Page last updated at 15:02 GMT, Tuesday, 24 June 2008 16:02 UK

Taxing time to stabilise climate

Dr Matt Prescott
Matt Prescott

We cannot continue using the atmosphere as a rubbish dump for greenhouse gas emissions, argues Matt Prescott. In this week's Green Room, he sets out the case why a carbon tax will make it cheaper to protect the environment than harm it.

Cyclist wearing a mask (Image: AP)
A global carbon tax cannot single-handedly stop us from using our atmosphere as a rubbish dump; but it could represent a fair and affordable step forward.
We all depend upon the Earth's atmosphere. Yet we continue to treat it as though it were a free, limitless and indestructible rubbish dump.

With little more than our fingers crossed, we seem to cling to the hope that the atmosphere will be able to absorb all of the greenhouse gases that we pump into it without changing its long-term climate patterns.

Unfortunately, the available scientific evidence tells us this is not the case, and that humanity's emissions have already increased the risk that dangerous, perhaps abrupt, climate change will hit billions of people over the years ahead.

The time has come for us to stop freeloading and to find a fair, affordable and effective way of valuing, in dollar terms, the maintenance of a stable climate.

Put simply, we need to make it cheaper to help the environment than to harm it.

The principle of costing carbon emissions is not new - the international carbon trade, led by the EU market, turns over billions of dollars a year.

But the majority of the world's countries, companies and citizens play no part in the exercise. It is remote and aloof, so we need something that touches everybody.

Tax incentives

I propose, as a first step, the establishment of a low rate of carbon tax; implemented globally, but raised and spent at the national level.

This tax could quickly be applied to every source of greenhouse gases in every nation, where it would act as an incentive for everyone to reduce his or her emissions.

Carbon tax campaign logo
$1 global tax per tonne of CO2
reward low-carbon users
create a business incentive to help the environment
discourage carbon-intensive activities
help rich and poor countries to work together

To date, most carbon tax proposals have advocated that the full environmental and social costs of climate change should be reflected in the introductory rate of a carbon tax.

Sweden deliberately did this in 1991 and now has a carbon tax equivalent to $151 per barrel of oil. It has been a huge success and enabled the country to achieve a 9% reduction in its emissions while simultaneously achieving economic growth of 44% between 1990 and 2006.

Clearly, not every society can afford such a high upfront cost.

My suggestion would be to introduce the global carbon tax at a rate that everyone could afford and that allows every country and human activity to be brought on board from the outset.

A rate equivalent to $1 (0.50) for every tonne of carbon dioxide (CO2) released into the atmosphere would meet these criteria and also create a global minimum price for carbon.

Assuming a credible global carbon tax was established, this initial rate could then be increased using a pre-determined price escalator or further international negotiations.

The rate of $1 for every tonne of carbon dioxide would add roughly $0.0023 to the price of a litre of petrol, or $0.32 to a barrel of oil. This would raise a total of $6bn (3bn) in the US, $5.5bn (2.75bn) in China, $600m (300m) in the UK and $700,000 (350,000) in Afghanistan.

To help put these carbon tax costs in perspective, since December 1998 the price of a barrel of Brent Crude oil has increased from $9.10 to its present price of more than $135. So it's not going to wreck any economy.

To encourage innovation, each country would be allowed to raise its $1 per tonne of CO2 in any way that it saw fit. Its only international obligation would be to demonstrate that it had done so.

Carbon cash-back

Full, fair and affordable international participation is important because it would create a new and higher level playing field for businesses to compete upon, and discourage the shift of industries and investments to non-participating countries.

Smoke pouring out of a chimney (Getty Images)
Rich nations could use the carbon tax revenues to help developing nations

If a government wanted to, it could give all of the carbon tax it raised back to its citizens, on an equal per capita basis.

This would not only make people sensitive to the cost of emissions but also create a reward for those who emitted less than their fair share.

When the rebate cheque was sent out to everyone, once a year, it could also be accompanied, for example, with discounts on energy-saving home improvements.

