The idea of a carbon tax comes from economist Arthur Pigou, who created the theory of externalities. It works. Therefore the industry is screaming about it. Therefore we must do more of it. And dump the subsidies, too.
Pigou didn’t use the word “externalities”. He called them “negative marginal social net product”. I will have a Diary about his views on taxing them, in what has come to be known as Pigovian taxation, on Saturday. For today, let’s look at the data, including the maps above and below, of carbon taxes and subsidies.
Fossil fuel subsidies—Wikipedia
Despite the G20 countries having pledged to phase-out inefficient fossil fuel subsidies,[5] as of 2023 they continue because of voter demand[6][7] or for energy security.[8] Global fossil fuel consumption subsidies in 2022 have been estimated at one trillion dollars;[4] ["Fossil Fuels Consumption Subsidies 2022 – Analysis". IEA. Retrieved 2023-02-16.] although they vary each year depending on oil prices they are consistently hundreds of billions of dollars.[9]
However the IMF estimates 2020 total subsidies at $5.9 trillion or 6.8 percent of GDP: this figure is much larger because over 90% of it is undercharging for environmental costs and foregone consumption taxes (implicit subsidies).[18] Setting fossil fuel prices that reflect their true cost would cut global CO2 emissions by 10% by 2030, according to the IPCC in 2023.[19] Unfortunately governments worldwide have increased their subsidies to 7 trillion in 2022 due to high energy prices according to the IMF. [20]
This is the epitome of wasteful government spending. We can sell saving Real MoneyTM, real lives, and Planet A to the public, and we must do so.