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| Fig. 1: Future total energy-related CO2 emissions estimated by the U.S. Energy Information Administration at various carbon taxation rates. [4] (Courtesy of the EIA) |
In the past few years, there has been a growing debate regarding carbon taxes in the United States. The purpose of such a tax is to help eliminate the dependency of the United States on fossil fuels as a main source of energy and shift it towards clean energy. [1] The earth is warming and scientific research shows climate change is real. If serious measures are not taken soon to help slow down and reverse climate change, our world will be unrecognizable from how it is today.
In attempt to help reduce emissions, the idea of a carbon tax has been introduced. (See Fig. 1.) Due to an increased awareness in the public about climate change, carbon taxes in the next decade are likely in the United States. Power companies need to start investing in clean energy such as solar and wind. These taxes will greatly reduce large fossil fuel based energy company's profits, and possibly make it unprofitable if they continue to focus on carbon technologies. [2] Although the energy industry is dangerously powerful and aggressively fighting such regulations, it is only a matter of time before a carbon tax is employed.
Due to the inevitability of a carbon taxes, it is key that large energy companies begin investing in clean energy soon so that the transition is smooth for both the people using the power, and the companies supplying it. Once the foundation is created, companies will be able to create clean energy at very little cost.
While carbon taxes are likely, there are multiple reasons why it has not been introduced yet. Companies need to have time to be able to make the transition of harvesting more clean energy. A quick and sudden transition would have consequential effects on the economy because the big energy companies are not prepared, and would potentially go under, leaving us without a supply of energy. Also, the short term startup cost of harvesting clean energy is quite high, so many companies are cautious of investing because there are unsure if it will be profitable in the next ten years.
If companies can begin investing in clean energy soon, they will be significantly better off in the future financially, while also helping to save the planet. It is believed that a carbon tax can reasonably cover around 75% to 85% of greenhouse gas emissions. [3] Carbon taxes are the first step in starting the transition to a non-carbon dependent generation. Hopefully the big energy companies will think long term, and begin investing in the future.
© William Genesen. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] R. S. Avi-Yonah and D. M. Uhlmann, "Combating Global Climate Change: Why a Carbon Tax is a Better Response to Global Warming than Cap and Trade," Stan. Envt. L. J. 28, No. 1, 3 (2009).
[2] D. Pearce, "The Role of Carbon Taxes in Adjusting to Global Warming," Econ. J. 101, 938 (1991).
[3] G. E. Metcalf, "Implementing a Carbon Tax," Resources for the Future, May 2017.
[4] "Further Sensitivity Analysis of Hypothetical Policies to Limit Energy-Related Carbon Dioxide Emissions," U.S. Energy Information Administration, July 2013.