Putting a Price on Carbon is Best Solution for Change Climate

Question: Discuss about the Putting a Price on Carbon is Best Solution for Change Climate. Answer: Introduction The industrial revolution and modernisation of society have created problems related to the carbon footprint. Precisely, the quantity of carbon dioxide discharged into the environment due to several activities of modern community, enterprises, and individual persons can be defined as carbon footprint which is the main reason behind global warming. A number of direct as well as indirect activities of mankind have contributed towards emission of greenhouse gases. In order to reduce the increasing amount of greenhouse gases, a carbon tax policy at the global level can be evident. Meanwhile, such universal stance may face a number of challenges but the decision can mitigate the adverse impact of a carbon footprint on climate change (Brannlund Persson, 2012). Scientific studies have been conducted by the modern environmental researchers to identify how putting a price on carbon can become the best solution to negate the negative effects of climate change. Different point of views/arguments In terms of benefits of carbon taxing, recent studies have been conducted to determine the level of impact of the decision. Invariably, there are certain challenges and issues such as economic issues as well as environmental issues associated with the decision. It is often stated that modern organisations should come forward and take the responsibility to reduce the surging level of carbon footprint. On the other hand, many of the environmental researchers have blamed the Government of the developed as well as emerging economies for the increase in carbon footprint (Fischer Fox, 2012). Key Issues In order to limit the expanding nature of carbon footprint, certain decisions must be taken into account to secure the long-term health of the environment. Significant research and analysis must be done to determine the best way that can cut down the increasing level of carbon footprint. Thesis Statement However, although industrialisation has become mandatory for both the developed as well as emerging economies, a carbon taxing policy must be considered as the best possible solution to mitigate the adverse effects of carbon footprints on environment leading towards climate change Economists have predicted that by putting a carbon tax, a comparatively higher monetary burden will be imposed on the middle-income as well as low-income people. Furthermore, putting a price on carbon may eventually lead towards a decline in the short run GDP and higher prices of essential commodities and services. Invariably, cap and trade system must be utilised by the government to trade emissions payments under an overall trade of carbon emission. Argument One of the primary targets of putting a price on carbon is to reduce the emission of greenhouse gases. According to Crowley (2013), pricing will evidently increase the cost-competitiveness of substitute resources of power. In order to cut down the fees of production in different industries, modern organisations, as well as community-based individuals, will attempt to use significantly less power that has been drawn from fossil fuels. Christoff (2013) has evaluated that carbon tax will be encouraging as modern businesses will install the latest machinery and cooling system reducing the energy consumption level. In the meanwhile, Cap-and-trade system has an overall advantage over a carbon tax as the policy delivers certainty of substantial emission reduction. The Government of Australia predicts that current carbon tax policy will reduce the household electricity bills by 9 percent whereas the average gas bills will be down by 7 percent (Minchin Hopkin, 2014). Evidently, the reduction of energy consumption will directly affect the existing scenario of global climate change. Counter-argument Lo (2013) has compared the competitive climate policies at the global standards with the Australian standards to figure out how the carbon tax system can contribute towards encouraging the alternative energy resources restricting the conventional energy production. According to the author, the carbon tax will replace the power generated by consuming fossil fuels. Although such activities can create a negative impact on the mining sector, the long-term benefits of the environment can be achieved. Arguably, Cap-and-trade system can be identified as an environment policy tools but the system affect the economy. According to the research conducted, before imposing the carbon tax policy in Australia, the annual emission of carbon dioxide was registered about 559 million tons in 2011-2012. Incredibly, in 2013-2014, the annual emission of carbon dioxide was calculated as totalled 548 million tons (Nurdianto Resosudarmo, 2016). Refutation However, Fischer Fox (2012) have entirely different views on the decision of carbon taxation. According to the researchers, putting a price on carbon may shift the entire production and manufacturing industry to the economies where carbon taxes are lower or negligible. Thus, the GDP of the country can be affected in short run. Understandably, Cap-and-trade system provides economic incentives that influence the industries to reduce carbon emission. Thus, emission trading will be evident to meet the policy targets. According to the economists, imposing a carbon tax of $23 a tonne of carbon can reduce the short run GDP in Australia by 0.68 percent (Fischer Fox, 2012). On the other hand, administrating the carbon tax may turn into significantly expensive putting an excessive financial burden on the citizens of an economy. Ultimately, the decline in GDP may adversely affect the employment situation as well. The carbon pricing strategy has been implemented by the Australian Government on several companies that emits carbon during the process of production. The Australian Carbon Tax Policy does not apply to all fossil fuel usage in the nation that has a negative impact on the environment. Hence, the carbon tax policy introduced in the year 2012 was not effective enough to reduce the total green house gas emission in the nation. For example, the Investor Group on Climate Change found that carbon emissions from companies reduced by around 7 percent after the introduction of the carbon tax, but the greenhouse gas emission increased in the case of stationery energy and transportation sector by around 4 percent during the first six months of the new policy (Goulder, 2015). Argument By