Tax carbon consumers for real action on climate change

Will this coal on a Chinese barge on the Yangtze River end up being 'consumed' in the US and Europe? Photo: Marshall Segal via Flickr.
Will this coal on a Chinese barge on the Yangtze River end up being 'consumed' in the US and Europe? Photo: Marshall Segal via Flickr.
Climate negotiators in Bonn are hammering out the basis of a new global agreement - but have they got it all wrong? Taxing carbon consumption, rather than trying to regulate emissions, could stimulate the low carbon revolution the world needs.
Shifting the burden from production to consumption would completely reconfigure the current impact on climate change action - or inaction.

As delegates meet once again at climate talks in Bonn, important questions must be asked.

After decades of conferences, committees, procedures and protocols, is the multilateral approach to tackling climate change working?

What alternative routes are there that would lead to more action with less discussion?

Are unilateral measures - where states take steps to reduce greenhouse gas emissions without international agreements - so far-fetched?

One measure that could have an effect if enacted by economic superpowers such as the US or the European Union is a carbon consumption tax.

This is one of several progressive ideas to be presented at the congress Global Challenges: Achieving Sustainability taking place in October in Copenhagen.

Going it alone - and why not?

A carbon consumption tax, even if introduced by the EU and the US, would be a unilateral measure - in the sense that it does not emerge from an organised collective international organisation such as the UNFCCC (the UN climate change body), but rather from the choices of individual states.

Unilateral measures are usually considered to be 'politically correct' if building on existing efforts to curb greenhouse gas emissions.

But the carbon consumption tax we propose would also reduce greenhouse gas emissions worldwide - action deemed less politically correct as it is deliberately aimed at affecting behaviour in other states.

As a tax on products, it would be a trade measure and would consequently have to be designed to legally conform with World Trade Organisation rules in order to survive potential legal challenges.

Some states might even reject such initiatives simply because they originate from the US or EU.

Leading from the front

Despite its own complications, unilateralism seems more appealing than multilateralism if the latter fails to deliver results on issues of great importance to future generations.

While it may be seen as politically incorrect even to propose such an idea, it could be the only pragmatic and viable solution to today's global challenges.

A carbon consumption tax would effectively curb greenhouse gas emissions in all countries that want to export their goods to countries that impose it.

For a long time such proposals have been seen as some type of 'eco-imperialism', or economic protectionism designed to keep developing countries from access to markets for their products.

Stimulating low-carbon investment

But the harsh reality of today's climate challenges may be sufficient to change that view.

First, exporting is entirely voluntary - if countries can find other trading partners with less stringent requirements they are welcome to take their products elsewhere.

Second, developing countries - such as China - are themselves beginning to take their own steps to curb pollution because their environmental problems are becoming too large.

So a consumption tax may prompt investment in modernised production lines and manufacturing processes, with the subsequent effect of also improving working conditions, which in many developing countries is a cause for concern.

Taxing our 'imported carbon footprint'

But a consumption tax implemented by the EU and US would go further, effectively assigning responsibility for climate change.

Under the UNFCCC and the Kyoto Protocol, developing countries were not subject to any restrictions on greenhouse gas emissions. The language of the agreements refer to "common but differentiated responsibilities", without further explanation.

This leads to a situation where developed countries are faced with environmental measures that are too costly to implement if competing economies in the developing world are not required to do the same.

A carbon consumption tax, however, would change the locus of regulation from production to end consumption or use. For example, about a third of China's greenhouse gas emissions are accounted for by goods exported for use or consumption elsewhere.

Let the consumer carry the 'carbon burden'

Shifting the burden from production to consumption would completely reconfigure the current impact on climate change action - or inaction.

And if there is still any hope for a legally binding post-Kyoto Protocol with hard targets for at least some countries, this may be as good a time as any to do so.

When analysing the responsibility for climate change, it's important to note that it is inherently a global problem and part of mankind's common concern. Emissions from a country such as Denmark affects all other countries just as much as those from China or Britain or the US, and so are of equal interest to all people from all nations.

Decades of enforcing the 'polluter pays principle' on a global scale has led to inefficient rules that have produced little, if any, reductions in greenhouse gas emissions, as few countries are willing to shoulder the additional costs.

So why not adopt a legislative framework that puts the burden on the consumer, rather than require nations to enforce against the producer?


Laura Nielsen is Associate Professor of WTO Law at the University of Copenhagen.

Henrik Palmer Olsen is Professor of Law at the University of Copenhagen.

The authors do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

The Conversation

Help us keep The Ecologist working for the planet

The Ecologist website is a free service, published by The Resurgence Trust, a UK-based educational charity. We work hard - with a small budget and tiny editorial team - to bring you the wide-ranging, independent journalism we know you value and enjoy, but we need your help. Please make a donation to support The Ecologist platform. Thank you!

Donate to us here