Issue of December, 28, 2009
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Carbon taxes could hit the transportation sector.
Credit: Mauricio Ramos/IPS
Doors Opening for Carbon Tax
By Julio Godoy

The disappointing results of the Copenhagen climate summit could give a push to taxes on emissions of carbon dioxide, something many economists have been calling for and some governments have already adopted.

BERLIN, Dec 28 (Tierramérica).- With the chance for a global climate change treaty on hold, a tax on greenhouse gases could be an effective alternative for discouraging the activities that create emissions, say economists and environmentalists.

Revenues generated by the tax could then be made available to developing countries to finance the technological leap necessary to modernize their economies while also reducing emissions of greenhouse-effect gases.

Economists, environmentalists, international organizations and even some European government are in favor of the idea.

One such enthusiast is economist Dennis Snower, president of the Institute for the World Economy, of Germany's Kiel University, located some 300 kilometers west of Berlin.

"The climate consequences of carbon dioxide emissions are equal around the world, independent of where the gas was emitted," Snower told Tierramérica.

"As such, each emitter should pay the same rate per ton of carbon, regardless of whether it is from an industrialized or developing country, or the quantity of CO2 emitted in the past," he said.

According to Snower, the CO2 tax should replace the system of transferable emissions permits, which, he says, suffer two weaknesses: the permits are granted free of cost and in huge quantities by governments in the rich world to their national industries.

In general, the economists consider taxes a tool that governments can use to influence the behavior of their citizens and to guide consumption patterns, discouraging products considered harmful to the individual or the community, or encouraging healthy alternatives.

Richard Tol, environmental economist and professor at several European universities, also supports a tax on carbon emissions, saying it should be a global measure against climate change, starting at a low initial rate, and gradually increasing over time.

Like Snower, Tol criticizes the system of transferable emissions permits. He believes that system could work if the rights were auctioned off instead of distributed free of cost, as is the case currently in Europe.

The carbon tax is already becoming a reality in some parts of Europe. On Dec. 10, the Irish government introduced a tax that initially covers consumption of petroleum and diesel. Beginning May 1, 2010, the tax of 15 euros (22.5 dollars) per ton of CO2 emitted will be applied also to consumption of heating fuel and gas.

Brian Lenihan, Ireland's finance minister, said the tax is a demonstration of Irish will to reduce greenhouse gas emissions.

France will enact a similar tax on Jan. 1, 2010. President Nicolas Sarkozy announced the tax in September. "The tax, at a rate of 17 euros (24.35 dollars) per ton of emissions, will be applied to industries as well as households," said the president in a public speech at the time.

Sarkozy explained that the value of the tax is equal to the average price per ton of CO2 on the European carbon market, in operation since 2008.

Former French prime minister Michel Rocard (1988-1991), who in early 2009 headed the commission that proposed the introduction of the carbon tax, told Tierramérica that the "purpose is to penalize some polluting behaviors, like the consumption of fossil fuels and which contribute to global warming."

Multilateral institutions, like the International Labor Organization, support a global tax on CO2. In a report published Dec 11, the ILO estimated that the tax would lead to the creation of some 14 million jobs by 2014.

The ILO suggests a tax similar to those of France and Ireland. The report "Green Policies and Jobs: A Double Dividend?" also estimates that some 600 million workers around the world, representing about 40 percent of all jobs, currently work in sectors with high CO2 emissions.

However, some economists and the governments of some emerging nations, like China, see the tax as counterproductive. Beijing believes it ignores the different responsibilities of industrialized countries and developing countries in terms of how much they have contributed to global warming.

Ottmar Edenhofer, professor at the Technical University of Berlin, says the CO2 tax would "motivate the petroleum or carbon producing countries to accelerate extraction of those fuels and would increase emissions. The system of transferable emissions permits is preferable because it allows immediate control of national emissions budgets," he told Tierramérica.

But the emissions rights - in practice, limited permits to pollute - need to overcome two obstacles: first, the international community should adopt a binding system of allocation, whether according to national population, which would favor developing countries, or according to economic yields, which would benefit industrialized countries. The second is that the market itself should be global.

In any case, said Edenhofer, the urgency of climate change demands an immediate solution.

"The global budget of greenhouse-effect emissions in the current century must not surpass 830 gigatons of CO2 if we are not to cross the maximum temperature increase, of two degrees (Celsius)," he said.

"In the last decade, humanity produced 270 gigatons. At that pace, the world will have exhausted its budget in less than 30 years," warned the expert.

* IPS correspondent.

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