Climate Bytes: The Carbon Tax and Beyond


This is another note in a series about aspects of the climate crisis. 


There has long been a public policy doctrine that governments should tax those things that are harmful to society and subsidize what is beneficial. Because CO2 is the root cause of global warming,  there has been support from scientists, economists and politicians for incentivizing switches from high to low or zero sources of carbon emissions. This was the rationale for creating Canada’s “carbon tax”. And, it has been working. Climate scientist James Hansen has repeatedly urged the introduction of a program he calls “carbon fee and dividend” and this, in its simplest terms, is what Canada’s  program is about. In Hansen’s idea, 100% of revenue from the “carbon fee” is shared equally as a “dividend” to the public. In Canada, almost 100% of revenue is returned as a rebate to the public and the remainder is spent on climate mitigation. Canada’s mistake has been to call it a tax rather than a fee and to omit words like dividend or rebate in the program title. Surveys show that, of the millions of Canadians who have received rebates, over half seem to be blind to that fact. Likewise, they are unaware that most rebate amounts have been greater than carbon tax payments they have made. Because of single-minded aversion to the word “tax”, many Canadians have been open to believing the misinformation being disseminated by opposition politicians and other opportunists. 

Canada’s version of James Hansen’s “carbon fee and dividend” has been acceptable to governments partly because it works more so because it does not otherwise disrupt “business as usual” and does not require abandonment of the prevailing economic world view. Economists, even Nobel Prize winners, have posited dangerous views such as that a 4oC Earth temperature rise would be economically beneficial. In contrast, climate scientists predict that even a 3oC world would be destabilizing at best and, at worst, civilization-ending. Such thinking by economists is a continuation of the long-time disconnect between conventional economics and the natural world and has a been used effectively by climate deniers and other magical thinkers and, of course, by the greedy fossil fuel industry. Following that path leads us to disaster.

More than that, we need to restructure our economy. Seth Klein’s book [A GOOD WAR, Mobilizing Canada for the Climate Emergency] tells us that the scale of change that is needed to combat global warming has precedents. At one level, in response to calamitous events such as the 2008 financial crisis, 9-11 and, most recently, the COVID Pandemic, governments acted quickly if only to protect the status quo and the financial elite. But the closest we have come to an existential crisis such as we now face is Klein’s story of the early years of World War II. Then, almost overnight, entire  economies in Canada, Britain and the U.S. were transformed and manufacturing capacity was commanded to shift from producing cars and other consumer goods to producing military equipment and aircraft. Governments successfully convinced the citizenry that the enemy was at the gates and to accept willingly that rationing programs and other compulsory hardships and privation were a necessity. 

Once again, an enemy is at the gates. We must start accepting that truth and acting accordingly. Earth warming in 2023 was “off the charts” and climate scientists are dumbfounded and unable to explain what happened. This underlines our need not only for a carbon tax but also for the equivalent of Victory Gardens, Victory Bonds and dedicated use of all resources to the single end of survival. We can choose that route or we can continue the path we are on, a condition that is almost certainly  terminal. Nature, as it always has, is showing us who is in control.

Author: TIG