Carbon Pricing

The buildup of excess carbon dioxide and other greenhouse gasses in the atmosphere — the human cause of impending climate catastrophe — results from a fundamental flaw in our market-based economic system. The market encourages people and businesses to reduce costs, and if they don’t keep costs low, they lose out in competition and can even go bankrupt. If something useful is available for free, people and businesses tend to use as much as they want with little or no thought to the consequences.

Greenhouse gasses are continually pumped into the atmosphere for free. We know that the atmosphere can’t hold any more greenhouse gasses without greater and greater damage to the climate system, therefore, the economic system must change. 

Currently, fossil fuel use doesn’t bear the cost of the damage it inflicts on the climate and world ecosystems. If the costs of burning fossil fuels reflected the true cost of this damage, we would have reduced their use long ago. 

Carbon pricing, broadly stated, is any governmental effort to change the pricing system to take these costs into account. It would be quite easy to put a fee or a tax on carbon so that the damages could be reflected in the pricing system. However, that would be seen as a “tax”, which isn’t popular politically. 

However, a fee on carbon gets at the root cause and has many other benefits. It can be structured so that it does not harm, or even helps, those who have lower incomes, by distributing the proceeds of the fee back to the people. Whether imposed as a fee or some less effective, “second-best” mechanism (e.g., subsidy or regulation), carbon pricing is absolutely crucial in solving climate change. Any progress is progress.