Don’t Tax Carbon—Just Stop Digging It Up

Carbon taxes are regressive and ineffective, failing to provide the transformative change we need.

Cynthia Mellon August 19, 2019

Hundreds of Canadian children and youth took part in a global protest against climate change in Toronto, Ontario, Canada, on May 24. (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images)

For alter­nate per­spec­tives on this issue, see The Gov­ern­ment Should Write Every­one a Check — Paid for by a Car­bon Tax” by Owen Poindex­ter and Some Econ­o­mists Say Car­bon Tax­es Are a Sil­ver Bul­let. The Real­i­ty Is More Com­pli­cat­ed.” by Kate Aronoff.

The belief that a tax-driven process is possible distracts from the more complex and deep-reaching political changes necessary to drastically cut carbon emissions.

Owen argues that a car­bon tax and div­i­dend could cut car­bon emis­sions while con­tribut­ing to the gen­er­al wel­fare, but the mod­el is deeply flawed. Indeed, any car­bon tax — whether the rev­enue is redis­trib­uted as div­i­dend or not — would be both inef­fec­tive and regres­sive. We should shift our ener­gies toward cli­mate solu­tions that elim­i­nate fos­sil fuels altogether.

For starters, actu­al­ly exist­ing car­bon tax­es from Cana­da to the Nether­lands have, at best, reduced car­bon emis­sions only mod­est­ly. Look at British Colum­bia: In 2008, the Cana­di­an province imple­ment­ed a car­bon tax with rev­enues returned through div­i­dends and income tax rate reduc­tions. While the province’s emis­sions declined in the program’s first year, they rose again in sub­se­quent years.

The envi­ron­men­tal group Food and Water Watch (FWW) indi­cates that the type of emis­sions sub­ject to the tax actu­al­ly increased in British Colum­bia between 2011 and 2014, while untaxed emis­sions went down. As a result, FWW con­clud­ed, It appears that the British Colum­bia car­bon tax has had no ben­e­fi­cial long-term impact on green­house gas emis­sions.” The report spec­u­lates that a lack of ade­quate pub­lic tran­sit (mean­ing indi­vid­u­als rely on cars regard­less of the increased price of gas) and the promise of a div­i­dend and low­er tax­es (which meant peo­ple and busi­ness­es didn’t mind pay­ing slight­ly high­er ener­gy prices) con­tributed to the policy’s failure.

But the prob­lems run deep­er. Mar­ket-based approach­es such as a car­bon tax are accept­ed by the fos­sil fuel indus­try because they do not actu­al­ly threat­en the ongo­ing and con­tin­u­ous extrac­tion of oil and gas. In a state­ment on the 2015 Unit­ed Nations cli­mate talks in Paris, Exxon­Mo­bil endorsed a car­bon tax as the best option” to address cli­mate change while let[ting] the mar­ket dri­ve the selec­tion of solu­tions.” But the mar­ket by itself can­not set in motion a process of reduc­ing car­bon emis­sions toward zero, nor address the larg­er struc­tur­al inequal­i­ties that are becom­ing ever more apparent.

Accord­ing to Basav Sen, cli­mate jus­tice project direc­tor at the Wash­ing­ton, D.C.-based Insti­tute for Pol­i­cy Stud­ies, A price on car­bon is like a sales tax — it doesn’t make pol­luters pay for green­house gas pol­lu­tion. It makes end users pay.” By con­trast, he says, A reg­u­la­tor solu­tion that phas­es out fos­sil fuel extrac­tion and use can be designed to penal­ize those who are respon­si­ble for the prob­lem, not every­one else.” This direc­tion is where we need to go.

Owen argues that the finan­cial bur­den of a car­bon tax could be out­weighed by a div­i­dend, while oth­ers pro­pose that car­bon tax rev­enues should be used to imple­ment cli­mate solu­tions in front­line com­mu­ni­ties. But, as Sen points out (and Owen con­cedes), if a car­bon tax were actu­al­ly effec­tive, rev­enues would decline as emis­sions decrease. The tax itself is not a reli­able source of funds for either idea.

There is no evi­dence that the fos­sil fuel indus­try, with its pow­er­ful lob­by in Wash­ing­ton, would per­mit a car­bon tax to be set high enough to actu­al­ly com­pen­sate for the vast harm the indus­try has done (and con­tin­ues to do) across the globe, espe­cial­ly in com­mu­ni­ties near the sites of extraction.

The belief that a tax-dri­ven process is pos­si­ble dis­tracts from the more com­plex and deep-reach­ing polit­i­cal changes nec­es­sary to dras­ti­cal­ly cut car­bon emis­sions, such as reg­u­lat­ing against the extrac­tion and use of fos­sil fuels and seek­ing the best and most inclu­sive ways of tran­si­tion­ing toward a regen­er­a­tive econ­o­my — one that doesn’t leave vul­ner­a­ble peo­ple and com­mu­ni­ties behind. For instance, gov­ern­ments world­wide pro­vide an esti­mat­ed $775 bil­lion to $1 tril­lion annu­al­ly in sub­si­dies to fos­sil fuel cor­po­ra­tions (not includ­ing the social costs that get shift­ed onto the poor by cli­mate and health impacts and such exter­nal­i­ties as mil­i­tary inter­ven­tions). It can be argued that the fos­sil fuel indus­try would not be viable if it were forced to adhere to a strict busi­ness mod­el with­out sub­si­dies and tax breaks.

End­ing sub­si­dies would be a start. But a car­bon tax is not the answer.

For alter­nate per­spec­tives on this issue, see The Gov­ern­ment Should Write Every­one a Check — Paid for by a Car­bon Tax” by Owen Poindex­ter and Some Econ­o­mists Say Car­bon Tax­es Are a Sil­ver Bul­let. The Real­i­ty Is More Com­pli­cat­ed.” by Kate Aronoff.

Cyn­thia Mel­lon is pol­i­cy coor­di­na­tor at the Cli­mate Jus­tice Alliance (CJA), a grow­ing mem­ber alliance in the cli­mate jus­tice move­ment of 70 urban and rur­al front­line com­mu­ni­ties, orga­ni­za­tions and sup­port­ing net­works in the cli­mate jus­tice move­ment. CJA is ded­i­cat­ed to build­ing Just Tran­si­tion away from extrac­tive sys­tems of pro­duc­tion, con­sump­tion and polit­i­cal oppres­sion, and toward resilient, regen­er­a­tive and equi­table economies.
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