In Support of a Climate Tax

There are tens of thousands scientist who have come to the same conclusion, versus a handful of weirdo skepticals. Every single human being, around the globe, can now feel it: bush-, forest- and rainforest fires, droughts, freak storms, flooding, land-slides, heat waves, water scarcity, temperature record this, climate record that… There’s no need to talk about science. Climate Change is here.

While we know what we need – a rapid transition to a fossil-free infrastructure, the inaction in the face of the threats is deafening. It is too expensive; it is technologically not possible. The technologies are already on the market, and they are competitive, and developing further. Sooner or later, renewables will take over, simply because of the lower cost of renewables (you don’t have to buy fuel). and higher efficiency of electric motors over combustion engines. However, if we let the politically distorted markets decide, the transformation will not happen fast enough. So how to accelerate the transformation? Regulation or banning fossils? Randomly supporting renewable projects and efficiency measurements? Emission reduction targets, every country on its own? Unfortunately, none of these approaches will lead to a fast transformation.

We have come to the conclusion that only one way to achieve a fast transition to a non-fossil society with a renewable infrastructure is a global climate tax:

  • A climate tax on all fuels and GHG-active fuels and substances
  • The climate tax is levied on the price at the point of sale to the end consumer, administrated like a VAT: Climate Added Tax, CAT.
  • The tax is levied at the same rate, everywhere around the globe.
  • The climate tax shall be increased every year to allow the economy to adapt, step by step. The suggested starting tax is U$50 per ton of CO2 equivalent, increasing by U$50 every year
  • The tax revenues are 50% re-distributed to the people in cash (ideally, the low-income groups will receive a higher cash-back than high-incomers),
  • 40% of the CAT revenues are invested in renewable energy infrastructure,
  • 5% of the CAT revenues are invested in R&D,
  • and 5% as compensation for damages incurred and climate mitigation.

 

We already have the key technologies in place, highly competitive at the market. While a CAT will initially increase energy bills, the cash-back will compensate for the lower-income groups, and not affect their purchasing power. The tax will make fossil energy more expensive while renewables become cheaper, accelerating the transformation. And where technology has currently short-coming, the R&D investment will accelerate technological break-throughs.

According to our calculations, such a system of a global climate tax will lead to

  • Sufficient renewable energy available to replace all fossil fuels by 2035 at the latest
  • Thanks to higher efficiency and lower fuel cost, the global energy bill will be 30-50% lower than now

For more information, see Global Climate Tax