Alternatively, citizens in richer countries could be encouraged to donate some or all of their carbon tax rebate to help others in their own country, or abroad, to adapt to the impacts of climate change.

Governments could also spend the money they raise on preparing for climate impacts.

Finally, money could also go into fast-tracking the development and uptake of low-carbon technologies such as solar heating systems, air-source heat pumps, concentrated solar power and tidal lagoons.

Countries would then find themselves importing less energy from unstable regions, and investing more in local jobs and locally supplied sources of power.

At present human activities, such as burning fossil fuels for energy and clearing rainforests for agriculture, release approximately 29bn tonnes of CO2 into the atmosphere each year. This means that a $1 tax would generate $29bn.

Even a fraction of this would be enough to kick start low-carbon economic development and fund adaptation to climate change in many regions of the world.

One invaluable service a global carbon tax could provide would be to contribute some funds to help places such as Brazil and Indonesia to retain and extend their rainforests, providing benefits for their own societies as well as for the global community.

Man walking through smog (Image: AP)
A carbon tax will help raise funds for clean energy projects

Clearly, if today's markets worked more perfectly, it wouldn't be necessary to propose a corrective tax because the price we paid would already include all of the costs associated with using fossil fuels.

Although a lot is expected of carbon markets they have so far failed to provide a consistent, stable and predictable carbon price for long-term investors.

Taxes also aren't perfect. Many "green taxes" have been abused by governments and treated as a way of raising general-purpose funds rather than as a way of funding green measures.

Treasuries hate having to spend the taxes raised from a particular source on a given activity; but if governments hypothecated their "green taxes" and spent more of the money they raised under this banner on environmentally beneficial activities, this would greatly enhance democratic accountability and public trust.

Nobody enjoys paying taxes, but the brutal truth is that they work. They force you to value what was previously taken for granted, and provide the funds needed to achieve socially and environmentally beneficial outcomes or to correct market failures.

I'm a believer in the power of goodwill and markets, but I am worried that they will continue to fail us, unless we start to tackle more of our excuses for inaction and consider our all of the options for delivering massive emission reductions.

We cannot continue to postpone action indefinitely or to wait for disasters to force our hand. This is because climate change is like a giant super-tanker, and we are unlikely to be able to stop it by the time that we can see it is going to hit us.

A global carbon tax cannot single-handedly stop us from using our atmosphere as a rubbish dump; but it could represent a fair and affordable step forward.

Dr Matt Prescott is an environmental consultant and director of, an online campaign encouraging greater energy efficiency, and founding co-ordinator of E-Day

The Green Room is a series of opinion pieces on environmental topics running weekly on the BBC News website

Do you agree with Matt Prescott? Will a global carbon tax make it cheaper to protect the environment rather than harm it? Will deliver the necessary cuts in greenhouse gas emissions needed to stabilise the climate? Or will it become just another tax that gets swallowed into governments' coffers?

Let's assume that we can all agree on the need for drastic CO2 reduction, that a cheap and efficient way can be found of making taxes work, and that we can get the support of other nations. Hey, it can't be hard, can it? Now impose taxes. The impact is to squeeze people's use of carbon-based fuels, making them use less. Therefore, it only works if people feel the pinch. The people that feel the pinch first are likely to be poorer. So, the way this tax works is to increase fuel poverty. The more people it can push into fuel poverty, the better the tax is working. Any moves to relieve fuel poverty undermines the tax. Spot the policy dilemma?
Mark, Guildford

I get very annoyed by those 'in denial' over global warming. The planet is heating up, and at the same time we happen to be pumping billions of tons of waste gases into the atmosphere - Occam's razor would suggest the culprit is clearly us. But even if the retreating ice-age or solar cycles or whatever were contributing, only a fool could think there could be no down-side of using a finite atmosphere as a dump. Having said that, I think that relying on 'green' tax is a very bad idea. As someone said, governments get used tot he income, loopholes are found, the burdon on working families increased, and another 'market' for a significant few to make billions from the capitalist system. We need strong government-led action and massive investment. I firmly believe that the country best-placed to not only clean up its own act but truly face the environmental challenges of the future should it choose to do so is China.
Matthew, Helston, UK

