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 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 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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