How carbon taxes can succeed

tax
Credit: CC0 Public Domain

The political leeway for carbon taxes is greater than commonly assumed. Political scientists at ETH have shown how carbon taxes could find acceptance in Germany and the U.S.. What matters most is the intended use of the tax revenues and that all industrialized nations implement the taxes.

Useful to fight , but politically risky: are widely regarded as a double-edged sword. However, a study conducted by ETH has now challenged this idea. Depending on how carbon taxes are designed, the majority would indeed support them. In addition to the actual tax rate, there are two main factors affecting public acceptance: how governments use the revenues and whether other industrialized nations introduce similar taxes.

This was the conclusion reached by the authors—senior researcher Liam Beiser-McGrath and ETH Professor of Political Science Thomas Bernauer—in an article recently published in Science Advances. They conducted an online experiment to study attitudes towards carbon taxes in a representative sample of about 3,000 people in both Germany and the U.S.. Participants evaluated a series of carbon tax proposals, which randomly differed based upon features of their design.

This set-up allowed the researchers to evaluate the influence of individual aspects of a carbon tax model on people's willingness to pay. In other words, they were able to determine how a carbon tax should be structured in order to achieve majority acceptance, and conversely which properties could cause it to fail.

They focused on two questions in particular: How did information about the intended use of the tax revenues influence people's willingness to pay? And did respondents' attitudes change when they knew that other countries would also impose a carbon tax?

Earmarking taxes improves acceptance

Focusing exclusively on the influence of the intended use of tax revenues, a clear picture emerges: survey participants were more open to paying the tax when they know how the revenues would be used. Certain purposes even generated a clear majority. For example, if the government were to use carbon taxes to invest in renewable energy, more subjects surveyed in the U.S. would support than oppose taxes as high as 60 U.S. dollars per ton of carbon emissions. This is equivalent to 860 dollars annually for the average citizen, which falls within the range considered necessary to bring greenhouse gas emissions in line with the internationally agreed 2°C goal. Similarly, a general tax refund to the population also has a positive effect on people's willingness to pay.

In Germany, too, acceptance of CO2 taxes rises significantly when revenues are used for these sorts of programs, although the majority is only willing to pay up to 20 U.S. dollars per ton. This figure is nevertheless remarkable from today's perspective, as Canada's carbon tax—which was implemented in 2019 at 20 dollars per ton, to be increased to 50 dollars by 2022—is considered ambitious. Bernauer says: "Our study shows that there is indeed leeway for structuring a carbon tax that is both effective and acceptable to the majority. This is probably true for Switzerland as well. Carbon taxes aren't necessarily political suicide."

Government plans to invest revenues in infrastructure had a positive impact on people's willingness to pay the tax, as did planned investment in government programs for low-income communities (albeit to a lesser extent). However, carbon taxes are very unpopular if revenues are used to reduce corporate taxes or government deficits.

Industrialised nations must cooperate

The researchers identified another decisive factor, in addition to the use of revenues: respondents in both countries were only prepared to accept high taxes if all industrialized nations were to implement a CO2 tax. For Germany to accept a lower tax, on the other hand, it was sufficient for other EU countries to cooperate. In the U.S., there was even for unilaterally introducing a tax of up to 30 dollars per ton.

More progressive Americans

This surprising discrepancy appeared throughout the results: in the U.S., people seem to be more open to a tax than in Germany. Study author Beiser-McGrath says, "We would never have expected that Americans, who tend to be more averse to taxation, would be more open to this than Germans." This may be due to lower support of market instruments in Germany. However, the study leaves this point open.


Explore further

Global carbon tax may be more feasible than previously thought

More information: Liam F. Beiser-McGrath et al. Could revenue recycling make effective carbon taxation politically feasible?, Science Advances (2019). DOI: 10.1126/sciadv.aax3323
Journal information: Science Advances

Provided by ETH Zurich
Citation: How carbon taxes can succeed (2019, September 19) retrieved 21 October 2019 from https://phys.org/news/2019-09-carbon-taxes.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only.
26 shares

Feedback to editors

User comments

Sep 19, 2019
We're talking FOSSIL carbon here, right? The problem is adding fossil carbon to the environment, not processes that re-use already present carbon. Without the distinction, there might be perverse situations where it is less expensive to use and release fossil carbon than to use already present carbon. If at all, non-fossil carbon would be taxed at a much lower rate. Processes which remove carbon from the atmosphere might get a credit.

