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Five Ways to Put a Price on Carbon

For decades, we’ve been paying the cost of climate change driven by carbon pollution. We’re paying for it in dollars, in lives and livelihoods, and in every way imaginable. The world has awoken to the harsh reality of industrial carbon pollution’s impacts on our planet, and the time has come to hold the polluters accountable.
The Climate Reality Project

Five ways to put a price on carbon
Source: Climate Reality Project

The main purpose for carbon reduction is to reduce the amount of carbon being emitted into our atmosphere. The science is settled. Our planet is heating up, and carbon pollution from CO2 Emissions is to blame. The fossil fuel industry burns oil, coal and gas, sending heat-trapping emissions into the air. Ninety million tons of carbon pollution enter the atmosphere every day. That means a hotter world for all of us. It also leads to Dirty Weather, from extreme rainstorms to prolonged drought.

There are five ways to price carbon.

1.  The Status Quo: external costs of climate change are not internalized and the taxpayer is forced to pay for climate and health-related damages.

2.  Regulation: sector by sector regulation of all the sectors in the economy that produce carbon pollution.(1)

3.  Cap and Trade: put a mandatory limit (or “cap”) on some portion of national emissions, and allow firms to buy and sell rights to emit within the cap as well. This can be with or without offsets. A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for an emission made elsewhere.(2)

4. Carbon Tax: a tax based on greenhouse gas emissions generated from burning fuels. The tax may or may not be revenue neutral. A revenue neutral tax is one that does not have a net increase in overall federal tax revenues.(3)

5. Carbon Fee and Dividend: An incrementally increasing fee is placed on carbon pollution and 100% of the money is returned to households. The term fee is used deliberately to indicate clearly that it is a revenue neutral pricing system. Carbon Fee and Dividend, as proposed by Citizens Climate Lobby, is an upstream fee and is levied at point of production of fossil fuels (at the well head, mine or point of entry). A downstream tax, on the other hand, would be levied at the point of consumption of fossil fuels and/or products dependent on fossil fuels.

Five Ways to Put a Price on Carbon

(1) The Canadian and US government are currently both using regulatory mechanisms to mitigate greenhouse gas emissions. Examples are emission standards for cars and for coal-fired power plants. The oil and gas sector has yet to be regulated in Canada.
(2) QuebecCalifornia and the European Union are jurisdictions that have implemented cap and trade with offsets to mitigate their greenhouse gas emissions.
(3) British ColumbiaNorway and Sweden have carbon taxes.

Source of Five Ways to Price Carbon: Citizens’ Climate Lobby

What Can You Do? Find your cost of carbon pollution and Do Something About It.


Rolly Montpellier,

Rolly Montpellier is the Founder and Managing Editor of BoomerWarrior.Org.

Rolly is also a registered Climate Leader (Climate Reality Leadership Corps) a blogger, an activist and a Climate Change presenter.

BoomerWarrior is for the socially aware and politically conscious; for the change-makers and thought-provokers; for the light and young at heart; for anyone willing and courageous enough to move forward. 

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  1. This is an avenue that I feel needs more exploring. (USA perspective, the same would hold true in Canada, just change the names.)

    Corporations are “people” now. As such they have a fiduciary responsibility to Planetary life support systems as do we all. I will be fined $1,000 in AK if caught throwing a paper cup out the car window. (The President himself would be impeached if caught on camera!) Guide lines here? GOPollutocrats piss all over themselves at the thought of $25/ton for toxins. Go figure. There is precedence. GOPollutocrats do not fund abortion. Why tolerate your tax $$$ funding Planetary ecocide?

    • Thank you for your comment Leif. I know that corporations in the U.S. are “people” but that is not the case in Canada. I agree with you that we cannot use our tax dollars to continue to provide subsidies to corporations which are burning fossil fuels to the detriment of our air and water. Countries which are introducing carbon pricing are making progress, albeit very slowly, to transition to a clean energy future. We must continue to make people aware that protecting our environment does not mean economic collapse.

    • Thanks for your comment Doug. I particularly like the article “Realistically What Might the Future Climate Look Like?” It graphically illustrates three scenarios which would limit the total global emission of carbon dioxide from fossil-fuel burning and industrial processes to 750 billion tonnes over the period 2010–2050.

      Presumably, that would keep our world warming at no more that 2 degrees Celsius. But what are the chances that we will be able to accomplish that? I share the article’s pessimism. “Clearly our CO2 emissions have not yet peaked – in fact they increased by 1 billion tonnes between 2010 and 2011 despite a continued global economic recession; therefore, the green curve is no longer an option.”

  2. No, no time for incrementalism here! We’re still talking like we have time to talk about these things. Any sort of “carbon budget” is going to push us way past 2ºC because of the heat already in the pipe (the ocean heat lag) and because of the carbon feedbacks that are already kicking in. The mantra has got to become ZERO CARBON AS RAPIDLY AS POSSIBLE.

    1. The $1.9 trillion in direct and indirect subsidies to fossil fuel corporations (IMF 2013) are redirected immediately to perpetual energy sources (perpetual = renewable minus burning). And no more talk of renewables “being able to stand on their own two feet.” Fossil fuel corps have been subsidized for decades. Want to see the market do that magical thing economists keep telling us about? Make fossil fuel companies less profitable.

    1. New (globally applied) regulations that force companies to internalize/pay for their social (public health) and environmental costs before calculating their profits. Again, instant switch of investments to renewables.

    2. No cap and trade — just a huge cap that decreases rapidly on our way to zero carbon.

    3. A carbon tax with some teeth in it: $200 to $300 per tonne (Stern Commission). (You’d see some real movement to renewables then, too!)

    4. Carbon fee and dividend? Oh, please. Such nice talk of fire safety rules while the house is ablaze! We cannot do this slowly.

    The cool thing (and of course I’m only talking in broad brush strokes here) is that zero carbon could ensure climate justice. The less developed (= less responsibility for global warming) nations wouldn’t have as far to go to get (back) to zero carbon. The richer countries have further to go but also more resources to pay for getting there.

    Achieving (virtually) ZERO CARBON probably isn’t going to be pretty, but we could take it on globally as an international challenge, not unlike the space race. And we could probably do it faster than we think, given how quickly the US mobilized for WWII.

    • Very interesting response Greenhearted. I agree with most of what you’ve written. That said, I don’t think the shift to a zero-carbon will be done as quickly as you would like. Don’t get me wrong. I’m all in favor of getting there. I’m afraid that incrementalism (which is a bad word when it comes to climate change) will be the way the transition to a clean energy world will occur. You have to start somewhere.

      Previous industrial revolutions seem to have gone the way of incremental progress. When coal first replaced horsepower and human energy, there were critics and deniers then too. But after it occurred, there was no going back. It was the same when oil displaced coal as the predominant energy source. Fifty years from now, we will have made the leap to clean energy because we will have priced carbon. As you point out, putting a price on carbon will make fossil fuels less profitable thereby shifting investment and entrepreneurship to new clean energy opportunities, research and development, etc.

      The question of course is do we have time to do this incrementally? If the answer is NO, then humanity is in trouble.

  3. James – indeed, there are many ways of pricing polluters. I like your suggestion about pricing waste that ends up in ecosystems.

    Just checked your site – I like it. Are you interested in doing some cross-posting? I’m doing that now with a few other partners. It would work like this – I would post some of your material on my site and you would do likewise. The other thing I would do is add you as a partner on my site. If you check out my site now on the Home page, you will see a slide thing (on the right, scroll down) which features my cross-posting partners.

    To find out more about me and how I could contribute to your site, if we agree to cross-post, check out the site footer.


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