Bringing carbon emissions to people’s wallets

In this April 3, 2014 file photo giant machines dig for brown coal at the open-cast mining Garzweiler in front of a smoking power plant near the city of Grevenbroich in western Germany. (Martin Meissner/AP)

Americans have been burning fossil fuels for centuries. During the Industrial Revolution, coal became one of the most prominent sources of energy. Later, it was joined by natural gas, gasoline, and other crude oil products. These resources were the solution to generating efficient, inexpensive energy for years – but only at the expense of carbon dioxide emissions. A number of the world’s most respected scientists, armed with mountains of data, have surmised that these emissions have been detrimental to the environment, and yet humans continue to burn fossil fuels regardless. If the scientific evidence is not sufficient, then an economic incentive, such as a carbon tax or emissions trading policy, is the solution to reduce carbon emissions.

When fossil fuels are burned, they release carbon dioxide into the atmosphere. This greenhouse gas traps heat, keeping it from escaping Earth’s atmosphere, and thereby raising the average global temperature. The issue is that the rate of these emissions has increased drastically in the past century. In fact, according to NASA, carbon dioxide levels in the atmosphere were at 280 ppm in 1880, but have risen to 400 ppm. NASA’s Goddard Institute for Space Studies found that this climb in carbon dioxide levels was accompanied by a rise in temperature anomalies, from 0.2°C in 1880 to 0.8°C today. Yet U.S. carbon emissions, along with global emissions, are still increasing.

The problem is that carbon emitters are not entirely accountable for the emissions they produce. There is a private cost to burning fossil fuels, but it does not account for the social costs that occur as a byproduct, such as the effect of the emissions on local communities and ecosystems. These factors are externalities, which are unaccounted for in the private cost of burning fossil fuels. An economic instrument such as a carbon tax or emissions trading program would internalize these externalities and provide an incentive for emitters to reduce their emissions that would directly affect them.

In the case of a carbon tax, this would entail establishing a set price on emissions, usually per ton of carbon dioxide produced. Emissions trading, also known as the cap-and-trade policy, would instead set a cap on the amount of carbon dioxide a particular individual or company could emit and allow market forces to determine the price. Parties that produce less than the allowed emissions could then trade allowances with parties that intend to produce more than their allotted amount through a system of permits. Ideally, either of these policies would make the marginal cost of producing emissions greater than the marginal benefit.

There are some who say that the economic cost of a carbon tax is too great. However, this is simply not the case. After coming to terms with the fact that Americans have an unhealthy dependence on foreign oil, the federal government has started a huge push for energy independence. Currently, only 24 percent of the petroleum consumed in the U.S. is imported, according to the U.S. Energy Information Administration, but that number only holds until recent discoveries of oil reserves in North Dakota and Alaska are depleted. The only way for the U.S. to be truly energy independent is to turn to renewable resources.

Enter, the carbon tax. One of the most important benefits of turning carbon emissions into an economic issue is that it encourages energy companies and consumers alike to turn to renewable energy sources. It will be more worthwhile for companies to invest in solar energy, hydropower, wind power and biomass, thereby decreasing their carbon dioxide emissions. Yes, it is understandable that the transition from fossil fuels to renewable energy can only happen over a long period of time, but a carbon tax will incentivize this process by making fossil fuels less profitable.

Of course, a move away from fossil fuels will initially be more expensive. To ease this transition, the revenue generated by a carbon tax could be allocated toward subsidies for clean energy research or could be used to offset existing taxes. But to continue with the current approach toward carbon emissions will ultimately fail. Americans must realize that the opportunity to reduce the impact of fossil fuels on the environment is now, even if that realization requires an economic incentive.


Alex Oliveira is a staff columnist for the Daily Campus. She can be reached via email at alexandra.oliveira@uconn.edu.