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Contributors to this article: Sister Helen Ojario, O.Carm., Coordinator, Bread for the World, and the Carbon Tax Center.
Think Globally…Act Locally. That is the focus that the Carmelite Non- Governmental Organization (NGO) wishes to spread on the topic of global warming and how to get serious in our efforts to combat it. The Global Network for Justice recently presented information from a grassroots voice in America known as the Carbon Tax Center “CTC.” Launched in January of 2007, the CTC believe that taxing emissions of carbon dioxide—the primary greenhouse gas—is imperative to reduce global warming.
Is the world ready for a Carbon Tax?
Before you can answer this question, you have to know what a carbon tax is. A carbon tax is a tax on the carbon content of fuels—effectively a tax on the carbon dioxide emissions from burning fossil fuels. Thus, carbon tax is shorthand for carbon dioxide tax or CO2 tax.
Why are carbon taxes essential? Charging businesses and individuals a price to emit carbon dioxide (CO2) is essential to reduce U.S emissions quickly and steeply enough to prevent atmospheric concentrations of CO2 from reaching an irreversible tipping point.
It is projected that continued buildup of greenhouse gases in the Earth’s atmosphere threatens worldwide cataclysmic change in the very near future. Hotter summers are the least of what are in store for humanity. Destructive storms, inundation of coastal regions, decimation of food chains, spreading disease, economic devastation, warfare and massive migrations of humans and other species are all virtual certainties in the lifetimes of most people now living, unless the world makes sharp cuts in greenhouse gases.
According to the Federal Department of Energy, the United States releases 82% of its total green house gas emissions of carbon dioxide through the burning of oil, coal and natural gas. Based on 2002 data (the latest available), the U.S. is responsible for nearly 22% of the world’s CO2 emissions from fuel-burning.
A carbon tax will lessen U.S. oil dependence. Petroleum products account for 42% of U.S. CO2 emissions from burning fuels (36% for coal and 22% for natural gas), so a carbon tax stiff enough to cut down heavily on CO2 will necessarily put a big dent in oil consumption.
How much revenue will carbon taxes generate? If the carbon taxes are set high enough, they will have the needed impact. A federal “starter” carbon tax equating to 10 cents a gallon of gasoline, but applied to all United States fossil fuel burning, will bring in roughly $55 billion a year in revenue. This equates to around $180 per United States resident, or $720 for a family of four. (Thus, a family that paid less than $720 a year under this starter tax would come out ahead if the carbon revenues were rebated equally). Successive carbon tax installments adding the same 10¢/gallon equivalent would each add another $50 billion or so to the aggregate annual revenue stream. By the end of the tenth year (assuming annual installments), the annual revenue would be on the order of $500 billion.
While carbon taxes will need to be very high to create the required price incentives, they will need to be phased in to give individuals and businesses the opportunity to adjust. There is no magic formula or right number, but a tax that grows at an annual rate equivalent to 5-10% of the “baseline” cost of fossil fuels probably offers a viable combination of meaningful incentive and opportunity for adaptation. The $37 per ton of carbon “starter tax” mentioned earlier, equating to around 10 cents a gallon of gasoline, fits the lower end of that range. At least as important as the tax level is the commitment to keep raising the tax, so that energycritical decisions, from car-buying (Hummer or Prius?) to home-buying (exurb or transit-oriented community?) to factory locating (highway interchange or rail line?), are made with carbon-appropriate price signals.
Fossil fuels impose a multitude of environmental and social costs apart from a destabilizing climate. Chief among them are “traditional” air pollution such as car and truck exhaust and smokestack emissions; damage to land and water from extracting and transporting fuels; and the militarism, income inequality and political authoritarianism that is evidently prevalent to extractive economies (e.g., Saudi Arabia, Nigeria, and Indonesia). Many researchers believe that these and other “indirect” costs exceed the “market” prices paid for coal, oil and gas.
On the plus side, United States carbon taxes could be expected to usher in a host of non-climate benefits, from better air quality and less strip-mining to reduced entanglement in the unstable and dangerous Middle East. Americans could also look forward to a slew of indirect benefits for example, lighter road traffic arising from a decrease in vehiclemiles traveled, as families and businesses adapt to higher gasoline and diesel fuel prices by trimming their least essential trips and consolidating others.
Past fuel tax efforts in the United States have fared poorly. The idea of taxing energy to reflect its true costs runs smack against both Americans’ traditional sense of entitlement to cheap energy and the anti-tax ideology of the past quarter-century. This cheap-energy entitlement helped kill the last two big efforts to tax energy. President Clinton’s BTU tax in 1993 and Rep. John Anderson’s “50/50” program in the 1980 elections which helps explain why no prominent elected official has yet endorsed raising taxes on energy. Progressive tax -shifting or a rebate of carbon tax revenues should dramatically reduce resistance to the idea of a tax.
Recent polls indicate that Americans are coming to recognize the need to pay more for energy in order to combat global warming. A New York Times/CBS News poll released in early 2006 demonstrated significant support for an increased tax on gasoline to reduce global warming, even though there have been no political champions promoting such a tax. A recent Massachusetts Institute of Technology survey reports “a remarkable increase in the American public’s recognition of global warming and their willingness to do something about it.” During just the past three years, survey respondents increased by 50% their willingness to pay more for electricity to reduce global warming.
What will a carbon tax look like to me?
On the one hand, just about everything derived from fossil fuels, from a drive in the country to plastic bags for groceries, will cost more, with prices rising the most for activities or goods that use the most fossil fuels. But the upside is three-fold: (i) your tax rebate or reduction will offset much, perhaps more than 100%, of those price increases; (ii) you’ll be able to minimize your tax bite by cutting down on fuel usage (e.g., shortening those country drives, bringing your own bags to the grocery store, purchasing “green power” from windmills and other nonfossil sources); and (iii) Americans’ combined behavior changes in response to the carbon tax will go a long way toward protecting the climate and averting the cataclysmic consequences of unchecked global warming.
The Global Network for Justice is a project of the New Orleans Bread for the World at the Twomey Center for Peace in New Orleans, LA.
For more information contact Sister Helen Ojario, O.Carm., Coordinator, Tel 504- 861-5834 or visit the Global networks’ website at: www.globalnetwork4justice.org. Excerpts used with permission. The Carbon Tax Center: www.carbontax.org.
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