by Larry Hands and Karen Kendrick-Hands reporting from the UK

How Carbon Fees Can Drive Climate Change Solutions

Even as we celebrate the fact that the UK is no longer relying on coal to generate electricity, the nostalgia for coal here is alive and well.  We travelled on a narrow gauge railway used to transport slates from the minds in the Welsh Highlands to harbours for export. Its antique steam engine was powered by coal. Where we are staying, all of the fireplaces in the public spaces of the classic hotel burn coal briquettes instead of wood. The smell is distinctive, and unforgettable and gives Karen a headache. 

Rotary’s 4-way test applies to the things that we think, say and do, including our history of relying on fossil fuels to develop our economies, while those who are burdened with the damage have received little or no benefit from that development. That approach is certainly not fair and beneficial to all concerned.

Societies typically respond to undesirable activities by banning, regulating or taxing them. We need to explore those responses to managing carbon dioxide (CO2) pollution from burning fossil fuels. 

As a global community, we successfully came together through the UN to ban dangerous freon that was causing the ozone hole (and was a highly destructive greenhouse gas as well). We did this through the UN’s Montreal Protocol.

Nations also regulate pollution such as in wastewater, solid waste, and process air emissions. 25 years ago, I travelled through an area in China that had multiple cement kilns. I realized that sometimes, you just need to require good air pollution control equipment on sources because market forces alone would not make that happen. The air quality through this region was just awful. Certainly, now, the same thing is happening with plastics. They are just thrown away and easily end up in our oceans or other parts of the environment and cause real damage to the environment and to people as they disintegrate into micro and nano plastics.

Why Regulation Is Key to Tackling Pollution and Carbon Emissions

For centuries, those who have used fossil fuels have enjoyed the benefits, but only in the last 35 years have the true cost of the burdens been understood, and we are not currently fully addressing the problem. Later is too late, we need to reduce carbon dioxide pollution now.

For better or worse, we have a global market-based economy, and things get priced.  When market pricing is working, costs are “internalized.” A higher price signals the need to reduce consumption.  Thus, to reduce consumption of carbon – i.e. burning fossil fuels – we need to price it (and the CO2 emissions it releases) at a rate high enough to reduce its consumption.  The global market has for the most part failed to do that. 

3,500 economists around the world agree that some sort of robust carbon tax or fee would be the fastest, most effective and least disruptive way to reduce our carbon pollution. A carbon fee charged at the coal mine, the oil/gas well or at the port of entry would be broad and help consumers see the impact of their choices.  For example, local asparagus bought in season would cost less than out of season asparagus flown in from far away (never mind the difference in taste and quality). Taxing the fuel used to fly in out-of-season asparagus would show up in the price, and inform our decisions.

Achieving the objective of the Paris Agreement to limit global temperature increases to 1.5°C from pre-industrial levels requires a whole economic transition. The Glasgow Financial Alliance for Net Zero (GFANZ) is a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy, which was announced at the UN Climate Talks in Glasgow in 2021. Companies, banks, insurers, and investors need to adjust their business models, develop credible plans for the transition to a low-carbon, climate-resilient future, and then implement those plans.

However, right now, it seems less risky and more profitable for people or companies to invest in the old technology of coal, oil and gas than to invest in the new developing technologies that provide safety and security for future generations. A carbon fee would help level the playing field for decarbonizing the economy, by making the true costs of business-as-usual CO2 pollution more visible.

Pricing Carbon: A Key to Global Climate Action and Reducing Fossil Fuel Dependence
Shutterstock: Sustainable Finance

Shutterstock: Sustainable Finance

A carbon fee robust enough to fix our problem would generate a lot of money. It makes sense to start with a small fee and increase the fee yearly, to give folks a chance to plan while putting the fee on a glide path to be robust enough to push us to net zero or even beyond.

How do we use these proceeds? Do we return it to individuals to help them deal with the transition? Do we send it to developing nations to start addressing “loss and damage” that excess emissions has already caused? Do we apply this “carbon dividend” to support adaptation efforts? Do we use it for new governmental programs, perhaps like helping folks to transition to low-carbon living or for research and development to reduce carbon emissions? Maybe some of each? 

This is where Rotarians, as leaders in their specific communities and nations, can be people of action, help hash out the details, and work to get a robust carbon fee established in their community, their nation and throughout the world. Later is too late. Our children and grandchildren will thank us if we establish the solutions to stabilize our climate. We did it with the ozone hole, let’s do it for the climate!

If you would like to learn more about this, Check out Citizens Climate Lobby or Citizens Climate International. Check out the Rotarian Magazine of April 2019 for an article about Citizens Climate Lobby, VISIT.