Carbon tax or carbon price


One of the ways to act against global warming is to make using fossil energy more expensive. This will make investments in renewable energy or energy efficiency more profitable. Two financial mechanisms have been proposed:  a carbon tax or a carbon price.

Carbon tax

This tax is perceived on petrol, gas and charcoal, according to the quantity of CO2 they emit. For instance, a tax could be paid directly by fossil energy producers, and contribute to a worldwide fund for investments in renewable energy, energy efficiency or protection against global warming.

Switzerland currently has a partial carbon tax on heating fuels, which will be raised in 2016 to 84 francs per ton of CO2. The product of the tax contributes to the fund for energy renovations of buildings. According to the study "Perspectives énergétiques 2050", the tax could reach 1140 francs per ton in 2050.

What is the actual effect of such a tax? The experience of Australia shows that after the introduction of a carbon tax, emissions due to electricity were reduced by 11% in two years. After the tax was scraped, they rose by 4.3% in one year.

Carbon price

The principle of a carbon price is to sell emissions quotas, whose price is fixed in a carbon trading system. A company that pollutes more than expected has to buy quotas to cover the extra pollution. A company that reduces emissions can sell the right to pollute.

The European Union set up a carbon market ETS, but the system is difficult to run, and up to now has not performed well : the price of carbon is under 10 €, too low to have a deterrent effect on energy usage.

Switzerland fulfilled its Kyoto goal for 2008-2012 by buying 2.5 million tons of CO2 emission certificates per year abroad.

An advantage of a carbon price is that it also covers CO2 emissions from chemical processes (for example cement manufacture) or agriculture.

Some say these carbon markets are immoral: "The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors." Pope François, Laudato Si

Association Climat Genève