Researchers: Carbon Taxes Can Reduce Climate Change

Researchers at MIT and the National Renewable Energy Laboratory found that carbon taxes can help battle climate change. The researchers also concluded that some of these taxes would be fair. Wait, what?

We’ve all heard about the fabled “cap and trade” schemes – systems whereby government sets a cap on carbon emissions, and violators have to purchase “carbon credits” from greener companies. Essentially, cap and trade aims to promote renewable energy (and punish the purveyors of fossil fuels). Oh, and the riches to be had …

Firms like Generation Investment Management (GIM) – chaired by superstar ecowarrior Al Gore – stand to make billions on federally-mandated carbon schemes. When Al Gore famously purchased “carbon credits” to offset his do-as-I-say-not-as-I-do lifestyle, he bought them from GIM. The press claimed the former Vice President could become the “world’s first carbon billionaire.”

How’s that relate to MIT and NREL’s study? The carbon taxes spring from genuine concern, but a lot of companies stand to make serious bank.

The researchers compared two carbon values ($25 and $50 per ton of carbon emissions) and considered three different means of redistribution – an equal rebate to every household, a tax break for individuals, or a corporate tax break.

Surprisingly, given the set of assumptions, the researchers found that corporate tax breaks provided the greatest economic boon, though this option was also the “most regressive,” allegedly putting the burden on low-income households. An equal tax break for everyone was the least regressive but also had a minimal impact on the economy.

Instead, the researchers pushed for a hybrid model – tax breaks for corporations and a rebate for low-income families.

“It’s sort of an obvious solution to take some chunk of the money and use it to focus on the poorest households, and use the rest to cut taxes. It doesn’t seem like a hard thing,” said John Reilly, the co-director of MIT’s Joint Program on the Science and Policy of Global Change.

Reilly added that “starting with a $50 per ton carbon tax and increasing it by 5 percent per year would lead to a 63 percent reduction in total U.S. greenhouse gas emissions by 2050.”

Read more about this study here: http://news.mit.edu/2018/carbon-taxes-could-make-significant-dent-climate-change-0406