Carbon Taxes Rake in the Green for the Emerald Isle

Initiated during the depths of Ireland's financial crisis, carbon taxes have been effective in improving the country's environmental and economic outlook.
December 30, 2012, 7am PST | Jonathan Nettler | @nettsj
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Elisabeth Rosenthal reports on the effects of new environmental taxes imposed during the depths of Ireland's economic meltdown, and considers the propects for something similar being instituted in the United States. Three years ago, "[Ireland's] government imposed taxes on most of the fossil fuels used by homes, offices, vehicles and farms, based on each fuel’s carbon dioxide emissions, a move that immediately drove up prices for oil, natural gas and kerosene. Household trash is weighed at the curb, and residents are billed for anything that is not being recycled." Other taxes are tied to automobile emissions.

Despite the pain of new taxes on already strained finances, "[e]nvironmentally and economically, the new taxes have delivered results," says Rosenthal. "Long one of Europe’s highest per-capita producers of greenhouse gases, with levels nearing those of the United States, Ireland has seen its emissions drop more than 15 percent since 2008."

"Even more significantly, revenue from environmental taxes has played a crucial role in helping Ireland reduce a daunting deficit by several billion euros each year."

Could such an approach ever be imported to the United States? After all, economists on the right and left have supported such taxes, and, according to Rosenthal, "[a] recent report estimated that a modest carbon tax in the United States that increased incrementally over time could generate about $1.25 trillion in revenue from 2012 to 2022, reducing the 10-year deficit by 50 percent, based on projections from the Congressional Budget Office." Unfortunately, she adds, "the issue remains a nonstarter in the American political arena."

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Published on Thursday, December 27, 2012 in The New York Times
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