Yes, earmarking the tax proceeds to investments in clean energy would be good. Also directing funds at helping workers displaced by the transition. This would remove the jobs argument which always seems to be used to justify destructive industries.

Sep 19, 2019
Not exactly sure where they get that Canadians consider the carbon taxes are "acceptable to the majority". They aren't, now I have serious problems with using taxation as a method to curb climate change. How does that work exactly... make life more expensive when we know that wage growth has not changed in the last 40 years ... As a consumer I don't have a choice on how things are constructed (what processes are used, what materials, how these materials are sourced and mind/fabricated) I don't have a choice where they are constructed (like the other side of the planet... why not local) and I don't have a choice on how they get shipped.

Sep 19, 2019
I'm okay if taxes are used in only one way... FUNDAMENTAL SCIENTIFIC RESEARCH!!! it is the only way to come up with the new magic needed for engineers to design new ways to generate power and or capture/reuse the carbon in the atmosphere. Now what will really happen is that the taxes are going to be used to put more solar panels in Canada even though we live in this climate where things like overcast and snow most of the year make solar power an absolute pile of crap for this country. What our current PM TrueDope has done is use taxes to pay for solar farms to recover lost power for private power companies... you only find the solar farms in rural areas kinda convenient considering that is where the loss is in the High power transmission lines. These renewable do absolutely nothing to reduce carbon... heck considering the ridiculous energy requirements needed to build solar panels to begin with (never mind the environmental disaster it creates with heavy metals and poisons)

Sep 19, 2019
Now if we were serious on climate change we would completely obliterate any and all patents, we would bring back manufacturing to each country because its easy to wag your fingers at others saying their dirty but much harder when you have to sleep in the bed you made.

Not just that we wouldn't just consider only solar panels and wind farms as the only solution.... dumbasses there are things like hydro electric the ORIGINAL renewable energy source. Low pressure molten salt thorium reactors... proven over 60 years ago (not renewable but virtually unlimited energy source and ridiculously safe, does not produce green house gases).

How about geothermal...god damn it we live in Canada this IS THE F'ING PLACE TO DO THIS DIPSHITS!!!!


Sep 19, 2019
Taxes and tax credits/subsidies are the classic way to correct for undesired economic behavior. The fossil fuel industry places huge externalized costs on current and future generations. Taxes are a way to factor that cost into the market by making the cost include the hidden, externalized costs. It tilts the table, injecting a bias into the market. But it does not pick winners and losers amongst the alternatives. The marketplace will do it's thing to bring forth the best alternatives.

As to hydro, I think all the reasonable locations have pretty much been used and in some cases, the damming of rivers has causes so much trouble downstream that the dams are being decommissioned and removed.

Sep 19, 2019
Okay good argument but I ask what are the environmental problems with producing semiconductors ... honestly I think that hydro electric does much less damage than semiconductor manufacturing almost an order of magnitude less.

The problem though is not necessarily taxation but lets be honest how much of the culpability has been passed onto corporations... little to none although many ridiculously over produce goods that eventually get destroyed by companies like Amazon so that no one gets it and all that energy that was used to not only get the raw materials and the production of said materials into usable products to produce the actual widget that is being stored for years (costing energy just store it) just to have it destroyed, this doesn't even account the energy used to ship all this raw/refined material and said final product several times around the world.


Sep 19, 2019
Honestly if this is as serious as everyone is claiming should we not just get the best and brightest and come up with a better way... no more subsidies for anything other than what will save the human race... any IP, patent, idea, method or what ever should be taken and be used to save humanity. No royalties, not sue balls, no infringement ... seriously are we going to let lawyers be the reason why we die as a species.

But you will never hear that kind of speech on any venue cause unfortunately most of these taxation imposed upon people are just a scam to get more tax money to waist on some lobbyists wish list.

