Harbinger Of Clear Skies

“The end of the world”. Such a statement may seem a tad dramatic, but its inevitability cannot be denied. The eternally present shadow that looms over our future has been given many names by our ancestors: Ragnarök, Apocalypse, The Long Night, but we have come to realise that the harbinger of doom for our planet has a much simpler name; Global Warming. The exponential rise in Greenhouse gas levels brings the end crawling towards us steadily. The only fact that Man can take solace in is that the danger is known and its endgame, avoidable. Countries around the world are taking advantage of this and are investing in various methods to curb global warming. This has led to the creation of a revolutionary socioeconomic tool- The Carbon Tax. The first Carbon Tax was introduced by Finland in the 1990s for purposes entirely political but since then countries around the world have been making use of this tax to combat global warming.

Carbon dioxide (CO2) is one of the main green house gases released by human activity.

How Does It Work?

The logic behind the carbon tax is simple. The tax is levied on the carbon emissions required to produce goods and services and is essentially used to change the economic behaviours of businesses and firms. By setting a price that has to be paid for every ton of greenhouse gas emitted, the cost of production of firms increases and will reduce the profit margins the firm will be able to make. These firms will thus be given the incentive to look for more environmentally-friendly fuels or adopt the use of new technologies to reduce their carbon emission output and reduce their cost of production. Many countries have made plans to reduce their carbon emissions this way. Singapore implemented the “Climate Action Plan” in 2019 to cut down on its CO2 levels by 36% by the year 2030. The tax levies $5 per tonne of carbon dioxide on firms that emit over 25000 metric tonnes of emissions a year. Other countries like Sweden were pioneers in the implementation of the Carbon tax and are famous for having the highest Carbon Tax rate in the world of US$126 per metric tonne of CO2. The tax was set in 1991 and was levied primarily on fossil fuels used for motor fuels and heating purposes.

The combustion of fossil fuels releases vast amounts of green house gases into the atmosphere which leads to the enhanced green house effect.

Does It Work?

However, the real question that must be answered is if the Carbon Tax is truly making a difference. Since its implementation more than 30 years ago, Sweden’s carbon emissions have been declining steadily, with the carbon emissions in 2020 decreasing by nearly 40% compared to the year prior. Sweden’s tax revenues from the Carbon Tax have also been decreasing which shows that more firms have been switching to environmentally-friendly fuels and the market for innovation of new technologies to reduce carbon emissions has also shown significant growth in the past three decades. Singapore has also shown similar results, with results predicting that the policy will reduce the overall carbon emissions of Singapore by 9.2 billion metric tonnes in the next 20 years. The market in Singapore for clean energy technology has also increased with plans to increase the amount of solar energy dependence in the country. Singapore aims to deploy at least 2 gigawatts of solar energy by 2030; this is the equivalent of powering up to 350,000 houses for a year.

Conclusion:

All in all, it can be said that despite the need for more ambitious targets and initiatives to mitigate the effects of climate change, the Carbon Tax is a viable socioeconomic method of curbing the effects of global warming. One can only hope that more countries invest in such a scheme to try and halt the oncoming catastrophe.

By Taaran Sajal Vinod