A carbon tax is a great idea. In response to Catherine's comments on water vapour (WV). WV has an atmospheric life of about 1 week, when it then falls back to Earth i.e. rain. This causes no measurable long term warming effect of the Earth. CO2 has an atmospheric life of well over a century. The increase of CO2 in the atmosphere causes the Earth to warm which in turns causes an increase in the amount of WV. This is why there is more WV than CO2 in out atmosphere. Oh and the increase of WV still has no measurable long term effect on the Earth's temperature.
Ciaran Ryan, Dublin

If the carbon taxes are retained for real environmental uses then they have a chance of working.
Barry Johnston, Chester, UK

The tax he proposes would do absolutely nothing to reduce consumer use. at such small levels it does nothing to change consumer habits as whilst it is an added inconvenience it does not cause so much disruption that people would suddenly stop using their cars or even switching off the lights. as for the money being passed on to the consumer or being used for projects to reduce carbon consumption then thats just not going to happen with this government and many others around the world. it will go into all the tax revenue that is collected and then split in whichever way the government sees fit. it would certainly not go into a dedicated carbon reduction fund. a tax of such levels is not the way forward. people need incentives. take the bin tax. why not reward those who do recycle the most waste with lower council tax bill and punish those that don't with the bin tax. rather than billing everyone because they have produced waste (which is inevitable in the current waste management sector in the UK). the alternative to the car is a slow, inconvenient and expensive bus or a ridiculously expensive, overcrowded train. where is the incentive to use public transport when it is actually more expensive, time consuming, awkward and overcrowded than using a car? make these cheaper to use and people may just use them. petrol prices are now at a level were people are being v careful with how they drive, surely this is a perfect opportunity to promote public transport and invest in its infrastructure for use by the public on a regular basis. if people know that public transport will be cheaper than the car and not be so inconvenient and time consuming more people would use it.
Deno, Preston, UK

Typical, to tackle a problem, throw money at it! Did you know that money actually uses trees and metals to be produced? Duh! Typical British reaction to a problem, TAX EM' so this is effectively, Air Tax. Jesus, money isn't going to help. Stop having wars, I can only imagine the resources being used for that. Oh and the tax man probably uses more carbon than average joe due to having 5 holidays a year on our taxes. United Kingdom of Tax! Stop cutting down trees, plant them! God it's so obvious, and you're all falling for the media panic monster. OOOOhhhh we're all going to die, if so, what's ANOTHER tax going to do? Nothing! Trees don't use money, they provide it. God help the human race with this mentality.
Dave, LPL, UK

The day we stop believing that we can make a difference is the day we stop making a difference.
Blaise Wong, Vancouver, Canada

A carbon tax is the right idea, but $1 per tonne is far too tame. The IEA says we need to be spending $400 billion per year between now and 2050 to make a CO2 cut of 50%. The carbon tax needs to be at least $20 per tonne; and to create a serious incentive to decarbonise transport it probably needs to be nearer $200 per tonne.
Colin, Glasgow

A carbon tax that would fund alternative energy construction loan program is a great idea. I suggest a similar system to the public works projects for sewer treatment. BUT keep the government agencies away from the money. Set it up like a rebate system. If you don't the government will divert the money. Unfortunately, the US the government traditionally uses taxes like the proposed carbon tax to fund day-to-day expenses. For example, the US federal government has been using our old age retirement program called Social Security as a checking account for the last 40 years. I just got a letter from Social Security explaining that they will only pay 72% of required benefits after 2042. This may be somewhat reasonable for national governments but here in California it is much worse. Today we have a $40 billion short fall caused by Californian politicians. They proposed to continue to finance this debt though bonds and stealing money from other programs like gasoline taxes for roads. It is likely California will pass a tax or fee to fund greenhouse gas reduction. However, in short order this money will be diverted to pay for government operations unless significant barriers are installed
Tim Dunn, Sacramento, CA USA

