Global Policy Forum

Energy Taxes



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Emissions of greenhouse gases such as carbon dioxide cause the earth's atmosphere to warm, leading to deadly droughts, floods and other extreme weather events. Taxes on carbon/energy can help mitigate global climate change, by raising the prices of carbon-rich fuels to reflect the social and environmental costs they inflict on society. Higher prices of carbon-based fuels would also boost the use of renewable energy, such as solar and wind power.

Many experts argue that energy taxes would be more efficient in reducing the speed of global warming than the current emissions trading system under the Kyoto Protocol. The Kyoto system imposes greenhouse gas emission caps on ratifying countries by giving them a limited amount of emissions credits. But these emissions credits are tradable, thereby allowing affluent governments and powerful industries to evade responsibility by purchasing credits from less-polluting countries and industries. Critics argue that the emissions trading system only deals with climate change on a superficial level. Moreover, energy taxes have the advantage of raising revenues that could be earmarked for further investment in renewable energy sources.

Articles and Documents

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Can Carbon Farming Make the Carbon Tax More Politically Palatable? (August 2, 2012)

Australia has launched a carbon tax initiative together with the Carbon Farming Initiative (CFI). Under CFI, the government will buy carbon credits from farmers and land managers who save carbon by storing carbon or reducing greenhouse gas emissions on the land. Australian farmers are exempt from most of the carbon tax but are eligible for the carbon credits in CFI. The double initiative could be useful in gathering support from Australia’s farm lobby for the controversial carbon policy, but questions remain about market approaches to climate change mitigation. (Triple Crisis)


Organized Crime May Be Behind Carbon Permit Thefts, EU Says (January 31, 2011)

Hackers, linked to organized crime, have mounted sophisticated cyber attacks on trading systems in the European carbon market, calling into question the security of these exchanges. The hackers stole CO2 permits and resold them in the market before their owners realize that they were missing. The attacks pose a threat to the legitimacy of the carbon market, but EU officials claim the raids do not undermine their carbon trading scheme. (Bloomberg)

Tax on Carbon: The only way to save our planet? (January 4, 2011)

James Hansen, one of the world's leading climate scientists, is disappointed with the pace world leaders are moving to fix a rapidly warming planet. He asserts that China and the US, the world's leading carbon emitters, should tax carbon to support the transition to clean technologies, and move their economies away from dependence on fossil fuels.  Hansen claims that "cap and trade" schemes, which aim to price carbon on markets where it can be traded, will only let the fossil fuel industry to proceed with "business as usual." (The Independent)


France Faces Internal Fight Over Carbon Tax (July 28, 2009)

Recently, the French government released its energy strategy report. France is following the lead of Denmark, Norway and Sweden with a proposed national carbon tax. The tax will affect all sectors that are not part of existing emissions trading programs. The carbon tax plan is a step towards the goal of a 25% reduction in France's emissions by 2050. (Reuters)

Can We Reverse Global Climate Change? Carbon Tax and Dividend (May 14, 2009)

James Hansen argues that the cap-and-trade approach will fail to reduce greenhouse gas emissions and instead will most likely lead to "political trading" and "obfuscation". A cape-and-trade system in addition could lead to speculative bubbles. This article favors a carbon tax with a full dividend distribution to the public as the appropriate tool to stimulate innovation and increase performance within the energy industry. (YaleGlobal)


Why Cap and Trade Could Backfire (July 16, 2008)

Proponents of the cap-and-trade system argue that capping carbon emissions reduces output and in turn decreases global warming. But, by turning carbon emissions into tradable commodities, the cap-and-trade system removes the negative "stigma" associated with producing such emissions. The system suggests that one can produce carbon emissions as long as one pays to "neutralize" the carbon footprint. Further, this Christian Science Monitor article says, the system has not reduced global warming. Carbon emissions in Europe rose by 0.8 percent, after the first year of the EU's cap-and-trade system.

