Carbon Tax is Best Solution For Climate Change

Question: Write about theCarbon Tax is Best Solution For Climate Change. Answer: Thesis statement: Imposition of carbon tax is the best solution for climate change Carbon tax is a type of fees that is imposed on the pollutants that cause greenhouse gas pollution. This arises mostly from the burning of fossil fuels. In order to reduce global warming and restrict emission of green house gases, a monetary price is imposed upon them. One of the major green house gases that has caused various environmental problems is carbon dioxide. Carbon tax is one of the strategies under carbon pricing policy that imposes a certain amount of tax at a specific rate per ton of the carbon dioxide emitted in to the environment. The other way round is by imposing taxes on all the various sources of fossil fuels in proportion to the quantity of carbon level in them. The major objective behind imposing carbon tax is to improve the environment and prevent any further damages. The carbon emissions have caused serious environmental issues. Therefore, researchers have estimated a monetary value for the emission of carbon dioxide in order to prevent further environmental damages. Carbon tax is thus an attempt to control the emissions of carbon in the atmosphere by pricing carbon and prevent any further environmental damages. However, there have been many problems associated with the implementation of the carbon tax policy. Carbon tax accounts for almost 85% of the energy used worldwide. Around 85% of the energy comes from the fossil fuels. While only 15% of energy comes from hydro power, nuclear power, biofuels, solar energy and wind energy and there are very few sites where building dams for generation of hydro electricity is possible while the nuclear plants face various political issues. On the other hand, Vera Sauma (2015) stated that carbon taxes might encourage the development of hydro power and nuclear power. For example, the government can invest more in the generation of green electricity and provide it at subsidized rate by utilizing the revenues from carbon tax. This shall result in the reduction of environmental damages and increase in the use of renewable sources of energy. A few scholars have argued that focusing on the aspect of Benefit Certainty is is more necessary as it emphasizes on the environmental aspect instead of economic aspect (Ploeg Withagen, 2014). For example, implementation of carbon tax shall motivate the development of renewable resources such as solar energy, wind energy, hydrogen engines and many more. Nevertheless, although implementation of carbon tax could result in some negative effects but there is not enough evidence to support the fact. In accordance with the fast climatic changes and the increase in the popularity and acceptance of the carbon tax strategy, it can be stated that it is necessary to implement carbon tax on a global level. Thus, it can be summarized that the implementation of carbon tax shall encourage various firms to develop other alternatives. Some studies have shown that imposition of carbon tax has led to the reduction of green house gas emissions up to 15% (Hoberg Meadowcroft, 2015). Next in terms of economy, the increased burden of this tax might discourage the producers to continue their production in the same country. According to Parry (2015), this can encourage the producers to move to some other country where the carbon taxes are absent or comparatively lower. The shifting of the producers may adversely affect the economy of the country. This might also encourage the firms to keep their actual amount of carbon emission hidden from the government (Martin, De Preux Wagner, 2014). The implementation of carbon tax has also led to the shift from carbon intensive firms, toward information and service industry. Carbon tax would result in increase in the costs of goods and services as the production costs would tend to rise. This price hike would reduce the purchasing power of the households and hence reducing their real wages. The concept of providing rebate on the other taxes due to implementation of carbon tax seems to be a vague concept as it has been proved t hat once a tax has been imposed, they are never removed. There are arguments regarding tax swaps to reduce the income tax in order to implement carbon tax. It might sound good theoretically but practically it is not feasible. In case of the cap and trade policy, it becomes easy to track the amount of carbon emissions in the environment (Goulder Schein, 2013). On the other hand, Murray, Pizer Reichert (2016) have stated that the implementation of carbon tax is more efficient as it enables the government to generate revenues that can be utilized in developing the alternatives in order to repair the damages caused by carbon emission. For example, the revenue generated from the carbon tax has helped the government in reducing the deficits that would reduce the total cost of the taxes to the economy (Rezai Van der Ploeg, 2016). This could have a positive impact on the economy in the long-run. This revenue could even encourage the government to cut down marginal tax rates. This would allow the government to help the selected groups that are highly affected by taxes. This could lead to equilibrium in the economy. Many economists have stated that the falling emissions lead to a stable economy. Elgie and McClay have compared the green house gas emissions, per-capita fuel consumption and the gross domestic product in Canada (Elgie McClay, 2013). A sharp decline of around 19% in the fuel consumption has been observed after four years of implementation of the carbon tax policy. Nevertheless, although carbon tax seems to be a burden on the households but a uniform rate of carbon tax has the potentiality to reduce the greenhouse gas emissions to a large extent. However, the carbon tax policy is more effective than the cap and trade policy as under the cap and trade policy, the government often tends to issue pollution credits falling under the pressure of influential heavy industries. This proves the superiority of the carbon tax policy over the cap and trade policy. For example, carbon tax allows the government to reduce taxes through the policy of tax swaps. The revenue generated from the carbon tax has the capability of reducing the income tax rates. The carbon tax can also be used to pay the federal debt. These revenues can also be used to pay some lump-sum amount of dividends to the households. The revenue generated from the carbon tax can be utilized for research and development of the renewable sources of energy. Carbon tax can be very useful in improv ing the overall economy of a country. Conclusion: Thus, it can be concluded that the carbon tax policy is capable of reducing the adverse impacts of carbon emissions in the atmosphere. Carbon tax allows the government to generate revenues, which it can utilize in repairing the environmental damages and prevent any further damages. Implementation of carbon tax shall compel the firms to reduce their carbon emissions and use more renewable resources. Being a negative externality, the social cost of the carbon intensive industries become more than its private costs. The major objective of carbon tax is to internalize the externalities (Weitzman, 2014). The reason behind this is that a person due to whom environment is affected shall be responsible for paying the social costs of his activities. However, to achieve revenue neutral, rebates must be provided on the other taxes in order to reduce the burden of taxation. Though it is difficult to implement carbon tax, it is suggested to implement this tax in order to lower the adverse effect of carbon emissions on the environment and to prevent any further damages as this shall lead to sustainable development. References: Elgie, S., McClay, J. (2013). Policy Commentary/Commentaire BCs carbon tax shift is working well after four years (attention Ottawa).Canadian Public Policy,39(Supplement 2), S1-S10. Goulder, L. H., Schein, A. (2013).Carbon taxes vs. cap and trade: A critical review(No. w19338). National Bureau of Economic Research. Hoberg, G., Meadowcroft, J. (2015). Climate action: carbon pricing is an essential first step: this article is excerpted from Acting on Climate Change: Solutions by Canadian Scholars, Catherine Potvin et al, a position paper by the UNESCO-McGill Chair for Dialogues on Sustainability (March 2015).Alternatives Journal,41(1), 58-61. Martin, R., De Preux, L. B., Wagner, U. J. (2014). 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