Carbon Tax Would Curb Warming Pollution, Harvard Project Says

New taxes on sources of heat- trapping emissions should be discussed during international climate-change negotiations next month, a study group based at Harvard University said.

A carbon tax that raises the cost of goods and services using fossil fuels is among ideas outlined in today’s report by the Harvard Project on International Climate Change Agreements. Another option is a global agreement on a cap-and-trade system for greenhouse gases, said Robert Stavins, co-director of the project at Harvard in Cambridge, Massachusetts.

Delegates from more than 190 nations will meet in Poznan, Poland, next month to continue talks on a global climate- protection deal that negotiators hope to conclude in Copenhagen in December 2009. The U.S. is the only industrialized country that refused to ratify the Kyoto Protocol, an international climate accord that expires in 2012.

“There are plenty of institutions who will be going to Poznan and saying to the 195 countries, ‘Here’s how you have to do it,’” Stavins said in an interview. “Climate change is an extremely difficult problem. No one has cornered a market on wisdom in this area.”

Today’s report is meant to “inform the process,” said Stavins, director of Harvard’s Environment Economics Program. The report doesn’t endorse any of the suggestions.

The Kyoto protocol is flawed because it doesn’t require large polluters such as China or India to make binding emissions cuts, according to the report. Only a few countries are required to take action under the accord. That encourages polluters to move to countries not bound by the pact.

Tax for Some

A carbon tax, while politically unpopular, “is the most effective way to influence the daily consumption decisions made by more than a billion households and firms around the world,” according to the report. While the tax wouldn’t have to include all countries, it must cover all large emitters, the report said.

Another solution would impose targets and timetables on all countries, Stavins said. Rich countries responsible for most of the atmosphere’s carbon dioxide would be required to make “severe” cuts, while developing nations could carry on “business-as-usual emissions.”

“Political realities would inform the formulas used to set caps,” according to the report. For example, developing countries may not have to reduce emissions in early years and instead make later cuts proportional to those of industrialized countries, accounting for differences in income.

“How do you get developing countries included?” Stavins asked. “They have targets. It’s just that their targets are business as usual. As they become more wealthy, then increasingly they take on more stringent targets.”

Last week, President-elect Barack Obama said the U.S. will “engage vigorously in these negotiations.” Progress on the framework of a new agreement is unlikely until Obama develops new U.S. proposals, Stavins said.

“The best you could expect from this meeting was continued progress, a lack of acrimony, some agreement on some core principles,” Stavins said. “I wouldn’t anticipate anything on actual architecture.”

Source: Bloomberg