Carbon Tax

CARBON TAX

Swapnil | Gaurav | Team | Suhail

SNAPSHOT

1. Introduction

2. Impacts on environment

3. Impacts on economy

4. Impacts on business

5. Impacts on households

6. Conclusion

INTRODUCTION TO CARBON TAX

FACTORS OF PRODUCTION

WHAT IS LAND?

LET ME TELL YOU A

STORY

I WAS LIVING HERE

LIFE WAS BAD :(

I USED MORE RESOURCES

LIFE GETS BETTER

NOW, I OVERUSED THE RESOURCES

I’M RICH AND GREEDY FOR MORE!!!

I WIN, EVERYBODY LOSES

“Each man is locked into a system that compels him to increase his herd without limit--

IN A WORLD THAT IS LIMITED”

~ Garret Hardin

HOW CLIMATE CHANGE HOW CARBON

EMISSION

IS DESTROYING

THE EARTH

GLOBAL WARMING

WHAT THIS MEANS FOR HUMANS?

CAUSING 200 BILLION IN DAMAGE – SAME AMOUNT AS 4 YEARS OF WAR

2 WAYS OF REDUCING EMISSION

1. Direct carbon taxing

2. Cap and trade with

other companies

DIRECT TAX

Carbon tax is based on economic principle of negative externality

Company A Company B

CAP AND TRADE WITH OTHER COMPANIES

WHAT THIS MEANS FOR THE ENVIRONMENT?

WHAT THEY THOUGHT WOULD HAPPEN…

KYOTO PROTOCOL

GROWTH AND THE ENVIRONMENTAL KUZNETS CURVE

We need to spend

180 billionper year globally to

maintain the

protocol

It would reduce

the temperature by

0.004 °C by end of

century

EUROPE 2020 POLICY

We need to spend

250 billionper year

It would reduce

the temperature by

0.05 °C by end of

century

WHAT THIS MEANS FOR THE ECONOMY?

Increase in cost of

inputs

Carbon TaxC

ost p

ush

infla

tion

Incr

ease

in c

ost o

f

prod

uctio

n

Increase in selling price

FROM ASSET TO LIABILITY

Carbon-emitting industry would be greatly affected by this larger decrease in demand

They become a

HUGE BURDENon economy

LOSING THE CUTTING EDGE

Increase in carbon price

Higher cost for exports

The country loses trade advantages

WHAT THIS MEANS FOR THE BUSINESS?

“The Australian Securities & investment

commission reports there were 10,632 company which have closed down 12% higher than GFC”

WHAT THIS MEANS FOR THE HOUSEHOLDS?

Effect of carbon price on expenditure($23/ ton)

Price of electricity increases by 10%

Price of gas increase by 9 %

Price of food increase by less than 5%

Overall effect is just

0.7%

HOUSEHOLDS SPEND MORE ON BEER (2.2%) THAN THEY DO FOR ELECTRICITY (2.1%)

FINDINGS - AUSTRALIA

Carbon tax of $23 is not enough

$100 per tonne of carbon tax needed to be charged to make an impact on current situation

This will collapse the

economy

GLOBAL NEW INVESTMENT IN RENEWABLE ENERGY

Source:UNEP,Bloomberg

CONCLUSION

We have been focusing on controlling the carbon emission

Instead, we should focus on solving the problem by research on green energy

“Every dollar on R&D would avoid $11 of climate damage”

INNOVATE OR PERISH