{"id":88669,"date":"2023-01-06T13:37:00","date_gmt":"2023-01-06T17:37:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=88669"},"modified":"2023-01-17T17:12:37","modified_gmt":"2023-01-17T21:12:37","slug":"benefits-of-a-carbon-tax","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/benefits-of-a-carbon-tax\/","title":{"rendered":"The Benefits of a Carbon Tax: Save $22 Trillion &#038; the Planet"},"content":{"rendered":"\n<p>What&#8217;s a carbon tax? What difference could a global carbon tax make for the economy and the environment?<\/p>\n\n\n\n<p>Beyond general strategies to combat climate change, Bjorn Lomborg also endorses specific policies in his book <em>False Alarm<\/em>. In particular, he argues that we should implement a global carbon tax.<\/p>\n\n\n\n<p>Read more to discover the benefits of a carbon tax.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-benefits-of-a-carbon-tax\">The Benefits of a Carbon Tax<\/h2>\n\n\n\n<p>A carbon tax offsets the carbon emissions of the goods we buy. For example, we would pay a tax on Amazon packages proportionate to the carbon emitted in production and delivery. According to Lomborg, the benefits of a carbon tax are both economic and environmental.<\/p>\n\n\n\n<p>(Shortform note: Although we haven\u2019t yet implemented a global carbon tax, the European Union (EU) <a href=\"https:\/\/earth.org\/what-countries-have-a-carbon-tax\/#:~:text=Carbon%20Tax%20Countries,%2C%20the%20UK%2C%20and%20Ukraine.\" target=\"_blank\" rel=\"noreferrer noopener\">successfully implemented a carbon tax<\/a> on its constituents. This tax even applies to imported goods; manufacturers that import products to EU countries must pay a fee equal to the carbon tax that domestic producers pay. So, there\u2019s already precedent for a successful international carbon tax.)<\/p>\n\n\n\n<p>Lomborg believes that a carbon tax is necessary to correct market failure. Put simply, market failure occurs whenever we <em>inefficiently <\/em>distribute goods or services\u2014in other words, whenever the market doesn\u2019t reflect the inconspicuous costs of certain products. For instance, market failure occurs if the cost to buy a pack of cigarettes doesn\u2019t reflect the pollution they create.<\/p>\n\n\n\n<p>Similarly, Lomborg asserts that market failure is occurring because prices don\u2019t reflect the carbon emissions created by many products. For example, when we purchase beef, prices reflect the cost of rearing the cow, packaging the beef, and shipping it to a deli. But they don\u2019t reflect the carbon emissions created via this process. A carbon tax would correct this failure.<\/p>\n\n\n\n<p>(Shortform note: Although a carbon tax can correct market failure, <a href=\"https:\/\/www.wri.org\/insights\/carbon-tax-vs-cap-and-trade-whats-better-policy-cut-emissions\" target=\"_blank\" rel=\"noreferrer noopener\">cap-and-trade programs provide an alternative approach<\/a>, in which governments sell a limited number of carbon emissions to the highest bidders. Because consumers can simply pay the carbon tax indefinitely, whereas cap-and-trade systems allow for a finite number of allowances, proponents of cap-and-trade systems note that <a href=\"https:\/\/www.c2es.org\/content\/cap-and-trade-basics\/\" target=\"_blank\" rel=\"noreferrer noopener\">they provide more certainty about the amount of carbon emissions<\/a>. However, because cap-and-trade programs use auctions to distribute allowances, they provide less certainty about the <em>cost <\/em>of those emissions.)<\/p>\n\n\n\n<p>To determine the ideal carbon tax, Lomborg returns to DICE, which predicted that climate change will cost 3.6% of GDP\u2014$140 trillion\u2014by 2100. He concludes the optimal carbon tax would reduce the temperature from 7.4\u00b0F to 6.75\u00b0F. Although this tax would cost about $20 trillion to implement, it reduces the <a href=\"https:\/\/www.shortform.com\/blog\/economic-effects-of-climate-change\/\">cost of climate change<\/a> from $140 trillion to just over $100 trillion. In other words, <strong>it would save us $22 trillion overall<\/strong>.<\/p>\n\n\n\n<p>(Shortform note: In 2020, other researchers argued that DICE, which grounds Lomborg\u2019s predictions, <a href=\"https:\/\/www.nature.com\/articles\/s41558-020-0833-x\" target=\"_blank\" rel=\"noreferrer noopener\">inaccurately accounted for climate damages<\/a>. After adjusting for these alleged inaccuracies, they found that the Paris Agreement\u2019s original goal\u20143.6\u00b0F\u2014aligned with the economically optimal approach to climate change. So, the ideal carbon tax could be higher than Lomborg suggests.)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What&#8217;s a carbon tax? What difference could a global carbon tax make for the economy and the environment? Beyond general strategies to combat climate change, Bjorn Lomborg also endorses specific policies in his book False Alarm. In particular, he argues that we should implement a global carbon tax. Read more to discover the benefits of a carbon tax.<\/p>\n","protected":false},"author":9,"featured_media":88672,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,81,160],"tags":[850],"class_list":["post-88669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-economics","category-science","tag-false-alarm","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Benefits of a Carbon Tax: Save $22 Trillion &amp; the Planet - Shortform Books<\/title>\n<meta name=\"description\" content=\"Bjorn Lomborg thinks we should implement a global carbon tax. 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