The carbon tax

by anonomous
(Australia)

I thought that a carbon tax was meant to be a good way of managing emissions however I am confused about the negative media attention. Are you able to explain this in simple terms??

Answer from Climate-change-wisdom

In order to reduce our carbon emissions we have to change what we do. Specifically we have to reduce the amount of fossil fuels we burn.

This is not easy to do when the cheapest form of energy available is the oil we use in our vehicles and the coal we burn to generate our electricity.

If the alternative energies that create fewer greenhouse gas emissions are more expensive it requires some intervention from government to make most of us use them.

The idea of a tax on carbon is simple.

It makes an activity that uses a lot of fossil fuel, such as aluminum smelting that requires vast amounts of energy, more expensive.

This has two effects.

1. Impose a tax on carbon and companies that use a lot of energy now have a strong incentive to be frugal and use less energy.
   
   They do this to reduce or avoid a big tax bill and emissions go down.
   
   
2. Businesses that can’t use less energy but still have to pay the tax will pass that expense on to their customers. Products that need a lot of energy become more expensive.
   
   Customers will always look for a bargain so they will either shift to a cheaper (ideally less energy intensive) alternative or not buy at all. Lower demand results in lower production and lower emissions.

This is neat enough logic.

But it is painful for those companies that just have to use energy or fossil fuel to do their job. You don’t want to be a trucking company if there is a new tax on diesel fuel designed to make you truck less.

The public also hates the word tax. They think it is a cost to them and the money goes to government who they don’t trust to use it wisely.

This is why the media are all over it.

It gets people fired up.

In the end though, as a way to reduce greenhouse gas emissions a tax can work. But, like any other way to change behavior, it might not be popular.

CCW
July 2011