A simple solution to accelerate climate action
If [the government] have the courage to make polluters pay, it will save many times more people than have died during the pandemic. Support for the plastic bag tax rose after it was implemented, and it was the same with other measures like the indoor smoking ban. It just requires leaders to lead. And now is the time.
- Stephen Fry
What is a carbon tax?
A carbon tax is a type of Pigovian tax, meaning a tax that businesses or individuals must pay due to engaging in activities that cause adverse side effects for society. A carbon tax is a tax on the amount of greenhouse gases (GHGs) emitted by a business or individual. There are two types of carbon tax:
• Upstream: Carbon could be taxed on fuels (at the point of production or import), and on direct sources of emissions from industry, waste and agriculture
• Downstream: Applying a carbon tax on goods and services at the point of consumption, maximising consumer-visibility (through carbon labelling)
So what's the fuss all about?
1. It’s popular with voters
Two-thirds of people said a carbon tax was a fair way to raise money, and that the proceeds should be spent to benefit the country, according to a poll of 2,000 people carried out by Opinium for the Zero Carbon Campaign.
2. It’s popular with business
Even oil companies support it! An upstream carbon tax means carbon could be taxed on fuels (at the point of production or import), and on direct sources of emissions from industry, waste and agriculture. A carbon tax would create a level playing field for heavy emitting businesses and provide the financial incentive they need to transition.
3. It could help pay for Covid-19
In order to keep in line with net zero by 2050 targets the price of carbon needs to be at £75/tCO₂e by 2030. By 2030 taxes raised from carbon could total £27bn annually. This would help pay for Covid- 19 and sponsor the green recovery.
4. It would make a big impact fast
A tax on GHG’s is one of the simplest, effective ways of dealing with emissions. Placing a price on emissions would accelerate the uptake of more sustainable technologies through financial incentives.
5. Now is the time
After leaving the EU Trading Emissions Scheme it is time for the UK to make its own, more aggressive and direct carbon pricing scheme. UK government should see COP 26 in Glasgow this November as an opportunity to exemplify what bold commitment to climate action looks like.
Conclusion
A carbon tax is a realistic and effective option to accelerate emissions reductions whilst also providing a source of revenue to help support the green recovery from Covid-19. Tougher legislation surrounding the responsible handling of emissions needs to occur.
For those businesses who cannot immediately change their emissions such as the airline industry, a carbon tax combined with regulated offsetting would be a step on the right path to decarbonisation.
If you are interested to find out more about carbon offsetting then take a look at our our long read on how carbon offsetting can be used as a force for good in regenerating our planet (and then sign up to one of our offsetting subscriptions!).