Carbon Pricing to promote Public Goods

Carbon Pricing for Public GoodsGeneva, January 25. By Adam Koniuszewski, GCSP Fellow

The Cost of Carbon Pollution

The enormous economic, social and environmental costs of climate change have been widely recognized since Nicholas Stern worked on quantifying them a decade ago. These costs however remain largely unaccounted for in the marketplace. This failure to apply the polluter pays principle distorts prices, encourages carbon pollution, and gives fossil fuels a competitive price advantage over cleaner alternatives.

Pricing Carbon

A number of nations, including Scandinavian countries, Switzerland and Italy, are trying to correct market signals by pricing carbon. In 2016, carbon pricing covered 13% of global emissions; a number that is expected to reach 50% of emissions by 2030. Carbon pricing, in the form of a tax or carbon trading, generated $50 billion in government revenues in 2015.

A “Framework Convention for Carbon Control” 

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The author suggests that carbon pricing experiences have produced valuable lessons for more governments to adopt it. In fact, there is now a compelling case for creating a “Framework Convention on Carbon Control” (FCCC) and an independent agency to oversee all aspects of carbon emissions and sequestration. Inspired by the successes of the “Framework Convention for Tobacco Control” (FCTC) in alleviating the smoking epidemic, the carbon control convention would be designed to fix market failures and insufficiencies that create de facto subsidies for carbon pollution.

The author also suggests that by ending fossil subsidies and implementing carbon pricing, nations can generate a revenue base that could be used to reduce corporate and personal income taxes. In addition to supporting national priorities like health and education, carbon finance can also fund the universal goals represented by 2030 sustainable development agenda.

For more see:  Winning the Tax Wars – Tax Competition and Cooperation 

Published by Wolters Kluwer, Jan 2018 (see chapter 9)

About “Winning the Tax Wars”

Tax Wars Book FlyerThe book is the outcome of the 2016 TaxCOOP conference at the World Bank in Washington DC on the impacts / solutions to international tax competition. It covers transfer pricing / profit allocation between tax jurisdictions, the need for compliance, investigations and protecting whistleblowers, wealth taxation in an increasingly unequal world, derivatives and hedge-funds, tax investigations, electronic commerce and crypto-currencies, and sin taxes. Its authors, editors and experts include: Brigitte Alepin, Blanca Moreno-Dodson, Louise Otis, Allison Christians, Vanessa Houlder, Lyne Latulippe, Patricio V. Marquez, Richard Murphy, Erika Siu, Eric M. Zolt and Adam Koniuszewski.

About TaxCOOP

TaxCOOP is an international independent and nonpartisan conference on tax competition and the weaknesses of the current tax system in the era of globalisation. Thanks to its various initiatives, TaxCOOP is now recognised as one of the most influential tax initiatives globally.

 

Pope Francis’ Encyclical: a climate game changer?

Rarely has a papal announcement received so much interest and controversy even before its release. On June 18, the long-awaited environmental encyclical of Pope Francis – the highest form of papal teaching – will be released to the 5,000 Bishops of the Catholic Church with a message to 1.2 billion Catholics around the world.

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This promises to be of great significance for several reasons:

1) Part of a long process at the Vatican

While the environmental focus of the encyclical was inspired by the 2014 papal visit to Tacloban, a city in the Philippines devastated by the Haiyan hurricane, the interest of the Vatican for environmental matters started much earlier. In 2002 already, John Paul II released his “Declaration on Environmental Ethics”, raising concerns about the degradation of natural resources and the pollution of water, land and air. Pope Benedict in turn, credited for being the first “Green Pope”, said that: “respect for humans and for nature are one and the same”. He installed solar panels and turned the Vatican into the first carbon neutral-state. So the interest of Pope Francis results from a 15-year period of growing interest for the relationship between humanity and nature during which the message of the Vatican was developed and refined.

2) A holistic and universal message

The key points of the encyclical will extend beyond the narrowly defined “environmental sphere” to emphasize harmony with God, with nature and with other human beings. By addressing questions of poverty, inequality and hunger, in a world of plenty where one-third of the food goes to waste while 800 million people suffer from chronic hunger, Pope Francis aims to replace apathy and indifference with global solidarity. In this manner, he can reframe the climate science debate into a moral and ethical imperative that is relevant to all.

By bridging science and religion, Pope Francis can provide a universal and non-denominational message that resonates with teachings across faiths. Islam, Judaism, Hinduism and Buddhism, all agree on the moral need for humans to act as stewards and protectors of the Earth and to care for the most vulnerable.

3) Strategic timing for the message

The June 18 release will allow Pope Francis several opportunities to address key audiences including President Obama, the US Congress and the UN General Assembly during the adoption of the Sustainable Development Goals that will run until 2030 – all during the month of September, sufficiently ahead of the December Climate Summit in Paris to mobilize the public and world leaders ahead of the conference.

4) A unique personality to overcome the North-South divide

Ever since the Rio 1992 Earth Summit, there has been a divide between developed countries, largely responsible for the bulk of carbon pollution, and Global South countries, the frontline victims of climate change impacts. This is why the move by the leading economies to push the “green economy agenda” onto poor nations has been received with great suspicion by developing countries that see this as another attempt at economic imperialism at their expense. Pope Francis, who selected his name after St Francis of Assisi, a man of peace and poverty, is largely perceived as the Pope of the Global South. No one is better positioned to defend the interests of developing nations and ensuring they do not end up on the short-end of any climate agreement. Only Pope Francis has the moral authority to bridge this great divide and allow a historic reconciliation capable of aligning all interests for the benefit of humanity and future generations.