Are you kidding. China, which has topped all other countries this year in pollution will not sign the Kyoto accord. Will you go collect the taxes there. India which will be 2nd by the end on the year is also not apt to play well with the tax issue. How about this: Make China and INdia, and others create a real and viable EPA. Why do you think the autos coming into the USA get only 65 % of the gas mileage they get in the EU? Better roads in the EU? Better gas? I am all for saving our planet, lets do it right. NOT WITH MONEY, WITH EFFORT.
breeze, Florida

Cute idea, but ultimately pointless. There is hardly even any agreement over basic things like responding to genocides, giving aid to or allowing aid for people harmed by natural disasters, or even enforcing "international law". I wish the Green Room would entertain more *viable* ideas, instead of these idealistic notions that never play out in reality.
Chris C, Salt Lake City, UT, USA

Our political systems are out of bounds and out of control. Look what our respective rulers spend our money on. What do they buy and promote? Cameras and weapons just to name 2. They currently take over half my wages as it is now!!! Funding Super government(s) and their insatiable desires does not seem like a good idea to me. I'm with you on stopping waste but I would rather get my hard earned money back and spend it locally on achieving efficiency. Screw the government.
ece, Austin Texas U.S.A.

CO2 is a colourless, odourless, non-toxic, naturally-occurring trace gas in the atmosphere, without which plant and animal life cannot exist. To descrbe this essential gas as a pollutant is the height of chicanery. Besides which, we already pay over 200 tax per ton of CO2 in the form of fuel tax.

Really, I want carbon down, I just don't agree with quite a few points of this article and the approach of it. Another tax burdened levied on the backs of the working class is just unacceptable. This just may be an American way of thinking though.
Rob, DC, USA

Well, you certainly don't lack ambition. Your wanting to impose a stable climate on planet Earth when it's never had one before, proves that. You also confuse CO2 with pollution, which shows a certain degree ignorance for someone calling themselves an environmental consultant. Or are you just doing your bit to foster the image of a mad scientist? Actually, it would be a great comfort to us all if you stopped meddling in things you don't understand. Like taxing us into prosperity, for instance. Thanks all the same.
AJ, Guildford, UK

The only problem I can foresee with this type of rebate check is that our government would tax us on the check after we received it. The idea is terrific and one that could possible help the whole world. Some people do not realize how their consumption affects others, until they are hit in the pocketbook because of their overconsumption.
Norma Bomberger, Phoenix, Arizona USA

The big green con!!! You can't seriously think about taxing us any more. All that is happened regarding Globe warming is that we keep getting taxes added on to most of the things we have to buy. Instead of taxing all those people like myself who don't have loads of spare cash every month, you should tax the higher earns and then use the money raised to actually do something for the environment. We should be making room and planting trees, loads of them and the government should help people (financially) to install solar panel power to our homes. I notice the taxes but I don't notice any real action to stop globe warming, the government are just using it as an excuses to tax people more.
Daniel, Bedford

Its a nice idea, but how on earth does Matt Prescott expect to get every country on the planet to agree to a carbon tax when many nations will not even talk to each other. to implement such a tax would be a logistical and political nightmare. It is evident that the environment is the concern of everyone on the planet, to try and implement such a tax how ever is naive and igrorant of the current political climate.
Gemma Strutt, Swansea, UK

Why bother with the complications of taxes. Why not just adopt carbon rationing: personal carbon quotas that can be traded but that get reduced each year. In the early stages those that use less will benefit by selling unused quotas to the profligate and wealthy. Ultimately everyone will be forced to use less. The only truly equitable and moral solution.
Quentin, Camberley, UK

I cannot believe this is actually being floated as a viable idea? Do you seriously want to TAX one of the most important life giving gases on the planet? And what on earth would the tax actually do, Nasa has just released a statement claiming that no matter what the human race does there is no stopping climate change. Co2 levels are at one of their lowest in Earths history, now we want to lower then even more? How about stopping real environmental problems like GMO crops mutating out of control and sanctioned ghastly experiments melding Humans and Animals at the basest cell level (recently allowed to CONTINUE not START as some reports stated, in the UK) A global carbon tax is just another way to take the money from your pocket to line other peoples, who exactly will pop over to India, Africa and China to enforce it there? The UN perhaps, I think not. Wake up, this is a complete con from start to finish.
Joe Brown, London

