If Carbon Pricing Comes, What will Lead Up to it?- a “Future History”

The Sudden Rise of Carbon Taxes, 2010–2030 (37 page pdf, Lawrence MacDonald and Jing Cao, Center for Global Development, Oct. 20, 2014)   

Today we review a “future history” that begins by assuming that by 2030 the world will not only have accepted but embraced carbon pricing. The authors predict what changes would be needed to get there with emphasis on what the two biggest CO2 emitting nations, the USA and China, do and why they do it (different reasons). Key aspects are the socio-economic benefits that accrue after carbon taxes are implemented, the penalties that arise (such as legal liabilities for climate impacts) when the main players are slow to respond and the role played by the British Columbian government in Canada in enacting a province-wide carbon tax on consumers which was both successful and popularly supported and served as a  model for other jurisdictions

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English: U.S. Energy Flow Chart of 2008 Estimated U.S. Energy Use in 2008 is ~99.2 quads (Photo credit: Wikipedia)

Key Quotes:

“It’s 2030 and instead of racing toward the brink of climate catastrophe the world has begun to back away. …although carbon dioxide (CO2) concentrations in the atmosphere breached 450 parts per million (ppm) last year—the level believed to offer a 50 percent chance of holding global warming below 2 degrees Centigrade this century—the rate of increase has slowed dramatically.”

“countries need not wait on internationally coordinated efforts if some carbon mitigation is in their own national interests—that is, the domestic environmental benefits exceed the CO2 mitigation costs, leaving aside climate benefits.”

Benefits of carbon pricing:
• “Fiscal advantages. Revenue from pricing carbon, whether generated from a tax or from the auction of tradable permits, has made it possible to roll back and even eliminate other, more distorting taxes….
• A wealth-creating green industrial revolution . [7] Countries that moved early to price emissions experienced a surge of investment into climate-friendly technologies: hyper energy efficiency, cheap clean renewables, energy-saving nanotechnologies, and green biotech. …
• Better health, reduced pollution. Reductions in noncarbon local and regional pollution, especially from coal (ultrafine particle pollution known as PM2.5, sulfur dioxide, carbon monoxide, mercury, lead, zinc, cadmium, and soot) but also from oil and natural gas, have cut cancers and cardiovascular and respiratory diseases around the world…”

“The company [Exxon Mobil] also suffered a major blow in the early 2020s when it lost a multi-trillion-dollar class action suit brought by an alliance of US state attorneys general, displaced residents of submerged island states, and environmental groups seeking damages in connection with the firm’s support for climate denial junk science.”

“US interest in carbon pollution taxes was also boosted by slowly growing awareness of the success of a carbon tax implemented in the western Canadian province of British Columbia starting in 2008. A 2013 assessment of the tax … found that the province’s consumption of fossil fuels covered by the tax fell 19 percent per capita compared with the rest of the country, while the province’s economy outperformed most of Canada…polls in British Columbia showed that public support for the provincial carbon tax increased during the first four years of implementation, to 64 percent.”

“In 2015 China imposed a 10 yuan per ton tax on carbon emissions, with the proceeds split evenly between the central government and the provinces. Collections were made upstream, at the extraction points for coal and oil (mine mouths and wellheads) and at the port of entry for imports of coal, oil, and natural gas….Today China has carbon taxes of 50 yuan per ton”

Responses to higher energy prices:
• “ were changes in household and firm behavior, activities such as insulating homes and commercial and industrial structures, switching to lower-energy lighting fixtures, taking fewer and shorter car trips, and making greater use of public transport.”
• increased investment in new technology for energy production, distribution, and use…”
• the surge of investment into carbon capture and storage (CCS) technologies for retrofitting existing coal- and oil-burning power plants.”

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