Elon Musk states that modality no. 1 to reduce carbon dioxide emissions would be to charge a carbon tax.
“My sincere recommendation, honestly, would be just adding a carbon tax,” Musk told Joe Rogan on the podcast The Joe Rogan Experience on Thursday. “The economy works great. Prices and money are just information … If the price is wrong, the economy is not doing the right thing.”
At present, 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, of which the most common and widespread is carbon dioxide. Carbon dioxide is released when fossil fuels, such as coal and gas, are burned. Excess carbon dioxide from the atmosphere captures heat and causes global warming.
Musk calls the concentrations of carbon in the atmosphere and environment an “invaluable externality.” An externality occurs when some consequences of production are not properly 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 sensitive way. But because we don’t have a price, it behaves badly, “says Musk.
Musk suggested a tax at the point of consumption. (A consumption tax is one that 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 the Brookings Institution.)
He also suggested that the tax be “regressive”, which means that the tax could be levied depending on income level. If a “low-income” consumer who has to consume a lot of gas (and therefore produce a lot of carbon emissions) could get a “tax cut,” Musk said as an example. – That’s how it’s done.
“This is obviously something that should happen,” Musk said.
Musk told Rogan that he had spoken to 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 Make It’s request for comment.
But Janet Yellen, appointed by President Joe Biden to lead the Treasury Department, has indicated support for a kind of carbon pricing strategy. “Carbon pricing” may refer to a carbon tax, an emissions trading scheme or any other number of other financing mechanisms.
“We cannot solve the climate crisis without setting efficient carbon prices. The president supports an enforcement mechanism that requires polluters to bear the full costs of the carbon pollution they emit,” Yellen said in written answers to questions from Senate Finance Committee members. , published in January. .
Of course, a carbon tax could give an electric vehicle company like Tesla a little on the market. But, according to Musk, “SpaceX would also pay a carbon tax,” he said. (Because missiles burn carbon dioxide-emitting fuel when burned, all missile companies should pay such a fee when consuming aircraft fuel.)
The purpose of a carbon tax is to align market incentives for the transition from a fossil fuel-dependent economy to one that uses clean energy (non-carbon energy). 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 collapsing. So if civilization doesn’t collapse, we will have sustainable energy, it’s just a matter of how soon that happens. The sooner the better.”
The idea of a carbon tax is not new. Opinions are divided on this.
“Elon is on the ground. We need to change millions of people to reduce emissions by buying more fuel-efficient cars, adding more insulation to homes, moving away from coal-fired electricity, and of a number of 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 effectively send a signal to consumers to make these changes. In fact, a carbon tax ensures that Adam Smith’s Invisible Hand has a green finger.”
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] from burning gasoline to climate, “he tells CNBC Make It.” So when we all make decisions about what to buy, we don’t have to consider the cost of the environment. The price of carbon corrects this problem by ensuring that pricing / goods activities more accurately reflect real costs. “
However, others do not accept a carbon tax.
“A carbon tax will do nothing to prevent climate change, but it will affect the elderly, minorities, the poor and the middle class and those with fixed incomes the most, as they spend a higher percentage of their income on energy and energy goods. energy-intensive than rich, “Hter Sterling Burnett, a senior environmental policy fellow at the Heartland Institute’s free market think tank, told CNBC.
Indeed, paying for basic energy needs can often be a higher percentage of what a low-income person does each month. And, to make that pain worse, “if you live in a poor, non-air-conditioned, energy-efficient, poorly built, or older home, then your energy burden will be bigger, ”said Nathaniel Smith, founder and Chief Equity Officer of the Partnership for Southern Equity, a non-profit organization in Atlanta, says Yale Climate Connections in 2019.
This is the argument for a non-regressive carbon tax, as Musk pointed out in his conversation with Rogan. This idea is a non-starter, according to Burnett. “It cannot be non-regressive if it is intended to change behavior. It must hurt to work otherwise people will not change their behavior and will not stop using fossil fuels,” he says.
Even those who support a carbon tax say that careful implementation is essential.
“If done right and set at the right level and without too many gaps, it can be an excellent policy – but that’s a big deal,” said Michael Gerrard, an environmental lawyer and professor at Columbia Law School. “It must be combined with additional regulations where necessary and with measures to counter any regressive impact on low-income people.”
So does Metcalf. “A carbon tax is not a magic remedy. We will need other policies,” he says, including increasing research and development spending to make zero-carbon 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. “It’s kind of toothless.”
“One thing that would matter – put a price on carbon,” says Musk. “It’s the obvious movement.”
See also:
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