I agree with him, I just don`t think it will happen. While some countries use energy/emit carbon like there`s no tomorrow others make serious and practical efforts to curb carbon and raise efficiency. Politics says why should china make any savings at all when they emit 3.2tons per person and yet U.S. emits 19.8tons per person.
John, Stafford, England

Can I claim the carbon tax back ? I have no kids, so I am "decommissioning" one human out of the equatation at the end of my life. Sure tax the people who are breading like rabbits and increasing the problem. But as I have done all I can to reduce "carbon creep" at the end of my life - surely I should get a rebate - fishermen get paid to decommission their boats to reduce over fishing; surely these catbon taxes should be used to reward people for reducing the cause of the problem - human activity So gimme the money !
Steven Walker, Penzance

The idea of a carbon tax often crops up, but in my opinion, a carbon quota scheme would be much better. The idea is that everyone would be allocated a fixed number of carbon units. If they don't use their allocation, they can sell off the spare units. If they use too many, then they have to buy up extra credits at the market rate. This scheme has at least 2 advantages. Firstly, it makes it relatively easy to fix a ceiling on the total carbon by only issuing a fixed number of units. Second, the incentive to cut carbon usage is greatest for those with the biggest carbon footprints and hence who are (a) most likely to have scope to improve and (b) most likely to have the money to pay for ways to improve their carbon consumption efficiency.
James Allwright, Basingstoke, Hampshire

No one should be taxed or be forced to change thier lifestyle because of what someone else believes. Wake up people!
David, akron,ohio USA

the government has been doing this for years, hi fuel duty was a 'green tax' the congestion charge was a 'green tax', they don't work, people are still buying and using cars the public are not the main polluters huge manufacturors are, concrete production is about the biggest cause of co2 pollution, but because construction makes so much money the come back on them is minimal. The government needs to sort out this ridiculous mess it has made because eventually something is going to give.
jamie, manchester

It is difficult to see how a 1$ carbn tax will sigificantly reduce the use of fossil fuels by the rich. I beleive that carbon trading at an individual level might work. Let's give a carbon Quota to each individual in the EC and those of us who are already taking action to reduce thier carbon footprint can at least aquire he funds to do even better. However as some have pointed out earlier a 7Metre sea level rise is now almost inevitable and a break down of civilisation is likely to follow such a major environmental change. I'm only glad that I am old enough to be unlikely to see 2050
Nigel Williams, LEEK

Carbon taxing is a great idea. But it needs to be a global programme and it needs to be set at a realistic level. Companies in Norway, for example, are taxed at $60 per tonne of CO2 emmitted. They therfore have a huge incentive to be clean. However, it makes Norwegian companies less compettitive on the global market because other manufacturers in other countries pay nothing. Some of the current offsetting schemes are seen as at best ineffective and at worst a complete rip-off ! We need a global political commitment with real teeth to make it effective.
Stuart Ward, Marlborough UK

Cash rewards invariably ties the results to cash cycly which Govt. can only get through people & industry (again people) but nevertheless we the people would have to accept a little pain if we have to apply breaks to our changing environment. The earlier we apply "sensible breaks", better for our and future generations to avoid "sudden breaks". While industries may be the source of major pollution, at perple level, attitude also is important aspect adn every individual have to start saving /reducing consumption of resources to the minimum.
Shanky, India

I fully agree with a carbon tax. I have suggested this to my MP, Frinds of the Earth and Greenpeace. They are all dodging the issue, but to me it is blindingly obvious that this is what we must do. The Economist is running an online debate right now concerning the need for legislation, without which businesses will not voluntarily act fast enough to take the necessary action. I go one step further. We should paln to replace almosrt entirely all other forms of taxation (income, corporate and VAT) with carbon taxes over a ten year period. Those individuals disadvantaged by this proposal (those suffering "fuel poverty") would, as now be given tax credits or allownaces. Tax breaks all round for those investing in renewable energy or energy conservation. Of course this can work! All we need is political will.
David Topping, Wadhurst, East Sussex

