A friend wrote to me recently, distressed by an ethical question. He was considering a long-haul trip to see his family, but he was well aware that the flight would have a huge carbon footprint. Could the trip be justified?
I suggested my friend find out what the carbon footprint was (a ton of CO2, it turns out) and then imagine a hypothetical carbon tax. Would he still be willing to travel if he had to pay the tax? Otherwise, the trip was not worth it.
My opinion raises the question of what this carbon tax should be. With a carbon tax of £ 5 per tonne of CO2 – many global carbon emissions are taxed at a lower level – the additional tax on this one tonne round trip flight would be insignificant. At £ 50 more serious, that would be noticeable but perhaps not decisive. (The EU and UK emissions trading schemes until recently implied a carbon price of around £ 50 per tonne of CO2; the UK price has since jumped. US Democrats are reflecting their own carbon tax.) If the carbon tax were a green £ 500 per tonne of CO2, my friend would be missed by his family more than most of us.
I realize that it is pipe dream to advise checking your personal consumption decisions against a totally hypothetical tax, but that goes to the heart of the usefulness of a carbon tax. It is not just an incentive to change behavior; it is a source of information on the behaviors that we urgently need to change.
This information is currently obscure. Global supply chains are frighteningly complex, providing products with a carbon footprint one can only guess at. The big picture is pretty obvious: thefts are bad, the bike beats the ride, double glazing is a good idea. But should you buy the British tomatoes, possibly grown in a heated greenhouse, or the Spanish variety, with more miles of food on the counter? Even for the attentive, these questions are difficult.
About ten years ago, Mike Berners-Lee published How bad are bananas?, a book that explained the carbon footprint of various everyday products. (Bananas are fine.) The headline hints at the desperation of waiting for consumers to voluntarily overcome climate change. How bad is red wine? How bad is an iPhone? Collectively, we make billions of decisions every day about what to buy, how to travel, and where to set the thermostat. We can’t expect us to do it with Berners-Lee at hand.
The advantage of a carbon tax is that we wouldn’t have to.
The price of anything we buy is tied to the cost of the resources needed to make it and deliver it. If something requires acres of land, tons of raw materials, megawatt hours of energy, and days of skilled labor, you can bet it won’t be cheap. The link between price and cost is vague but real.
Yet carbon emissions have not been reflected in this cost. A carbon tax changes that by making the climate impact as real a cost as any. It sends a signal down all of these supply chains, pushing every decision towards the low carbon alternative. A buyer may decide that a carbon taxed t-shirt is too expensive, but meanwhile the textile factory is looking to save electricity while the electricity supplier goes solar. Every part of the value chain is getting greener.
Big changes may well be achievable with a surprisingly subtle carbon tax. The International Monetary Fund has suggested that a tax of $ 75 / tonne of CO2 might be necessary, but even with a tax of £ 100 / tonne – nearly double – the daily pain would be less than what most people see. ‘wait.
In the UK, carbon dioxide emissions are less than six tonnes per person per year, plus two or three tonnes more to reflect the carbon footprint of imported goods. A tax of £ 100 / tonne covering these emissions would increase the cost of living by just over £ 2 per day and cover more than 5% of UK tax revenue. This is no small feat: the government would do well to send everyone a monthly lump sum as compensation. The burden would fall unevenly: those who spend a lot, fly a lot, drive a lot or heat large houses with drafts would pay more. You are unlikely to notice much of an impact on the price of bananas.
Coffee provides an instructive example of how imperceptible change would be. According to Mark Maslin and Carmen Nab of University College London, one kilogram of coffee beans delivered to the UK has a typical footprint of around 15 kilograms of CO2. If grown and shipped more sustainably, the footprint is 3.5 kilograms. With a carbon tax of £ 100 / tonne, this equates to £ 1.50 or 35 pence. You can brew dozens of coffees with a pound of beans, so coffee drinkers might not notice, but you can bet that behind the scenes, farmers and shippers will be looking to take their costs down by $ 1. , £ 50 to 35 pence.
My colleagues Gillian Tett and Simon Kuper have written about the risks of “greenflation” and the pain a heavy carbon tax would cause. They are right to be wary of the political damage that a botched tax could cause.
But we can also worry too much. It sounds like a huge step forward in decarbonizing the global economy, but it’s best understood as a trillion small steps. From frugal purchases to efficient logistics to renewable sources of electricity, carbon taxes smoothly steer us towards the greenest solution every time, whether we are guilty or reckless. They should be at the center of our fight against climate change.
“by Tim Harford”The next fifty things that made the modern economy”Is now available in pocket size
To follow @FTMag on Twitter to discover our latest stories first
As part of our coverage of COP26, we want to hear from you. Do you think carbon pricing is the key to tackling climate change? Tell us via a short investigation We will share some of the most interesting and thought-provoking answers in our newsletters or in an upcoming story.