The “Polluter Pays Principle” (PPP) was first introduced in 1972 by the Organization for Economic Cooperation and Development (OECD) guiding Principles concerning International Economic Aspects of Environmental policies where the polluter is going to be held responsible for the environmental damage and pollution it may cause. It is based on an age-old adage of “cleaning your own mess“. For instance, a factory that produces a potentially poisonous substance as a by-product of its activities is usually held responsible for its safe disposal.
In consideration of the fact that the scientific debate on GHG (particularly CO2) as the major cause of Climate Change has long been concluded and putting the PPP to use, it is on this premise that we should encourage governments of the world to agree on a global carbon price for all carbon-emitting products and services—in the process, discouraging their excessive use.
Sample courses of action
- Countries, regions, and the U.N. implementing carbon taxes.
- Establish a common methodology of measuring carbon-emission.
- Encourages the use of sound Environmental Accounting principles to supplement the traditional Accounting practices.
- Grassroots campaigns generating public support for carbon pricing.
- Pricing carbon is a high leverage strategy. It both reduces the carbon intensity of the energy supply and reduces the overall energy demand.
- Its implementation should consider existing taxes that are being imposed on CO2-releasing products and services.
Some Key Dynamic
- When the carbon price is increased, demand for Coal, Natural Gas and Oil is expected to go down at varying degrees. Renewables, on the other hand, increases as the relative cost of wind and solar make them more attractive.
- Just like the taxation option, a significant carbon price increases energy costs, which will consequently reduce the demand and consumption of energy.
- Renewable energy becomes relatively cheaper, which can incentivize job creation in the sector.
- Reducing the use of fossil fuels improves air quality, increasing healthcare savings and worker productivity.
- Revenue from carbon pricing can be allocated to social programs that can be shared with everyone.s.
- As carbon taxes reach effective levels, companies may try to pass costs to customers, where the poor are most at risk of being impacted. Policies can be developed that limit this impact.
- Workers employed in fossil fuel industries risk losing their jobs if companies shrink workforces in response to higher costs of production, so job transition plans should be in place and protections for workers ensured.
- Due to the political nature of fossil fuel production, government corruption and rent-seeking could create the possibility of certain industries avoiding the carbon price due to loop holes or exemptions.
My upcoming Blog on this subject will quantitatively assess the effects of carbon-pricing policy-scenarios on the established climate-metrics of post-industrial global mean Temperature-Increase and Sea-level Rise—using the world climate simulator EnROADS.
References: 1.) EnROADS Reference Guide, 2.) U.N. webpage https://www.un.org/en/sections/issues-depth/climate-change/ 3. The PPP http://www.lse.ac.uk/GranthamInstitute/faqs/what-is-the-polluter-pays-principle/ 4. Carbon Pricing https://www.worldbank.org/en/programs/pricing-carbon