Sep 19, 2019
The problem at least in Canada is that taxation not doing anything but provide free power to private sector power companies on tax payers dime... in Canada... seriously if like 10 to 15% show cast onto a panel and the power almost drops out completely... In Canada like where we have mostly trees in our rural areas... WTF that means for most of the morning and late afternoon there is no power being generated... we get at best in June maybe 10 hours (if it ain't raining all day long) but 60% of the year at best we get potentially 6 to 8 hours of actual power generating time... Winter time considering the amount of snow we have had over the last couple of years maybe a good solid 4 hours of day (if someone comes by every 30 minutes to clear off the panel).

At any rate concerned citizen that truly believes that our interpretation of taxation is a complete and total scam. Thank you TrueDope.

Sep 19, 2019
The whole idea that carbon (the basis for all life on Earth) is a pollutant, is absurd political BS.

The record shows increased temperature produces increased CO2, not the other way around.
Increased CO2 happens after the temperature increase.


Sep 19, 2019
@old C
The whole idea that carbon (the basis for all life on Earth) is a pollutant, is absurd political BS
that is because you can't read factual studies

much like oxygen, which we need for life, if we have too much of it we can kill ourselves
https://en.wikipe...toxicity

https://medical-d...oisoning

perhaps you should learn about exposure limits (start with Permissible Exposure Limits (OSHA PEL) and move on to what this means for plants, which is clearly and repeatedly specified in the dozens of studies that I've linked to you in the past regarding CO2 and how/when it's a pollutant)

Sep 19, 2019
Old C is right. Carbon dioxide always follows, never leads. Hundreds of millions of years ago or last Thursday, it follows not leads. We're barking up a very expensive wrong tree.

Sep 19, 2019
@rhugh1066
Old C is right
if old c was correct then it would be able to demonstrate it with peer-reviewed studies that invalidate the overwhelming evidence that has been repeatedly validated because, oddly enough, that is all it takes in scientific circles

produce a study that has the equivalent evidence to what you're debunking (or provide demonstrable evidence of bias) that is constrained by scientific principles

guess what old c (or the denier camp) has never once done?
We're barking up a very expensive wrong tree
your statement of Self-report or attitude (opinion) isn't equivalent to scientific evidence
http://wp.auburn....opinion/


Sep 19, 2019
I have serious problems with using taxation as a method to curb climate change. How does that work exactly...
e - evil3eaver

It is quite simple. So simple that even a child can understand it. What caused your brain damage?

Taxing bad behavior limits bad behavior because it makes alternative behaviors more economically viable.

You know just like fines for shitting on your neighbors property or pissing in their drinking water.

You claim not to understand because you are corrupt and willfully ignorant.


Sep 19, 2019
rhugh
Carbon dioxide always follows, never leads.
Am I correct that you have made that assertion before - and have been shown the data to refute the assertion? Here is the data for you again - https://www.ncdc....e-change Notice that sometmes C02 leads. The relationship between C02 and temps is well documented - including the whole issue of feed back loops.

Any way - if you want to assert that the current warming trend is not caused by green house gasses in the atmosphere - then could you provide the alternative explanation - with supporting science. Thanks.

Sep 19, 2019
The money is coming for renewable stocks. If you wanna have a nice comfortable retirement, get out of fuelish carbon intensive stocks and into renewables.

Need a kick in the ass? Here's one, both Michael Milken- yes, that Michael Milken- and BP- yes that BP- are both saying on the twenty-year horizon these renewable stocks will be the hottest thing going. Read for yourself: https://www.cnbc....ken.html

So you wanna get poor continuing to subsidize these losers, or get with the program? End the subsidies to fuelish destroyers, and reduce the tax burden and the deficits, or keep paying for losers? If you wanna be poor in 20 years, then just keep insisting on the fuelish.

As far as the article, gee, looks like carbon taxes will make your renewable stocks even better. I'm down with it. And ending the fuelish subsidies reduces the deficit and reduces the tax burden. What's not to like?

Sep 19, 2019
@DS.

