Should the polluter always pay?

Posted on

Image: Developing countries now account for about 75% of emissions, and an overwhelming 95% of global emissions increases, according to the Climate Leadership Council.

The answer isn’t as obvious as you might think. It depends on whether your priority is climate justice or cutting carbon.
By Mark Harris
December 8, 2024

in Anthropocene c

It’s a rule everyone learns as a child: if you spill it, you clean it up.

It’s a rule everyone learns as a child: if you spill it, you clean it up. This common-sense principle is even enshrined in US law, with polluters (mostly) paying to clean up Superfund hazardous waste sites.

What could be more sensible than extending the same argument to carbon emissions? If only it were so simple. The damage from CO2 rests on historical emissions from Western nations and Big Oil—but it is being driven today by countries struggling to industrialize and eradicate poverty, including much of Asia.

So who pays the bill—and which choice gets us to a low-carbon future fastest?

• • •

Current Polluters Pay—We Need To Shrink Emissions Now

1. Every ton and every dollar counts. We can’t control what humanity did in the past, from ignorance or for convenience, but whatever we can do to reduce emissions now will reduce the warming impact for centuries. Putting a price on carbon is the easiest way to do that, say economists. Researchers at the World Bank calculate that forcing polluters to pay around $200 for every ton of CO2 emitted could keep warming to around 1.5 to 1.8 Celsius, in line with the UN Paris Agreement.

2. Emissions have shifted South. Developing countries now account for about 75% of emissions, and an overwhelming 95% of global emissions increases, according to the Climate Leadership Council. Some of those increases echo 20th century development in the North, as the countries industrialize and become richer, but some are due to richer nations having off-shored manufacturing (and its attendant pollution) as their own economies transition.

Chart showing that developing nations now account for about 75% of CO2 emissions

Source: Climate Leadership Council

3. Plugging carbon leakage. Carbon leakage is the term the EU uses to describe companies that move their production overseas to avoid the bloc’s emissions trading system. In 2026, the EU will enforce a Carbon Border Adjustment Mechanism (CBAM), taxing importers the equivalent of its carbon price unless they’ve already paid at home. The plan is to nudge high-emissions nations into setting a price on carbon, and ultimately create a “race to the top” for global climate regulation.

• • •

Polluters With The Big Carbon Debt Pay—It’s Only Fair

1. No free rides. The USA has emitted more CO2 and contributed more to global warming than any other country to date—about a quarter of all emissions in history. Most countries in Africa, by contrast, emitted only about 0.01% of carbon in the last 250 years. But if you only charge countries polluting today and into the future, America gets a free ride on all that damage. 

2. Beware the green squeeze. None of the world’s least developed countries, home to about 15% of the world’s population, currently have a carbon price. Many are also among those most vulnerable to climate disasters, with weak infrastructures and a reliance on a few commodity exports. Think-tank ODI Global worries CBAM could cause a “green squeeze”—making the poorest countries’ exports more expensive and uncompetitive, even as extreme weather impacts worsen. ODI calculates that even a 10% increase in compliance costs for Ethiopia would shave 1% from its GDP, slowing its path out of poverty. It encourages the EU to grant some developing countries special treatment under CBAM.

3. Look to Vermont’s Climate SuperFund. There are other possible solutions. Instead of focusing on current emissions, a Climate Superfund Act in Vermont that passed this year works from historical data. The state now has 12 months to calculate the total losses it has suffered from greenhouse gases emitted between 1995 and 2024, and use that to determine how much to charge individual polluters. Academics have already done the heavy lifting here, using the non-profit Carbon Majors database to link 30% of climate-caused sea level rise, 40% of the increase in global surface temperatures, and 55% of the growth in ocean acidification to fewer than 100 of the largest fossil fuel and cement producers. But get ready for Big Oil to push back against this law (and a similar one pending in New York) in court.

Chart showing the carbon emissions from countries and companies increasing

Source: Carbon Majors

• • •

What To Keep An Eye On

1. COP climate financing. In November, parties at the COP29 meeting in Azerbaijan agreed to $300 billion in annual climate funding from developed countries and institutions like the World Bank. The money is intended for low-income nations to decarbonize and adapt their infrastructure for more extreme weather. The Guardian reports that a further trillion dollars is meant to come from private sector investment as well as potential new levies on shipping, frequent flyers, and fossil fuels. Many are skeptical that such taxes will be politically practical.

2. The Polluters Pay Climate Fund Act. Introduced by US Democratic lawmakers in September, this bill would force the largest fossil fuel extractors and refiners in the US to pay $100 billion a year into a fund, for the next 10 years. The make-up of the next Congress suggests progress is unlikely, although the similar Vermont act did get the OK from the state’s Republican governor.

3. Carbon cash-backs. New research from Germany, published recently in Nature, suggests that carbon taxes can be popular with voters—but only if they distribute the funds directly back to consumers. A “revenue recycling” model giving people a simple payment based on the expected revenues from a carbon tax topped the survey, which also found that most people underestimate the popularity of a carbon tax among their fellow citizens.

Pledge Your Vote Now
Change language