It is a worldwide concern that individuals buy items, which emit carbon dioxide into the atmosphere, and this destabilizes global climatic conditions. Moreover, it is worrying that people do not directly pay for the costs for the increasing global temperatures. Therefore, none is held accountable, even in the future, for polluting the environment by leading to the increase and variability of the global temperatures (Folbre). This kind of devastating climatic condition can mainly be solved by imposing some taxes on consumption of carbon dioxide.

Analysis of the problem

A carbon consumption tariff/tax would increase the costs of carbon intensive products (both goods and services), thus discouraging more people from buying them. Even though individuals would be hit hard by sudden changes in relative prices, revenues generated from the carbon tax could be used to compensate everyone by offering them rebate-like dividends to cover for the purchasing power reductions (Folbre). Moreover, this would encourage individuals to invest in technologies, which reduce carbon emission.

Climatic protection act proposes a new tax measure that makes it possible to return 60% revenues directly to the consumers, 25% allocated for reducing the deficit and the remaining 15% to be invested in the renewable energy (Folbre). In this regard, it is advisable to charge some fees on the consumption of carbon to mitigate its associated costs. Moreover, it is evident that a dividend based carbon regulatory approach is more appropriate than a cap-and trade approach because the latter is ineffective and prone to corruption (Folbre). The former approach would give more incentive to consumers, as away of changing their behavior on carbon consumption pattern. Indeed, more voters would be encouraged to support a significant carbon consumption regulation (“Set emission reduction targets”).

In conclusion, it is necessary to understand that a tax-and dividend approach can increase the spending of consumers, increased demand to conserve energy. Moreover, the increased demand for renewable sources of energy would increase the chances for economic growth. Therefore, it is clear that a reduction in carbon consumption will ultimately regulate average global temperatures and protect human health.


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