The Trouble with Markets for Carbon (June 20, 2008)

In 2005, the EU established a market-based system to cut carbon emissions that allows companies to buy and sell carbon emission permits. But, environmentalists argue that European governments have provided too many permits to certain polluters. And, evidence from the European Environment Agency suggests that carbon emissions from participating industries rose by 0.7 percent in 2007. The US is likely to experience many of the same challenges faced by the EU because US policymakers have proposed a weak cap-and-trade system. (New York Times)

Plan B - How to Stop Global Warming (January 4, 2008)

In his book – Plan B 3.0 – the President of the Earth Policy Institute Lester Brown outlines "an all-out response proportionate to the threat that global warming presents to our future." One element of Brown's plan involves a "worldwide carbon tax," modeled after cigarette taxes. This article points out that Brown's proposals make use of existing technologies, suggesting that the "real battle over climate change is now political, not technological." (Time)



Global Carbon Tax Urged at UN Climate Conference (December 13, 2007)

A panel of UN participants at the Climate Conference in Bali urged the implementation of carbon taxes to reduce global warming. They argue that such a tax would represent a fair system, allowing and encouraging all countries to share the burden of climate change. According to the panelists, the revenues from the tax should go to a Multilateral Adaptation Fund that will help countries deal with global warming. (Canada Free Press)

Carbon Tax Should Replace Carbon Trading to Curb Climate Change, Says US Mayor Bloomberg (December 13, 2007)

At the UN climate conference in Bali, New York City Mayor Michael Bloomberg strongly advocated for carbon taxes rather than cap-and-trade schemes as a means to reduce carbon emissions. Bloomberg said carbon trading is "vulnerable to special interests, corruption, inefficiencies." A carbon tax would more directly and efficiently reduce carbon emissions that cause global warming, as well as provide the world's governments with funds to further improve the environment. (Associated Press)

Carbon-Taxing the Rich (December 7, 2007)

Former World Bank economist Joseph Stiglitz argues that all countries generating carbon emissions must pay the cost of reducing climate change. He suggests governments increase the use of trade sanctions to punish free riders, and that governments must use every single available instrument to stop global warming. The simplest and most effective tool argues Stiglitz, is a carbon tax, which would apply directly to the emitters and secure a fair system for both rich and poor countries. (Guardian)

A Tax on Carbon to Cool the Planet (October 26, 2007)

A carbon tax would force consumers to pay the real social and environmental cost of burning fuels and raise the incentives to invest in renewable energy sources. But the US Congress remains skeptical and has instead proposed to lower carbon emissions through cap-and-trade plans. The author of this Christian Science Monitor article argues that cap-and-trade schemes in other countries have been flawed and therefore the US should set a good example by taxing fossil fuels.

Time to Tax the Carbon Dodgers (April 5, 2007)

This BBC commentary calls for a tax on exports from wealthy countries – such as the US and Australia – that have refused to sign the Kyoto Protocol. The author argues that the tax would encourage these governments to "develop responsible climate policies" and could "redress the balance" of production costs between countries that pay for their CO2 emissions and those that "won't take climate change seriously."

Poll Finds Strong Support in Europe and US for Polluter Taxes (February 23, 2007)

An International Herald Tribune and France 24 poll found that the majority of US and European residents agreed that politicians were failing "to address the challenge of global warming." Respondents overwhelmingly supported a tax on industrial pollution and called for "responsibility for global warming to bear a financial consequence." Environmentalists hailed the results as a step forward in combating climate change, and urged governments to take action in response to public opinion.



French Plan Would Tax Imports from Non-Signers of Kyoto Pact (November 13, 2006)

As the world's two largest greenhouse gas emitters, the US and China, still prove unwilling to join the Kyoto protocol by the second week of the November 2006 UN Climate Conference in Nairobi, French Prime Minister Dominique de Villepin suggests a new means of pressuring disinclined nations. Arguing that Europe must "use all its weight to stand up" to "environmental dumping," Villepin proposes a punitive carbon tax on imports from countries that refuse to commit themselves to emission targets after 2012. The French prime minister says he would like to study such a tax with his European partners, and that France will "make concrete proposals about how such a tax might work in the first quarter of 2007." (Reuters)

Climate Change: Time to Get Real (September 26, 2006)

Climate change will hit the poorest first and worst, and "divide rather than unite nations," this openDemocracy article argues. It thereby threatens both prosperity and security and in fact "is the most serious threat to humanity since the invention of nuclear weapons." Allowing the world economy to keep growing and avoiding catastrophic climate change requires a very rapid expansion of energy efficiency and use of renewables. With a relatively small carbon tax, "this will be easier than many think," and campaigners now need to leverage public awareness to concrete recommendations for government action.



