Tuesday, June 20, 2017

The Climate Movement Should Demand: "Tax Greenhouse Gases Emissions With Subsidies for Low-Income People"

By Kamran Nayeri, June 26, 2015
Climate March in New York City, Septermber 2014

The climate movement must take the initiative
The world governments, in particular, the American government, have failed miserably to adopt and implement effective policies to mitigate global warming and catastrophic climate change despite scientific knowledge that it threatens the very existence of human species and much besides. 

While the grassroots movement demanding action to mitigate catastrophic climate change has been gaining momentum its focus so far has been on registering opposition to government inaction.  It is high time that the climate movement raise specific policy demands because government devised policies  have failed to work so far.  This is because governments place corporate and economic interests above protecting the climate. Precious time is wasted as the world edges closer to the tipping point when it will become impossible to stop the coming catastrophe due to feedback effects. 

For an emissions tax with subsidies to low-income people
The movement needs to adopt as its central demand a carbon/emissions tax with subsidies for low-income people.  This is easy to explain and to understand. Economic activities producing greenhouse gases (GHGs) do not factor in the cost of pollution.  Economists call this “externalities.” Since the Industrial Revolution, this has served as a generous subsidy to industries that cause emissions.  It is high time to add in this environmental cost through an emission tax.  However, the low-income people should be cushioned against such a tax eroding their already low purchasing power.  A subsidy is necessary which can be funded from the emission tax itself.  Emission taxes can also be used for subsidies to speed up transition to clean renewal energy (those that have minimal adverse effect on the environment—solar, wind and geothermal but not natural gas and nuclear).

The climate movement can enhance its effectiveness by focusing its campaigns on nine countries and European Union that are responsible for more than 70% of greenhouse gases. Ranked by their “absolute emissions,” they are China, U.S., E.U., India, Russian Federation, Indonesia, Brazil, Japan, Canada, and Mexico. 

Seven of these countries and E.U. have higher per capita emissions than the world average: Canada, U.S., Russian Federation, Japan, E.U., Indonesia, China and Brazil.  In eight countries and E.U.,  the transition to clean renewables energy will be largely accomplished by phasing out fossil fuels through a carbon tax (a form of emissions tax).  In Indonesia where key sources of GHGs are deforestation and land use an emission tax is required.

Climate Club
Early industrializers of the West and Japan as well as China should take the lead because of the historic responsibility of the former and the fact that China’s pollution is largely driven by industrial production for the West that makes China the leading emitter today. The E.U., in particular some of its member states like Germany, have taken notable steps to cut emissions already.  Last year, United States and China announced intention to reduce emissions in the coming years. And on Germany’s urging the recent G-7 meeting announced its intention to work for a world free of fossil fuels by the end of the century; a largely symbolic gesture. But all these have been rather timid action boxed in by each country's corporate and economic interests.  The climate movement should demand that they honor and exceed these intentions by creating a Climate Club through adopting meaningful emissions (or when appropriate carbon) taxes with subsidies to low-income people.  

Emissions tariff and Climate Change Assistance Fund
Key to the international success of emissions taxes is that Climate Club countries impose import tariffs on leading emitters who are not yet in compliance. The combination of emissions tax and import tariffs will benefit any country that joins the Climate Club and make it unfeasible economically not to join it.  All such tariff should go to a Climate Change Assistance Fund that gives assistance to the countries most affected by climate change and least able to face it alone and to help them transition to a post-carbon economy.  

How to proceed
In sum, I believe it is high time for each organization in the climate movement to discuss this and other policy proposals in their general meetings. What to do about climate change is too important to leave to politicians, bureaucrats, technocrats and business interests who routinely place corporate and economic interests before the health of the planet and all who live on it. 

Whenever we plan for protest actions various participating groups propose demands or slogans close to their own vision. There is usually harmony with the directions and goals of the climate movement.  However, it is time to strive for greater unity by adopting clear and concise policy of our own on how to combat climate change.  

The policy proposals here will run into opposition by many politicians, bureaucrats, and corporate leaders. However, climate movement is a political movement precisely because we must overcome such oppositions by our ever-more powerful mobilizations and unity in action.  Who else will design and implement solutions to climate crisis if not the climate movement?  At the same time, there may be criticism by some of us who have proclaimed “System Change, Not Climate Change.”  Of course, there is truth in the notion that the capitalist system is responsible for global warming and the planetary crisis. However, most people who raise this slogan do not subscribe to the idea that effective policy to combat climate change has to wait for the downfall of capitalism. In fact, it is the reverse.  Only through building a mass climate movement that can forge and force an effective climate policy on the existing capitalist world order that we can take genuine steps to overcome it.  

We can win the fight to reverse 250 years of greenhouse gas emissions if enough social forces are organized and mobilized in key countries and across the world.  It requires a clear understanding of policies, strategies and tactics that can achieve our goal.  Of course, we will continue with campaigns to end fracking, tar sands oil, explorations in particularly dangerous locations, coal trains and bomb trains.  But emission taxes with subsidies to low-income people and formation of a Climate Club that impose import tariff on major emitting countries and provide assistance to the countries of Global South to cope with climate change and transition to a post-carbon economy will be a powerful complement that will unify the movement across the world and point the way forward. 

Technical Appendix
It is well known among economists that in the global capitalist economy individual countries have no incentive to limit emissions that bring them economic benefits as long as they do not have to share its costs.  It is a typical free rider problem.  Given this, in a recent article in the American Economic Review, Yale climate economist William Nordhaus has argued for the formation of a Climate Club to combat climate change.  The two basic conditions for membership are: (1) to impose a meaningful carbon tax; and, (2) to impose import tariffs on countries not in the Club.  Professor Nordhaus discusses estimates for Social Cost of Carbon (environmental costs) to estimate proper tax rates as well as proper import tariff rates. Professor Nordhaus does not consider subsidies for low-income people nor a Climate Change Assistance Fund for countries of the Global South.  However, his work shows that relying on “peer pressure” and a “cap and trade” system will not work.  His policy proposal is also simple to understand and easy to implement if accepted.  Even in the environmentalist movement proposed policies to confront climate change is often a laundry list of options that work if they are undertaken at the same time and by a range of economic and social actors.  Taxing GHGs emissions and cutting off subsidies given to the fossil fuel industry historically are easy to understand and explain and effective. 

 1. They failed to arrive at any common policy for 21 years of Conference of the Parties (COP) and 11 years of Meetings of the Parties (MOP). Meanwhile CO2 concentration in atmosphere has continued to rise rapidly reaching 403 ppm in May 2015. 
 2. See, Kamran Nayeri, “People’s Climate March Was a Huge Success; What to Do Next?,” October 1, 2014
 3. See, for example, June 23, 2015 Letter to the White House by thirteen environmentalist organizations protesting EPA’s intended policy to substitute biomass for coal instead of transition to clean energy. 
 4.Mengpin Ge, “6 Graphs Explain the World’s Top 10 Emitters,” World  Resources Institute, November 25, 2014. 

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