Editorial Notes

[Editorial Notes] A case for a differential global carbon tax

The global south is expected to pay more carbon tax for global warming even though they have historically contributed less in carbon emissions. There should be different carbon tax norms for countries based on their emissions.
By IASToppers
September 12, 2019

Contents

  • Introduction
  • What is the need to equally share the burden of global warming?
  • What is the just approach to sharing the burden of global warming?
  • A new proposal for carbon tax sharing: Just Energy Transition (JET)
  • How the current mechanism can be corrected?
  • Who will subsidise whom and by how much under JET?
  • The Effective Carbon Tax
  • A case study of top two payer countries and their effective carbon tax
  • The just nature of Just Energy Transition (JET) carbon tax mechanism

A case for a differential global carbon tax

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Introduction

The Intergovernmental Panel on Climate Change (IPCC) says that the total global emissions will need to fall by 45% from 2010 levels by 2030 and reach net zero by 2050. Climate change is a global problem, and a global problem needs a global solution which needs to be equally shared among countries.

ipcc-iastoppers

What is the need to equally share the burden of global warming?

  • The tropical regions of the world, are likely to be most negatively affected by global warming because of their low altitudes and pre-existing high temperatures.
  • The global south is suffering more due to global warming which has historically contributed less to the carbon emission.
  • A genuine global consensus on the mitigation of this problem is missing and in the absence of collective agreement among nations regarding sharing the burden, the environment is becoming worse.
  • Both the worlds (North and South) need to contribute to prevent this danger in their self-interest.

What is the just approach to share the burden of global warming?

  • The burden of adjustment cannot be equal among countries when the underlying relationship between the two worlds has been historically unequal i.e. the Global North (Developed nations) has emitted more carbon than Global South (Developing nations).
  • There should be a global sharing of the responsibility among countries according to their respective shares in global emissions.
  • Currently, the most accepted model of mitigating strategy has been the carbon trading process.

a new proposal for carbon tax sharing: Just Energy Transition (JET)

  • It is a mechanism that can be applied by the world countries, based on a sense of global justice in terms of climatic fallouts and contributions of different countries.
  • It will also help the resource-poor developing countries to make the energy transition without having to worry about the finances.

How the current mechanism can be corrected?

carbon-tax-1-iastoppers

  • The energy infrastructure can be changed fundamentally, which requires massive investments for the green energy programme across the world.
  • A new global green deal which suggests that developed and rich countries, apart from funding their own energy transition, partially support the transition for the poor developing.
  • This sharing of the burden of development be done in a way which inverts this injustice funnel where developing countries are suffering more even after emitting less carbon into the environment.
  • The global energy transition should be financed through a system of the global carbon tax.
  • The total global carbon emissions are 36.1 billion metric tonnes of CO2, this amounts to a global carbon tax of $46.1 per metric tonne.

Who will subsidise whom and by how much under JET?

  • Currently, the global average of carbon emissions is 4.97 metric tonne per capita.
  • The countries which emit more than the global per capita average pay for their own transition plus fund a part of the energy transition of those countries who are below this average.
  • Therefore, the countries at the receiving end of climate injustice are duly compensated and at the same time, the entire world transitions to a greener world due to this process.

The Effective Carbon Tax

 

  • It can be evaluated by adding (subtracting) the carbon compensation amount to (from) each of the countries.
  • The total amount of “carbon compensation” made by the payer nations comes to around $570 billion. The distribution of this amount across the payer countries is based on their distance from the global average.
  • The distribution of this fund across the compensated countries is also based on how lower their emissions are in comparison to the global average. 

A case study of top two payer countries and their effective carbon tax

carbon-tax-iastoppers

  • The two top ‘payer’ countries in terms of absolute amounts of transfers are the U.S. and China since their emissions are higher than the global average.
  • Despite being a payer country, the effective tax rate for the Chinese is lower than the possible universal tax rate of $46.1 per metric tonne.
  • It is because their own energy transition (1.5% of China’s GDP) plus the global compensation they make requires a tax rate only of $34.4 per metric tonne.
  • Therefore, the burden of adjustment is only partially falling on their shoulder and only because they emit more than the global average.

The just nature of Just Energy Transition (JET) carbon tax mechanism

  • India has per capita emissions of 1.73 metric tonne which makes it a compensated country.
  • India comes at the top od compensated countries due to its population size and its distance from the global emissions’ average.
  • But some of the developed countries too like France, Sweden, and Switzerland has lower per capita emissions making them compensated countries.
  • This tells us that even high-income countries which have currently kept their per capita emissions low are beneficiaries of this globally-just policy.
  • This just policy wants all nations to climb down the emissions ladder without necessarily having to give up on their standard of living.

 

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