Elon Musk says the number 1 way to lower carbon dioxide emissions would be to impose a carbon tax.
“My main recommendation, honestly, would be to add a carbon tax,” Musk told Joe Rogan on the podcast The Joe Rogan Experience on Thursday. “The economy works really well. Prices and money are just information … If the price is wrong, the economy is not doing the right thing.”
Currently, there are no direct monetary consequences for companies and industries whose production releases greenhouse gases into the atmosphere; in other words, it is free to create greenhouse gases, the most common and widespread of which is carbon dioxide. Carbon dioxide is released when fossil fuels, such as coal and gas, are burned. Excess carbon dioxide in the atmosphere traps heat and causes global warming.
Musk calls carbon concentrations in the atmosphere and the environment a “priceless externality.” An externality occurs when some consequence of production is not adequately reflected in the market. In this case, it is a negative externality.
A carbon tax would change that. “If we only put a price [carbon emissions], the market will react in a sensible way. But because we don’t have a price for it, it misbehaves, ”Musk says.
Musk suggested a tax on the point of consumption. (A consumption tax is what is levied at the time of consumption, when someone buys something, where an income tax is one in which you earn income or collect interest, capital gains and the like, according to Brookings Institution).
He also suggested that the tax not be “regressive,” meaning it could be levied based on income level. If a “low-income” consumer has to use a lot of gas (and therefore produce a lot of carbon emissions), he could get a “tax credit,” Musk said as an example. “That’s the way to do it.”
“This is obviously something that should happen,” Musk said.
Musk told Rogan that he had spoken with the Biden administration about implementing a carbon tax. According to Musk, at the time, the administration said it seemed “too difficult politically.” A White House spokesman did not immediately respond to CNBC’s request for Make It’s comments.
But Janet Yellen, appointed by President Joe Biden to head the Treasury Department, has indicated her support for some sort of carbon pricing strategy. “Carbon price” can refer to a carbon tax, an emissions trading system, or any other financing mechanism.
“We cannot solve the climate crisis without an effective carbon price. The president supports an enforcement mechanism that requires pollutants to bear the full cost of the carbon pollution they emit,” Yellen said in written answers to questions from the members of the Senate Finance Committee published in January. .
Of course, a carbon tax could give an electric vehicle company like Tesla a chance to market. But, according to Musk, “SpaceX would also pay a carbon tax,” he said. (Because rockets burn fuel that emits carbon dioxide when burned, all rocket companies would have to pay this tax when they consume aircraft fuel).
The goal of a carbon tax is to align market incentives toward the transition from an economy that depends on fossil fuels to one that uses clean energy (energy that does not produce carbon). And that, says Musk, is an existential necessity.
“Tesla’s fundamental good is the extent to which it accelerates the advancement of sustainable energy. It’s inevitable. It’s tautological,” Musk said. “Either we have sustainable energy or civilization is sinking. So if civilization is not sinking, we will have sustainable energy, it’s just about how long that goes. It’s soon better.”
The idea of a carbon tax is not new. Opinions are divided on the matter.
“Elon is perfect. We need to get millions of people to change their behavior to reduce emissions by buying more fuel-efficient cars, adding more insulation to the home, moving away from coal electricity and many other changes.” , Gilbert E Metcalf, a professor of economics at Tufts University, told CNBC Make It. “A carbon tax uses the power of markets to send an efficient signal to consumers to make those changes. In fact, a carbon tax ensures that Adam Smith’s invisible hand has a green thumb.”
According to Richard Klotz, an environmental economist in the Department of Economics at Colgate University, “the prices of polluting goods / activities do not reflect their ‘true’ social costs. For example, the price you pay for gasoline does not include damages. [carbon dioxide] of the burning that gasoline causes to the weather, “he tells CNBC Make It.” Therefore, when we all make decisions about what to buy, we should not consider the environmental cost. The price of carbon corrects this problem by ensuring that price and goods activities more accurately reflect real costs. “
Others, however, do not support carbon taxes.
“A carbon tax will do nothing to prevent climate change, but it will do more harm to the elderly, minorities, the poor and the middle class and the fixed income, as they spend a larger percentage of their income on energy goods and energy-intensive that enriches them, “H. Sterling Burnett, a senior member of the Heartland Institute’s free market think tank environmental policy, told CNBC Make It.
In fact, paying for basic energy requirements can often be a higher percentage of what a lower-income person does each month. And, to make this pain more acute, “if you live in a low-quality home that is not weathered, that is not energy efficient, that was poorly built, or is older, your energy load will be greater,” said Nathaniel Smith, the founder and director of equity, of the Partnership for Southern Equity, an Atlanta nonprofit, tells Yale Climate Connections in 2019.
This, then, is the argument for a non-regressive carbon tax, as outlined by Musk in his conversation with Rogan. This idea is not initial, according to Burnett. “It can’t be non-regressive if it’s meant to change behavior. It must hurt to work otherwise people won’t change their behavior and stop using fossil fuels,” he says.
Even those who support a carbon tax say careful implementation is essential.
“If done right, and set at the right level and without too many cracks, it can be an excellent policy, but that’s important,” says Michael Gerrard, an environmental lawyer and professor at Columbia Law School. “It should be combined with additional regulations when necessary and with measures to counteract any regressive impact on low-income people.”
So too, says Metcalf. “A carbon tax is not a magic cure. We will also need other policies,” he says, including greater spending on research and development to make carbon-free technologies less expensive. And with a carbon tax, “getting the price right is the first job.”
According to Musk, the Paris Agreement is “just a piece of paper unless you do something about it,” he told Rogan. “He’s practically toothless.”
“One thing would be important: put a price on carbon,” Musk says. “It’s the obvious move.”
See also:
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