New Zealand First to Levy Carbon Tax (May 5, 2005)

New Zealand has become the first country in the world to introduce a tax on carbon emissions. By making polluting energy sources such as coal and oil more expensive than cleaner ones, New Zealand intends to reduce its greenhouse gas emissions that contribute to global warming. The government says the new tax will also have a beneficial impact on the economy in the long run, as timely action will make it easier for New Zealand to comply with stricter norms in the future. (Guardian)



Green Taxes 'to hit poor hardest' (October 27, 2004)

A paper from Policy Study Institute raises concerns that green taxes could affect lower income households disproportionately. However, the study remains positive towards green taxes, stating that governments can design tariffs or target compensation through state benefits to remediate negative social consequences. (Guardian)

US Told Tax Can Control Warming (May 31, 2004)

At the "Copenhagen Consensus" global economics conference, three prominent economists argue that a US carbon tax would be the most efficient means to decrease greenhouse gas emissions and curb climate change. (Denver Post)



New Energy Taxes for Europe (October 28, 2003)

European governments have adopted an energy taxation law aimed at reducing greenhouse gas emissions. However, this law exempts consumer petrol prices and, public and international air transport from the "energy tax." (EU Politix)

Energy Taxes of the Rich and Famous (January 9, 2003)

Most luxury homes in Aspen, Colorado contain energy-guzzling amenities such as heated driveways and outdoor pools. In response, Pitkin County has implemented the world's stiffest tax on carbon emissions, rated at $340 per ton of carbon dioxide, as part of a plan to finance green projects in the region. (Christian Science Monitor)



New Zealand Plans Carbon Tax to Meet Kyoto Targets (October 18, 2002)

The New Zealand government plans to introduce a tax of NZ$25 per ton of produced carbon dioxide by 2007, which will increase fuel costs for consumers. The new "carbon tax" will help the country meet its greenhouse gas emission targets under the Kyoto climate change agreement. (Planet Ark)



Environmentally Related Taxes in OECD Countries: Issues And Strategies (2001)

This OECD report analyses the use and effectiveness of environmentally related taxes in member counties. It also discuss problems to broader use of these taxes as well as potential solutions.

Can the Financing Gap Be Closed? (December, 2001)

This article discusses the findings of the "Zedillo Report." The report stresses the need for a global system of taxation, based on the consumption of fossil fuels and on international currency transactions. It also suggest the creation of a new international tax organization and a global council. (Africa Recovery)

Setback for Brown over European Tax (April 21, 2001)

The 15 EU governments have agreed to reopen talks on how to levy an EU-wide energy tax. The move was opposed by Britain who argued that the tax would undermine the competitiveness of European companies. (Daily Mail)

World's Richest Nations Urge Green Taxes (April 9, 2001)

The OECD is urging the removal of subsidies and introduction of green taxes "to prevent irreversible damage to our environment over the next 20 years". (Environment News Service)

Swedish Presidency Tries a Different Tack on Energy Taxation (March 31, 2001)

The Swedish Presidency has turned its attention to the issue of energy tax, which has been in deadlock at Council level over the last few Presidencies. (Europe Information Service)



'Radical' Irish Plan to Reduce Greenhouse Gas (November 2, 2000)

The Irish government sets out a strategy to "decouple economic growth from the growth in greenhouse gas emissions" including the phasing-in of carbon taxes. (Irish Times)

More Taxes, Please: Why the Price of Gas is Too Low (November 1, 2000)

Even the CEO Annual of the Canadian National Post Business Magazine is calling for higher fuel taxes. Christian Zimmerman presents a variety of arguments for energy taxes, including the fact that economies with higher fuel taxes are less vulnerable to oil price ‘shocks'.

Shifting Ground: A CCPA-BC Policy Brief on the Potential and Limitations of Environmental Tax Shifting (October, 2000)

This policy brief warns that tax shifting from societal "goods" (ie. income and employment) to "bads" (ie. pollution and resource depletion) cannot serve as a substitute of strong regulations. (Canadian Centre for Policy Alternatives)

UK Needs Carbon Tax Not Energy Tax (June 16, 2000)

The Royal Commission on Environmental Pollution wants a 60% cut in carbon dioxide emissions over the next 50 years. The Commission argues that government's proposals for an energy tax should be an intermediate stage in the introduction of a carbon tax. (Chemical News & Intelligence)

Heat Is On To Reduce Greenhouse Gases (March 31, 2000)

"There may be a role for an energy tax but only as part of a wider package of environmental measures," reports the Irish Times. Greenhouse gas emissions need to be reduced, but with the least expense to national economies.

German Ecotaxes Cause Political Backlash (January 11, 2000)

Germany's main opposition party, the CDU/CSU, has launched a campaign against the government's ecotax policy, alleging that revenue raised from this tax was not going contributions as promised. (Ends Daily)



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