Agreed. Not only that, but the increasing global problem of oil security and oil wars makes it a sensible thing to wean ourselves away from dependence on foreign oil/coal and just get on with domestic renewables development/implementation so that not only are we insured against foreign oil/coal supply disruptions/terrorism etc but also make our populations healthier and less endangered both globally/collectively due to less climate change danger and also individually by having jobs/environments which are cleaner, healthier, safer and indefinitely sustainable. Anyone still failing to see all the many and diverse benefits to going renewables should seriously re-evaluate their situation in re their intelligence and lucidity levels. Meanwhile the sane and reasonable among the world populations will proceed along the long scientifically/logically/rationally indicated reasonable and sane path towards the future based on renewables. Good luck to us all. :)

Sep 19, 2019
It's not the money. It's the money. :D

Sep 19, 2019
Oh RC, there you go again, soiling the forum with your raging stupidity.
Save the world RC, stop breathing. :)

Sep 20, 2019
that is because you can't read factual studies


Anyone with a brain questions you idiots.

Sep 20, 2019
Carbon taxes are just a redistribution of resources. Socialists have pushed for carbon taxes for as long as we have been discussing climate change.

Such taxes do nothing to reduce carbon use. The companies producing the carbon fuel just pass the cost on to the consumer. The consumer does not stop using carbon fuel because there is no viable alternative.

It is just a socialist process of redistribution. The world has way too much socialism now. We don't need more. The public has strongly resisted carbon taxes for this very reason. They accomplish nothing good and they harm the economy.

Sep 20, 2019
@dogbert, and all you got's conspiracy theories?

You gotta be kidding. I'll take the money, thanks. See ya, wouldn't wanna be ya.

Sep 20, 2019
Da Schneib,
@dogbert, and all you got's conspiracy theories?


What conspiracy? It is plain and obvious socialism. No hidden agenda. No conspiracy. Simple redistribution of resources. It serves no purpose except to further socialism.

Sep 20, 2019
Bah. I don't invest based on bullshit like that and if you do you deserve the dogfood that's going to be all you can afford to eat.

Sep 20, 2019
VendicarKahn

WTH is wrong with out, you first talk about taxation but then fines... they are not the same thing and you go as far as saying "So simple that even a child can understand it. What caused your brain damage?"

Seriously there is nothing you said that actually says it does anything to stop climate change... one thing you have not ever accepted is that life is to consume and create waste. So you kinda can't avoid those parts, curb what behaviour like eating, or keeping a house clean or getting to and from work. Are those the behaviours you are trying to curb?

Taxes hit those areas much more than the once a decade car purchase or at least in my case the once every 15 year real vacation. How is taxes going to change the fact that it is going to increase the cost of everything...

Sep 20, 2019
Guess you can sit there on you high horse and wag your finger of disapproval at others until people actually start starving in the streets and on that day they will take you down from your high horse and beat you to death.

Buddy we still need to live every day... what I've seen my taxes go to is solar farms which honestly in Canada is a bad idea, in places that little forests, rain/overcast solar is a great idea. So just in case your "brain damage" brain can understand, I am not against solar, but I'm against using the wrong technology in the wrong place Solar != Canada mkay. Don't misunderstand me further though I will say that there are a few limited places where solar is actually a good idea in Canada but very few places in this country are ideal for this tech. Not bad but I would argue that geothermal would be a much better choice for tax payers.

Sep 20, 2019
If you didn't read maybe I should put in caps:

*I DON'T HAVE A CHOICE ON WHERE THINGS I BUY ARE MADE, PACKAGED, SHIPPED
*IF THEY HAVE SOURCED COMPONENTS/MATERIALS FROM ETHICAL COMPANIES

I also don't have a choice that as you write you reply on a piece of electronics that are intentionally designed to fail ASAP. Allowing planed obsolescence cause "people would lose their jobs cause no one would buy another after" BS. Glued batteries/screen/circuits/whole damn phone... WIF don't they just submerge the whole damn thing into resin and get it over with.

Look there are many thing that need changing and I do agree that taxes are needed but the farce we current are perpetrating will do nothing to slow down, stop, or reverse climate change. Is that simple enough for your brain damage?


