Our directory of things of interest

University Directory

Cost cutting: the case for a carbon tax

  • Written by  Marco Magrini
  • Published in Energy
Could a carbon tax reduce society's demands for fossil fuels? Could a carbon tax reduce society's demands for fossil fuels? Peter Gudella
17 Mar
2018
For Marco Magrini, a tax on fossil fuels would be a no-brainer in order to get a supply-and-demand market place working fairly

If people do not consume a product or service, then there will not be anybody to supply that product or service for the sake of price,’ reads a passage from the Kural, written in Tamil language more than 2,000 years ago. Clearly the basic economic market forces of supply and demand have been known for a very long time.

Those forces though, can be interfered with at will. Take the widely dispensed subsidies to fossil fuels. The International Energy Agency estimates they were at around $260billion in 2016 (15 per cent down over the previous year), when taking into account state-funded incentives to end-user consumption of gasoline or electricity, often for demagogic reasons. Yet, according to the International Monetary Fund, when the costs of climate change, local air pollution, accidents and road damage are included, the global cost to society is more likely to be close to $5.3trillion.

For sure, the costs of climate change are mounting by the year. Storms in 2017 cost American taxpayers over $300billion, more than any year on record. Some scientists estimated that global warming made hurricane Harvey’s downpour 38 per cent worse than it should have been. While it would be foolish to suggest that fossil fuel companies should refund 38 per cent of the $125billion damage Harvey caused, why should all these disbursements not be taken into the fossil fuel economy’s account?

Plenty of economists maintain that a carbon tax, a direct levy on oil, gas and coal consumption, would be the easiest step towards a global decarbonisation purely driven by market forces. It would finally create a level playing field for clean energy to take off and exert its role as a climate-saving solution. In its absence though, fossil fuel subsidies are just the wrong way to go.

A paper recently published in Nature Energy argues that at $50 a barrel, nearly half of the American oil production would be unprofitable without federal subsidies. The White House has just repealed disclosure requirements for coal and oil companies to succour an ageing fossil industry, and has imposed a 30 per cent duty on Chinese panels, thus restraining a burgeoning solar industry.

The ancient laws of supply and demand could indeed promote a vital reversal of the world’s energetic course. Provided the competition is fair.

This was published in the March 2018 edition of Geographical magazine

red line

NEVER MISS A STORY

Geographical Week

Get the best of Geographical delivered straight to your inbox by signing up to our free weekly newsletter!

red line

Related items

Geographical Week

Get the best of Geographical delivered straight to your inbox every Friday.

Subscribe to Geographical!

University of Winchester

EDUCATION PARTNERS

Aberystwyth University University of Greenwich The University of Winchester

TRAVEL PARTNERS

Ponant

Silversea

Travel the Unknown

DOSSIERS

Like longer reads? Try our in-depth dossiers that provide a comprehensive view of each topic

  • The Human Game – Tackling football’s ‘slave trade’
    Few would argue with football’s position as the world’s number one sport. But as Mark Rowe discovers, this global popularity is masking a sinister...
    Essential oil?
    Palm oil is omnipresent in global consumption. But in many circles it is considered the scourge of the natural world, for the deforestation and habita...
    National Clean Air Day
    For National Clean Air Day, Geographical brings together stories about air pollution and the kind of solutions needed to tackle it ...
    The Nuclear Power Struggle
    The UK appears to be embracing nuclear, a huge U-turn on government policy from just two years ago. Yet this seems to be going against the grain globa...
    Diabetes: The World at Risk
    Diabetes is often thought of as a ‘western’ problem, one linked to the developed world’s overindulgence in fatty foods and chronic lack of physi...

MORE DOSSIERS

NEVER MISS A STORY - Follow Geographical on Social

Want to stay up to date with breaking Geographical stories? Join the thousands following us on Twitter, Facebook and Instagram and stay informed about the world.

More articles in NATURE...

Wildlife

Whale sharks have been found to not travel far from…

Wildlife

The Lone Star tick is spreading across North America, carrying…

Tectonics

Earlier this week, Indonesia was struck by a series of…

Energy

Efforts to reduce the energy drain of the internet are…

Energy

Coal’s rising popularity among climate-apathetic leaders is a worrying trend,…

Climate

Sharing the ideas of climate justice with a little humour…

Polar

Rising bedrock under the West Antarctic Ice Sheet could prevent…

Oceans

Officially declared the world’s ‘most overfished sea’, the Mediterranean is…

Wildlife

An interview with biologist Chris D Thomas, author of ‘Inheritors…

Geophoto

Some may see using the 50mm lens as a regressive…

Oceans

With the war against plastic gaining publicity and popularity, one…

Wildlife

India’s booming domestic dog population is attacking some of the…

Energy

Soaring sales of air conditioning units over the next thirty…

Climate

Well-meaning promises and actions don't always have the best outcomes.…

Geophoto

With the days at their longest and more light in…

Oceans

Tourism might be an economic pillar for many countries surrounding…

Wildlife

Brain sizes directly shown to correlate to survival rates among…

Wildlife

Celebrated author Professor Tim Birkhead provides a fascinating insight into…

Oceans

The world’s most biodiverse seagrass region – Indonesia’s Coral Triangle…

Oceans

Ocean conservation group urges world governments to step up action…