The progressive think tank Autonomy, which researches solutions for climate change, the future of work and economic planning published a (very readable) report titled ‘Toll Gates and Money Pumps: Why carbon taxation could be a simple, fair and transformative policy instrument’ on the 21st of March. The report outlines how a globally applied carbon fee and dividend policy would be extremely effective at lifting the poorest countries out of poverty and more than a billion people above the global poverty line, as well as combating climate change. There is an article on the report in the Independent.

The researchers modelled the global, European and nation state application of the scheme using two carbon prices. The lower carbon price is the current highest carbon tax worldwide, that of Sweden, at $137 per tonne, a price which makes it into the range  indicated by IPCC to be needed by 2030 to stay below 1.5°C-warming. The higher carbon price modelled was $195, this is the rate for advanced economies proposed by the Federal Environment Agency of Germany. It states that the policy is not intended to preclude public spending on decarbonising industry, agriculture, homes and transport and commodities should be clearly labelled with the GHG emissions expended in manufacture. 

The report states that the (lower) Swedish carbon price, applied globally, would be transformative, raising $2.69tn annually …… 

While countries in South America, Sub-Saharan Africa, South-Asia and many other parts of the Global South would profit immensely, most developed economies would only see proportionally relatively small losses.

…..As a global policy, it could wipe out extreme poverty and easily dwarf the scope of any existing development aid and debt relief schemes, illustrating that, in this sense, it is the Global North that owes an immense debt to the populations in the Global South, not the other way round. It would also go a long way to alleviate the disastrous impacts the Covid pandemic has had on the world’s poorest and most vulnerable, with for instance an additional 100m children falling into poverty, and prevent global disparities from deepening as richer countries recover while poorer countries fall even further behind (UNICEF 2021b). Such a global carbon dividend scheme could end the bitter reality of mass hunger and destitution and be a key building stone of a fairer, more sustainable and more inclusive post-pandemic economy. 

The authors do not address the issue of diminishing returns as the world economy decarbonises but the assumption is that the proceeds of the tax will enable all countries to embrace sustainable and fair economic development. The authors even suggest that the visible benefits of the fair distribution of the dividend could lead to… 

 the introduction of a more comprehensive, far-reaching UBI – implementing a global infrastructure for roll-out and, more importantly, materially recognize and implement the right to equal use of our planet.

Now that the results of our dependence on fossil fuels are so visible in the war on ‘our doorstep’ the world may be ready to welcome such ideas!