Sep 20, 2019
dogbert says
Such taxes do nothing to reduce carbon use.
But of course provides no support for the assertion. I did a quick google search - https://aceee.org...9_49.pdf
Overall the available evidence indicates that carbon taxes have contributed to reductions
in energy use and carbon emissions.


What is really interesting - is the Trumpian nature of so much discourse these days. Facts just don't matter. dogbert will never supply support for assertions - as the new normal - is to say stuff, and then move on to the next venue. There is no need to be honest, or accurate any more.

Sep 21, 2019
I think the conclusions of this study have been self-evident for a long time. I hope our mainstream political parties finally take them on board and start doing something.

Sep 21, 2019
@antigoracle.
Oh RC, there you go again, soiling the forum with your raging stupidity.
Save the world RC, stop breathing. :)
...posts the insensible 'weaponised stupid' and/or 'bot' on a site where his/its posting record is there for all to see just how ironic, not to mention lame, that latest effort from the 'weaponised stupid and/or bot' is. His/its Russian/GOP/Fossil troll-factory employers/programmers must be kicking themselves to have invested even that measly 'thirty pieces of silver' on such a low-grade crap-troll 'investment'. Serves 'em right, the lousy cheapskates! :)

Sep 22, 2019
Carbon taxes represent a fundamental conflict of interests: the state is making money out of a thing they're supposed to remove.

That's why carbon taxes don't ultimately succeed in their purpose. There is a perverse incentive to keep supporting fossil fuels "under the counter" so people would have to keep paying the carbon tax. This affects all other policy, such as support given to alternative technology.

The state does not want to give up any source of tax revenue, because the power of the state is based on their ability to spend money. The state rewards its supporters by taking money from some people and giving it to other people, such that the people who are given should become dependent on the state handouts. This does not mean merely welfare, but whole industries that would not exist without this wealth redistribution.

The state spending in the US is close to 50% of the GDP, which means half the people are dependent on the state for income somehow.

Sep 22, 2019
There is also a perverse incentive in spending the carbon tax money on subsidizing the competition.

Because, what the state is really saying there is, "As long as you DON'T have a cost-competitive alternative, we'll keep paying you guaranteed profits and none of you will have to compete with each other for it.".

The industry that is being subsidized goes "Okay!" and, rather than replace the fossil fuel industry, a "trust" is created where one hikes the prices up to compensate for the tax and the other makes sure that the new "solutions" always depend on the fossil fuels to operate. Win-win.

Wind turbines and gas turbines become best pals.

Unfortunately, this damage was already done 20 years ago, and governments around the world have paid trillions in subsidies to proportionally minimal actual effect. Now it's a matter of sustaining the subsidies anyways because a great many voters have become dependent on the income.

Sep 22, 2019
@Eikka.

Your above commentary seems to be getting 'one-eye' again. Your assumption is that govts want to maintain the income levels from the carbon taxes. In fact, they would be happy to see that particular taxation stream reduce as the renewables get more market share due to becoming cheaper, cleaner, safer and more sustainable into the longer term; not to mention the savings stream from improved health/environment from going renewables. And as for your complaint re subsidies during transition period, why would you complain? The point is to facilitate/expedite renewables so that they can then proceed faster to stand-alone basis once CRITICAL MASS of infrastructure/technical developments/implementations reach maturity and the coal-fired power are replaced by better system. Just like horses were replaced by machines, the transition requires much facilitation and subsidies etc from govts to encourage more quick transition and hence benefits from said transition. Cheer up, mate! :)

Sep 24, 2019
@old
Anyone with a brain questions you idiots.
what you do isn't the same thing: you're questioning established facts repeatedly validated by studies globally

you still can't understand how something that is beneficial one minute can be toxic the next, and that has been studied and validated repeatedly for centuries

and that is just a tiny part of what you demonstrably can't comprehend

that isn't "questioning" the science! that is ignoring reality for a fantasy built in your head by some idiot who wants to control you in some way, much like religion

if you had the ability to question the science you would have published studies falsifying AGW

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more