Carbon Tax sounds great. But unless it is put into practice is just not going to do any good to our planet. Many of the problems associated with implimenting this idea are not discussed by Matt Prescott. This tax may work well in developed countries (by developed countries I mean the wealthy and the ones with large educated population). I don't thing that from less educated people this concept is going to get the same welcome as from the educated once. Before implimenting anything drastic like this it is better to educate the unaware people about the consicuences of carbon emission. I feel that in my conuntry majority of the people are unaware of the facts of global warming. If people are made aware of thes first before taxing them then they may accept it.
George Sanju, Cochin

I do not wish to pay or participate directly in any carbon tax trading scheme which sees yet another tax placed in the lap of the individual. A much more sensible proposal would be to tax the source of the problem and encourage those bodies who have the power to change things to supply goods and services to the public which do NOT pollute. Over time as old poluting devices (cars etc.) break-down, they are replaced with environmentally friendly devices as part of a natural process. Sure, things might cost a little more in the short to medium term but those higher costs support the businesses who endure the costs over moving to more environmentally friendly processes.
Neil, Auckland

Rather than a tax - which affects the poor more than the rich, why not give everyone a carbon ration. You can spend it how you want but you can't use more than your share. This would mean everyone in the rich world had to reduce their carbon footprint, and it would allow the developing world to develop - but without matching our excesses. It would give business an incentive to develop low emission technologies which would be attractive to consumers with limited cabon credits to spend.
Elaine Shipton, Leicester, UK

Sounds great in theory, but our government would just keep the revenue, they've made a mess of everything so far, how can we trust them to do this right?
Chris, Cambridge

I think a carbon tax is a great idea. But it will need to be a fairly steep tax to really work. Stopping the supertanker of anthropogenic global warming (2 or 20 feet of sea level rise) will be a supreme effort which hopefully will help us to generate the basic skills for the even greater problem of natural climate change. We are nearing the end of the present interglacial (the Holocene Epoch). From the Grand Cayman islands (British West Indies), which have been relatively stable in terms of vertical elevations for the past 500,000 years, we have seen that the past four sea level highstands were between 52.5 to 95 feet above present. Arctic sediment studies tend to suggest that the trigger event that sends us into each 100k year ice age/interglacial cycle is the complete melting away of the Arctic ice cap, an event now predicted to be complete by 2070. So getting the skills to prevent an industrial revolution/6.6 billion hominid 2-20 foot rise will serve us well in the bigger battle which looms ahead.
William McClenney, Laguna Niguel, California USA

Taxes often make the recipient of the taxes party to the problem technology as they become an more and more important part of the govts income stream. There is a danger that the govt would not take proactive measures to stopping the problem and that any increased costs would simply be passed on to the consumer. for instance the very high taxes on cars and fuel in the UK has not stopped cars, the opposite has occured and car ownership is at record levels, this has not been helped by the fact that alternative transport forms become more expensive as well. Quite frankly I prefer bans or rationing.
patrick, johannesburg

Im really sick of all this carbon tax rubbish.. water vapour is a greater contributer to global climite change than CO2. What better to help out by planting back rain forests.. but at the end of the day we are still coming out of an ice age anyway, its going to get hotter yet. Some silly extra tax isn't going to stop that!
Catherine Goode, Birmingham

6 billion people need a tremendous amount of cheap energy to survive. Nothing will reduce the consumption of oil until it is all gone. I agree with developing green technologies, but they will not be able to produce the energy requirements of today or the future. A tax like that would simply be passed on to the consumer. Secondly, the idea that humans can regulate the global climate is idiotic.
PCG, miami

Matt Prescott addresses many current concerns that I have had about the environment. I think we all need to do our part to try and preserve the earth, because we all are making an impact on it. The tax would be a great way to help raise money, just one dollar more per person can raise a large amount of money which can be used to help reduce carbon emissions.
Chad, Englishtown, NJ USA

yes,i agree ,it s a very good idea.
adascalitei adi,

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