Carbon Tax is Best Solution for the Climate Change

This academic essay discusses the effectiveness of carbon tax in reducing carbon emissions and promoting renewable energy sources. It also highlights the challenges in implementing a carbon tax policy and the benefits of a harmonised global carbon tax. The essay concludes that carbon tax is the best solution for addressing the issue of climate change.

Running head: CARBON TAX 0
Academic Essay
Carbon Tax is Best Solution for the Climate Change

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Climate change is referred to a change in climate which is caused due to direct or indirect
human activities. Climate change is caused due to increase in greenhouse gases in the
environment and factors such as deforestation, burning of fossil fuels, and use of non-
renewable sources of energy (Shuman, 2010, p. 1061). Introduction of a carbon tax can
reduce negative impacts of climate change. A carbon tax is referred to a tax which is imposed
by the government on burning of carbon-based fuel or fossil fuels such as oil, gas and coal.
Countries which have introduced carbon tax include Ireland, Chile, Australia, Sweden, and
United Kingdom (Lin & Li, 2011, p. 5139). The issue is whether imposition of a carbon tax
can assist countries in addressing the threat of climate change. A carbon tax can decrease
carbon emissions of organisations and people, and it can increase the investment in renewable
energy sources. A carbon tax also generates national income that can be invested by the
government to reduce carbon emissions (Bristow et al., 2010, p. 1827). However, the
development of renewable sources of energy is difficult due to various economical and
geographical factors. The administration cost of imposition and collection of tax is also high
which reduce national income of a country. However, carbon tax is the best solution for
governments to address the issue of climate change.
A carbon tax can reduce carbon emissions of organisations and individuals and promote the
development of renewable energy sources. The increase in greenhouse gases in the
environment is the primary cause of climate change which is occurred due to carbon
emissions caused by human activities such as deforestation, use of non-renewable sources of
energy and burning of fossil fuel (Marron & Toder, 2014, p. 564). A high rate of carbon tax
will encourage companies and people to find new alternative renewable sources of energy
such as wind, solar, water and biomass energy. For example, wind power sources in Australia
have grown by 35 percent in five years up to 2011 (Hallgren, Gunturu & Schlosser, 2014,
n.p). Similarly, in Sweden, oil accounted for just 20 percent of energy suppliers which was 75
percent in 1970 (Sweden, 2018, n.p). Therefore, if a carbon tax is imposed, then carbon
emissions will reduce, and investment in renewable energy sources will increase.
However, it is difficult for the government and corporations to entirely use renewable sources
of energy because they will face different economical and geographical difficulties. As per
Lee (2014, p. 1218), manufacturing organisations are the primary contributors of greenhouse
gases in the environment because they use fossil fuel such as oil, gas and coal in their
procedure. They use fossil fuel because it is easily available and relatively cheaper. For
example, in Australia, more than 93.38 percent of energy is consumed through fossil fuel, and

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companies have to change their entire production procedure in order to use renewable energy
sources for manufacturing (Ycharts, 2017, n.p). According to Goulder (2013, p. 8), switching
the production location would be cheaper for manufacturing companies rather than entirely
changing their production procedure to use renewable sources of energy. Therefore, if a
carbon tax is imposed, then companies are more likely to switch manufacturing locations
since renewable energy sources are very expensive.
Although it is difficult for manufacturing companies to use renewable sources of energy, but
the technological developments in the field are making renewable energy sources more
accessible and affordable for companies. For example, as per Parkinson (2017, n.p), solar and
wind energy sources will substantially reduce the coal energy market by 2032 and use of
green energy sources will be cheaper for manufacturing firms. Similarly, people are also
contributing to reduce their carbon emissions by using renewable energy sources. For
example, Adelaide, Alice Springs, Blacktown and Townsville are solar cities in Australia and
people can take discounted loans to buy solar panels and use them for generating electricity
(Energy Matters, 2017, n.p). Therefore, the imposition of a carbon tax will reduce carbon
emissions by increasing the use of renewable energy sources.
The imposition of a carbon tax will be an effective tool for reducing carbon emission while at
the same time it will generate billions of dollars in revenue for countries. Ploeg and Withagen
(2014, p. 297) claimed that a carbon tax would increase the national income and the
government can invest that revenue for increasing the use of renewable energy sources. It is
called recycling carbon revenues. The government can invest the amount received from
carbon tax into diverse fields in order to establish public infrastructure that uses renewable
energy sources. For example, Tesla is developing a hyperloop system that will use renewable
energy source and reduce overall transportation energy costs and time by travel people at a
speed of 1,200 km/h (750mph) (Sakowski, 2016, n.p). If a carbon tax is imposed, then the
government will have more capital that can be spent on improving infrastructure that is based
on renewable energy sources and more meaningful behaviour.
Although there are numerous benefits of the imposition of a carbon tax, it would also result in
increasing new burdens for organisations, governments, consumers and the overall economy.
According to Andrew, Kaidonis and Andrew (2010, p. 613), the cost of imposition and
collection of carbon tax would increase overall expenses of the government which will
negatively affect the nation’s economy. For example, it is easy for countries such as Sweden

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and Norway to implement carbon tax policies effectively. However, it is difficult to
implement in countries such as China and India that contributes 30 percent and 7 percent
carbon emissions worldwide respectively (United States Environmental Protection Agency,
2017, n.p). The government would face difficulty in effectively imposing and collecting
carbon tax in these countries because of high population and low control of the government.
If a harmonised carbon tax is not imposed globally, then it cannot be used for addressing the
issue of climate change.
However, a harmonised carbon tax would generate income globally that could be used by
governments for addressing the global issue of climate change. As of 2017, the number of
countries that implement a carbon tax policy has reached 40 which include large nations such
as the United Kingdom and Australia (Roberts, 2017, n.p). In order to meet Paris climate
goals, nations such as India, Brazil and Thailand will also implement policies for
implementing carbon tax which would assist in reducing carbon emissions globally (Roberts,
2017, n.p). For example, Demark introduced carbon tax in 1992, and between 1992 and 2005,
the carbon emission per person has reduced by 15 percent (Nunez, 2018, n.p). If governments
across the world implement a harmonised carbon tax policy, then it will result in reducing
carbon emissions of both companies and people. Therefore, carbon tax is an effective
solution for addressing the issue of climate change.
In conclusion, there are many difficulties in implementing a carbon tax policy such as high
administration costs, increase in expenses of companies, lack of harmonised tax system, and
high dependence on fossil fuel. However, a carbon tax policy can reduce global carbon
emissions and increase the investment in renewable energy sources which assist in addressing
the issue of climate change. Thus, a carbon tax policy is the best solution for climate change.
Therefore, governments should implement a harmonised carbon tax policy for reducing
carbon emissions of organisations and individuals and increasing their dependence on
renewable energy sources.

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References
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