Saving the world with carbon taxes

This article was published in Dhaka Tribune on 25th August, 2019.

Every day, the news brings fresh stories about the urgency of stopping climate breakdown. The number of record hot years over the past decade keeps climbing, along with reports of severe storms, summer heat waves and melting polar ice. And yet we continue burning coal, oil and gas every day, generating more carbon dioxide emissions and making the planet hotter. Sometimes the scale of the climate problem seems overwhelming. But the fact remains that stopping global warming is simple; it only requires implementing a policy of global carbon taxes.

Economist have acknowledged for decades that global warming is essentially a failure of the market to price fossil fuels correctly. The abundance of coal, oil and gas means their minimum price is largely determined by extraction costs from the earth, which generally results in a low price (particularly for coal, which is cheap to mine). Unfortunately, the low prices of fossil fuels don’t reflect their true cost to society: if global warming is allowed to raise the Earth’s temperature by 4 or 5 degrees Celsius over the next century as projected by scientists, it could mean the end of much of the world’s population through droughts, crop failure, famines and ultimately warfare over food and water (a pattern already seen in Syria). The long-term cost of unmitigated climate change would be almost incalculable.

The rational, economic solution is to tax fossil fuels at point of extraction or import by coal, oil and gas companies. This would increase prices of coal, oil and gas and reduce their use, and thus slow down carbon emissions and global warming. However, governments have been wary of carbon taxes as a political liability which could create both unemployment and public dissatisfaction. In France, Macron’s attempt to impose a carbon tax at the beginning of 2019 sparked the violent ‘yellow vest’ protests among low-paid workers who could not afford higher transport and heating bills.

However, there is a refinement of carbon tax policy which can solve the problem of imposing any tax burden on the poor, namely 'carbon dividends'. This is the subject of economist James Boyce’s excellent new book, ‘The case for carbon dividends’. A ‘carbon dividend’ simply returns carbon tax revenue to the public as a flat payment per taxpayer. If all carbon tax revenue is returned this way, the net economic burden of the carbon tax will be zero, and it will not create unemployment. An example is helpful here; consider a simplified population of 100 people consisting of 5 wealthy people and 95 lower-income people. As wealthy people buy more carbon-intensive goods like cars and aeroplane flights, the wealthiest 5% may have 100 times the carbon footprint and thus might each pay $1000 carbon tax (as opposed to $10 for a lower-income person who doesn't fly or drive). Total carbon tax revenue for a sample population of 100 people would be (5 wealthy people x $1000 per person carbon tax) + (95 lower-income people x $10 per person carbon tax) = $5,950. However, all taxpayers would receive an averaged equal carbon dividend of $5950/100 or $59.50 each. That means that the wealthiest 5% of people would pay a net tax of ($1000 carbon tax - $59.50 carbon dividend) = $940.50 each, which gives them a powerful incentive to reduce their fossil fuel consumption. On the other hand, the lower-income 95% would receive a net benefit of ($59.50 carbon dividend - $10 carbon tax = $49.50). This net benefit will help low-income people to pay for higher costs of fossil fuels (due to carbon taxes) without falling further into poverty, and thus help prevent political backlash against the carbon tax. Even though it doesn’t cause any net tax burden, the carbon tax will make all use of fossil fuels more expensive and speed up the transition to renewable energy. The higher the carbon tax, the faster the transition will be.

This carbon dividend policy is not invented by Boyce; he has just written the first book devoted to it. In fact, carbon dividends are the policy advocated by Citizens’ Climate Lobby (www.citizensclimatelobby.org) a worldwide group of volunteers dedicated to educating the public and politicians about how to stop climate breakdown by implementing carbon taxes and dividends. The imposition of a carbon tax and dividend policy in Canada at the beginning of 2019 was largely the outcome of years lobbying by this group. This initial success in Canada needs to be replicated in every country if climate breakdown is to be prevented. Since Bangladesh is one of the countries most vulnerable to climate change, and there is now a large expatriate Bangladeshi population around the globe, one hopes that Bangladeshis wherever they are will join the campaign to stop global warming through carbon taxes and dividends.

Climate Changed: A graphic novel by Philippe Squarzoni

This article was published in Dhaka Tribune on February 9th, 2019.

French cartoonist Philippe Squarzoni has taken on the huge task of trying to convey the complex science of climate science and the global emergency that it implies in the form of his autobiographical/documentary graphic novel, Climate Changed. Hopefully this will enable the general public, which does not always seem inclined to wade through dense texts on scientific topics, to get a better appreciation of the challenges of global warming.
The book starts with the author contemplating the difficulties of tackling the subject of global warming in comic book form; unlike most comic book stories, it’s a scientific phenomenon without the conventional beginning and end of most stories. His solution is to place a fairly detailed exposition of climate science in the context of an autobiography. The end result is illuminating. It serves to remind the reader that climate change is not just happening to the globe. It’s happening to all of us, since we all live on this planet that is rapidly heating up, and is already presenting us with real consequences in the form of record high temperatures, droughts and deadlier storms. His visit to his childhood home and his observation of how much smaller and how different it seems as an adult illustrates that the comfortable planet we knew even a few decades ago is gone forever; the climate has changed, and it’s a now a new, more dangerous world that we live in.
As a low-lying country which is both densely populated and incredibly vulnerable to sea level rise, Bangladesh gets two mentions in the book. Squarzoni quotes climatologist and World Bank economist Stephane Hallegatte: with ‘a rise in sea level of a little over 3 feet (1 metre)… numerous densely populated coastal regions such as the Ganges and Nile deltas could be flooded. Millions of people will be driven out, and agricultural production will be severely affected. 20% of Bangladesh could be flooded.’ Bangladesh comes up again when Hallegatte discusses the potential effect of millions of climate refugees on the international arena: ‘If 20 million people leave Bangladesh and head for India, what do we do?… What will the India and Bangladesh of 2060 be like? Will tensions between them have eased? Or will they be at war?’. Even in Bangladesh, such long-terms concerns are rarely addressed in the short-term new cycle.
Unfortunately, the effects of climate change will be felt disproportionately by the poor; this is made clear by Squarzoni’s account of the severe flooding caused by Hurricane Katrina hitting New Orleans in 2005. The wealthier sections of the populace all evacuated upon hearing storm warnings a day in advance. The poor had no means to escape, and had to survive for days on the roofs of their submerged houses with most of the city being flooded with up to 23 feet of water. 30,000 people took shelter above the flood waters in the city stadium, until being finally evacuated by the government to the surrounding states. Desperate people started looting shops for supplies, with the result that a curfew was imposed; US soldiers freshly returned from Iraq were called in with orders from the state governor to shoot to kill. Total deaths numbered 1293, and 2 million were displaced; hundreds of thousands for over a year. Immense numbers were left in financial ruin with no means of rebuilding their ruined homes. All this in the richest country in the world. The question arises as to how poorer countries would deal with similar storms and floods, which will grow more common everywhere as global warming adds heat and power to storm systems. Will wealthy countries treat poor countries any better than they treat the poorest of their own citizens?
‘So, how to end this book?’ Squarzoni asks as he draws to a close. He observes that so far humanity has failed to deal with the existential threat of climate change by curbing fossil fuel use, and thus nearly closes on a pessimistic note; but as he says, ‘The story isn't over’. Everything depends on how successfully we the public are able to lobby governments of the world to act over the next decade (which according to the 2018 International Panel on Climate Change report is all the time we have left to make severe cuts to fossil fuel use and thus prevent catastrophic climate change of over 1.5C).