considering the fact that electricity and transportation is a highly demanding sector that cannot substitute the use of fossil fuels with the current availability of technology, carbon emissions in these sectors cannot be reduced. Hence, the use of carbon tax policy is not an effective way of controlling greenhouse gas emission in these sectors (Meng, Siriwardana McNeill, 2015). It can be seen through the statistical report of the Environment and Energy Ministry of Australia, the greenhouse gas emissions in Electricity and Transportation sector have increased by around 4 percent within the next six months after the introduction of Carbon Tax Policy in the year 2012 (Goulder, 2015). The primary reason for this increase in the greenhouse emission is the increasing demand for energy and reducing prices of fossil fuels like coal and oil. Hence, carbon tax policy fails to control environmental safety due to the lack of substitutable and cheaper energy sources. Counter-argument According to Anderson (2016), the topic of Carbon Tax policy became a major debate for the political leaders in Australia. It can be found through study that Carbon Pricing is not the ultimate way of reducing greenhouse emission in the nation. The statistical figures of the Department of Climate Change and Renewable Energy showed that after the introduction of the Carbon Tax, emissions in the major sectors such as electricity have only reduced by around 9 percent and coal generation have reduced by around 6 percent after one year, which is quite negligible as compared to the targeted objectives (Rozenberg, Hallegatte, Perrissin-Fabert Hourcade, 2013). The primary reason for the poor result of the carbon tax policy is the high demand in the market for electricity produced through coal and natural gas. Refutation Irrespective of the problems evident after the introduction of the Carbon Pricing policy, the strategy has helped the Australian Government to reduce greenhouse emission in the economy by a certain level. According to Kaufman, Obeiter Krause (2016), the carbon emission in the developed nations has reduced by around 28 percent in the last fifteen years saving the environment and life of the people. Moreover, it is expected that the Carbon Pricing Strategy will reduce the GHG emission by around 80 percent in the United States and the United Kingdom by the end of 2050. On the other hand, Anderson (2016) said that the Australian Government has been using an incentive scheme in place of carbon pricing to reduce GHG emission, which is much effective as compared to the strategy of only pricing carbon. Under this scheme, the companies meeting the target of reduced carbon emission are to be monetarily rewarded for their achievements (Snyder, 2014). But, the new strategy of the government is also not effective enough to meet the Australias Kyoto Protocol Target. A figure has been presented herein below for better understanding: Therefore, there is a need of mixed policy that will include both carbon tax and incentive schemes to promote the use of green energy and reduce carbon emissions to save the changing climate (Van Rensburg Head, 2017). Conclusion: Summary On the basis of the above discussion, it can be seen that pricing on carbon has certain negative impacts over the economy. Carbon tax exerts pressure over the leading businesses that depends on fossils fuels for their production process. Additionally, the carbon tax policy on alone is not enough to meet the Kyoto protocol targets of GHG emissions. Furthermore, it is not possible for the government of Australia and other major nations to control the demand of fossil fuels and other non-renewable energy sources due to falling price and increasing demand. Restatement of Thesis Therefore, putting the price of carbon must be supported by other government policies such as incentive schemes and subsidiaries to promote the use of green energy in order to reduce greenhouse gas emission and solve the problem of climate change. References Anderson, S. (2017).The carbon pricing debate explained.ABC News. Retrieved July 2017, from https://www.abc.net.au/news/2016-12-05/the-carbon-pricing-debate-explained/8092506 Brannlund, R., Persson, L. (2012). To tax, or not to tax: preferences for climate policy attributes.Climate Policy,12(6), 704-721. Christoff, P. (2013). Climate Discourse Complexes, National Climate Regimes and Australian Climate Policy.Australian Journal Of Politics History,59(3), 349-367. Crowley, K. (2013). Pricing carbon: the politics ofclimate policy in Australia.Wiley Interdisciplinary Reviews: Climate Change,4(6), 603-613. Fischer, C., Fox, A. (2012). Climate policy and fiscal constraints: Do tax interactions outweigh carbon leakage?.Energy Economics,34, S218-S227. Goulder, L. (2015). Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis.Journal Of Environmental Economics And Management,29(3), 271-297. Indicator: A-09 Greenhouse - implementation of measures under the National Greenhouse Gas Strategy. (2010).Department of the Environment - Australian Government. Retrieved July 2017, from https://155.187.2.69/soe/2006/publications/drs/indicator/12/index.html Kaufman, N., Obeiter, M., Krause, E. (2016). Putting a Price on Carbon: Reducing Emissions.World Resource Institute. Retrieved from https://www.wri.org/sites/default/files/Putting_a_Price_on_Carbon_Emissions.pdf Lo, A. (2013). The Political Economy of Carbon Tax: International Practice and the Australian Model.Chinese Journal Of Urban And Environmental Studies,01(01), 1350007. Meng, X., Siriwardana, M., McNeill, J. (2015). The Environmental and Employment Effect of Australian Carbon Tax.International Journal Of Social Science And Humanity,5(6), 514-519. Minchin, L., Hopkin, M. (2014).Carbon tax axed: how it affects you, Australia and our emissions.The Conversation. Retrieved July 2017, from https://theconversation.com/carbon-tax-axed-how-it-affects-you-australia-and-our-emissions-28895 Nurdianto, D., Resosudarmo, B. (2016). The Economy-wide Impact of a Uniform Carbon Tax in ASEAN.Journal Of Southeast Asian Economies (JSEAE),33(1), 1-22. Rozenberg, J., Hallegatte, S., Perrissin-Fabert, B., Hourcade, J. (2013). Funding low-carbon investments in the absence of a carbon tax.Climate Policy,13(1), 134-141. Snyder, B. (2014). Tax and trade: a hybrid climate policy instrument to control carbon prices and emissions.Climate Policy,15(6), 743-750. Van Rensburg, W., Head, B. (2017). Climate Change Sceptical Frames: The Case of Seven Australian Sceptics.Australian Journal Of Politics History,63(1), 112-128.