Carbon Taxes Cut Emissions, Not Jobs or Economic Growth
It’s easy to see why infrastructure spending would cut emissions, while creating jobs. Carbon taxes appear to do the same.
High carbon taxes can have large impacts, lowering emissions by almost 11%, as is the case with Sweden’s $125 per ton rate. Smaller taxes, like Poland’s less than $0.25 per ton rate, have almost zero impact.
Photographer: Bartek Sadowski/BloombergIt’s easy to poke fun at some economists’ apparent obsession with carbon taxes as the sole climate policy tool. Some appear to revel in making the case that we should tax carbon and only tax carbon. Meanwhile, it’s clear that carbon taxes alone aren’t enough, because more must be done than “just” price the negative emissions externality, and because of politics. Taxing something bad might be objectively good, but “tax” still appears to be a four-letter word in Washington, D.C.
But among all of these arguments, it would be too easy to overlook a simple fact: carbon taxes, done right, work. They cut CO₂ emissions. More surprising still, they might even boost the economy at the same time.