also create a heavy financial burden for many regions of the world, especially for cities located on coasts. At this point in time, the prices of climate-change-causing-pollutants like carbon dioxide, methane, and nitrous oxide currently do not match the financial costs of the damage they cause [1]. This is because large fossil-fuel-burning-corporations do not factor in the impacts of carbon emissions, which are more technically called “external costs” [2]. A carbon tax would collect revenue to pay for these “external costs.” According to the Tax Policy Center, a carbon tax is a tax levied on carbon dioxide and other select greenhouse gas emissions in hopes of deterring businesses and governments from producing harmful emissions that propagate climate change [1]. The tax targets energy-producing corporations that burn fossil fuels.
Canada currently boasts the most progressive carbon pricing program in the world, starting at $15 per ton of carbon dioxide and progressing to $38 per ton of CO2 by 2022. In 2016, the United States hypothesized that the enactment of a nationwide carbon tax could raise about $1 trillion in its first decade [1]. The United States has not yet passed a carbon tax, but forty international governments have enacted their own versions of a carbon tax, ranging from direct taxation to a cap-and-trade program [3]. A cap-and-trade program is a different mechanism for governments to place a price on carbon. The program dissuades companies from emitting carbon by taxing them for exceeding a carbon emission limit and incentivizes companies who remain below the limit by allowing them to sell their remaining carbon “credits” to companies who refuse to lower their carbon emissions [3]. Fears about rising energy prices, leading to political standstill in many countries, force carbon taxes to remain moderate, which inhibits their ability to actually mitigate climate change [3]. The European Union put in place a broad cap-and-trade program, but it was met with limited success. Their program only applied to a relatively small portion of greenhouse gas emissions and did not set high enough prices to push any nation to reduce their emissions [3]. To create a successful cap-and-trade program, the United States would need a stronger and more expansive policy than that enacted by the European Union. However, a gridlocked and unproductive Congress in the U.S. has led to inaction with regards to federally mandating a carbon pricing program of any kind. Therefore, any chances for cutting down carbon emissions through cap-and-trade or direct taxation must come directly from state-level action [3]. Nine states located in the Northeastern U.S. have formed the Regional Greenhouse Gas Initiative and imposed a cap-and-trade program, stipulating that energy-producing corporations buy permits to release greenhouse gases [3]. Compared to other countries’ progressive programs, these states only price a metric ton of CO2 at $5, and even California, known for its more environmentally-conscious legislation, prices a ton of carbon at only $15, though California applies the carbon tax to 85% of carbon-emitting sources [3]. Those in favor of a free, unregulated market worry about the potentially disastrous economic implications, particularly international trade concerns, such as pushing energy-producing companies to move overseas, which would reduce a country’s gross domestic product (GDP) [2]. This feared phenomenon is known as “carbon leakage,” which refers to the movement of carbon-intensive manufacturing plants overseas to avoid the carbon tax [4]. To prevent this detrimental economic consequence, concerned economists recommend that border carbon tax adjustments accompany the passage of carbon taxes in order to place tariffs on imported goods and services to preserve the competitiveness of energy-production firms and decrease the allure of tax-free overseas locations [4]. However, the General Agreement on Tariffs and Trade renders the border tax adjustments illegal, which further complicates the matter [4]. There is also a huge concern regarding the potential for the tax to disproportionately impact lower socio-economic individuals because poorer people tend to spend a larger share of their family income on gasoline and other energy-related services [3]. A proposed solution is to make the carbon tax “revenue neutral,” which would use a specific portion of the tax’s revenue to offset the unequal burden faced by poorer individuals [2]. Even if a government finally passes a carbon tax, the undertaking of determining how high to price the cost of emissions created from burning coal, oil, and gas will be a challenge [3]. It is a lengthy process to set the price of the carbon tax and to determine the size of the tax base [4]. The U.S. government attempted to rectify this barrier by developing a policy tool known as the “social cost of carbon,” which assigns a price to the total negative effects on the environment, community health, and businesses caused by a single metric ton of emitted carbon [2]. However, the results produced by this policy equation are tricky considering that the bulk of the most damaging and enduring effects are unknown and in the future. Another main worry tied to carbon tax programs has to do with the way in which the revenue collected from the carbon tax programs is distributed because people argue about where the revenue should be invested [2]. Should we contribute to solving current issues related to the environment, public health, and social inequality, or should we invest in technological research, green infrastructure, and the development of renewable energies? One thing is clear: interest groups and organizations will all be vying for a cut of the collected revenue [5]. Nations find it hard to balance the costs of climate change and the costs of reducing their most lucrative economic industries. The biggest hurdle for the carbon tax is referred to by economists as the Iron Law of Climate Policy, which illustrates that economic growth is currently and consistently prioritized over the protection and preservation of the Earth’s climate. At this point in time, fossil fuels account for about 85 percent of the world’s energy, so countries must start making climate change legislation like the carbon tax a top item on their agenda [5]. The potential challenges and stressors associated with successfully implementing a carbon tax are worth it if a carbon tax means discouraging the use of fossil fuels and cutting down carbon emissions. Though there is no clear consensus on how carbon pricing programs should be designed and administered, a price of some kind should be placed on carbon emissions in order to push countries to replace fossil fuels with renewable energy sources. The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients. Sources:
0 Comments
Your comment will be posted after it is approved.
Leave a Reply. |
|
|