Published on March 7, 2014
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 HOW CARBON EMISSION CLIMATE CHANGE IS DESTROYING THE EARTH
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
CAP AND TRADE WITH OTHER COMPANIES Company A Company B
WHAT THIS MEANS FOR THE ENVIRONMENT?
WHAT THEY THOUGHT WOULD HAPPEN…
GROWTH AND THE ENVIRONMENTAL KUZNETS CURVE
We need to spend 180 billion per 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 billion per year
It would reduce the temperature by 0.05 °C by end of century
WHAT THIS MEANS FOR THE ECONOMY?
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 BURDEN on 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
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