Why the U.S. Lags Behind Other Western Nations on Carbon Tax Issue

Implementing a carbon tax is increasingly viewed as one of the best ways to curb greenhouse gas emissions, but the U.S. has struggled to pass one.

By Hasan Tariq
Nov. 23, 2021 13:06 UTC
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The COP26 cli­mate con­fer­ence in Glasgow led to an inter­na­tional con­sen­sus on intro­duc­ing a car­bon tax.

The goal of the tax on fos­sil fuels would be to dis­in­cen­tivize using car­bon-based fuels to reduce green­house gas emis­sions. It would also encour­age a shift toward renew­able sources of energy.

Nothing would do more to accel­er­ate inno­va­tion and invest all cit­i­zens in a clean energy future than an econ­omy-wide car­bon fee, with cor­re­spond­ing div­i­dends for the American peo­ple.- Carlton Carroll, spokesper­son, Climate Leadership Council

We need coun­tries to come together to agree on inter­na­tional stan­dards to make that big shift to the low car­bon econ­omy,” said Lord Greg Barker, exec­u­tive chair­man at EN+, a green energy firm. It would be much bet­ter for the world if there was a com­mon car­bon price.”

See Also:Climate Change Coverage

Twenty-seven coun­tries cur­rently have a car­bon tax. The World Bank also reports that 65 car­bon tax ini­tia­tives are under­way across the globe at local, national and regional lev­els.

However, the United States is not one of them. Carbon tax­a­tion has been a debated issue in the U.S. since the 1970s, but no leg­is­la­tion to imple­ment one has passed. There are plenty of rea­sons for that.

First, oppo­nents argue that levy­ing a car­bon tax on U.S. com­pa­nies that pro­duce or rely on car­bon-based fuel would harm them, in turn hurt­ing the econ­omy. They also believe it would reduce the United States’s com­pet­i­tive edge against China, which does not have a car­bon tax and is the largest green­house gas emit­ter in the world.

Another major prob­lem of intro­duc­ing a car­bon tax in the U.S. is the nature of the tax. A car­bon tax is a regres­sive tax, which means every­body pays the same price for using car­bon-based fuels. The U.S. gov­ern­ment fears that it will dis­pro­por­tion­ately affect lower-income American house­holds.

A way around that prob­lem is to imple­ment a rev­enue-neu­tral car­bon tax. Revenues col­lected from this tax will return to American house­holds in the form of tax cuts. The exact mech­a­nism of how this will hap­pen, how­ever, is not yet clearly laid out.

See Also:EPA Plans to Tackle Food Waste in Effort to Reduce Carbon Emissions

Nothing would do more to accel­er­ate inno­va­tion and invest all cit­i­zens in a clean energy future than an econ­omy-wide car­bon fee, with cor­re­spond­ing div­i­dends for the American peo­ple,” said Carlton Carroll, a Climate Leadership Council spokesper­son.

Some states already have car­bon pric­ing. For exam­ple, California’s cap-and-trade sys­tem sets a max­i­mum amount of emis­sions for green­house gas emit­ters. Companies can buy or sell their per­mits at a price so that every­one has an incen­tive to reduce green­house gas emis­sions. Similarly, Washington state also intro­duced a car­bon pric­ing sys­tem in April 2021.

At the fed­eral level, how­ever, car­bon pric­ing is still being debated. The admin­is­tra­tion of President Joe Biden has allo­cated $555 bil­lion (€495 bil­lion) to address the issue of cli­mate change.

It aims to reduce green­house gas emis­sions by 30 per­cent by 2030. Instead of intro­duc­ing a car­bon tax, the gov­ern­ment said it would imple­ment a fee on methane emis­sions, which it hopes will com­pel oil and gas com­pa­nies to curb emis­sions.



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