THE DEBATE OF OUR TIME: CARBON TAX

Important research contributing to the debate of our time: Do we attack climate change with a carbon tax or a cap-and-trade system?

Carbon tax ‘won’t hurt’ the world’s poor
Jia Hepeng, May 17, 2007 (Science and Development Network)

WHO
Arief Anshory Yusuf, Padjadjaran University
The source of CO2 is changing (click to enlarge)
WHAT
Yusuf’s study finds that the carbon tax, as a method to control greenhouse gas emissions, will not adversely affect developing nations’ poor.

WHEN
Presentation made May 15 at 27th biannual workshop of the Economy and Environment Programme for Southeast Asia.

WHERE
Presentation made in Beijing, China.

WHY
- Though the tax on carbon dioxide emissions tax is accepted as a tool to combat climate change, previous studies suggested it would unfairly harm poorer people by adding to energy costs. Yusuf’s study of the Indonesian poor the impact on rural poor people would be less than on affluent city-dwellers. Small-scale farmers, the majority of Indonesia’s rural poor, might benefit because they use less machinery (and fuel) than large-scale competitors.
- Yusuf’s study finds that while Indonesia’s GDP would suffer from a carbon tax, it would not harm the economy so much as it would incentivize energy-efficiency and the tax revenues could be put back into the economy in a beneficial way.
CO2 goes down when the cost goes up (click to enlarge)
QUOTES
- Yusuf: “[The study has]…important implications in helping developing countries design policies that encourage carbon emission reduction".
- Nancy Olewiler, director, public policy programme, Canada’s Simon Fraser University: “The study shows that the later we adopt actions [against heavy-energy consumption], the worse our situation will be, as countries would become more reliant on massive use of energies…More studies are needed in developing countries to expand the finding's applications…”