The Greenhouse Issue - The Iniquity of a Carbon Tax

Abstract

The United Nations Conference on Environment and Development held in Brazil in June 1992 reached international consensus on the need to stabilise greenhouse gas emissions from human activities. The use of energy in all its forms, contributes to anthropogenic greenhouse gas emissions. However, energy is a fundamental requirement for human existence, and the demand for energy increases with improved lifestyle, urbanisation and population growth. Approximately 90% of the world's energy needs are currently met by the use of fossil fuel. In spite of technological and economic developments with renewable sources of energy, it is unlikely that they will be a major contributor to the world's energy needs for the foreseeable future. In consequence, fossil fuel must and will continue as the major source of the world's energy. Fossil fuel reserves are finite, those of oil and gas are estimated to last for several decades, whilst those of coal will last for centuries. Therefore, when developing strategies for greenhouse gas stabilisation, it is important to consider the relative magnitude of these reserves and the best use to which each form of energy is suited, taking note of environmental, technical and economic requirement and consequences. The misuse of potential transport fuels in stationary applications may result in a short term reduction in greenhouse gas emissions, but could ultimately result in a significant increase in greenhouse emissions, once oil and gas reserves are depleted. It is equally important to consider all greenhouse gas emissions associated with the energy chain. These include emissions associated with the winning, preparation, storage and transport of coal, which constitute a very small component of the total greenhouse gas emissions from the use of coal. However, in the case of natural gas, although greenhouse gas emissions, associated with the winning, treatment, transmission and distribution or liquefaction, transport, storage and distribution will vary for each situation, nevertheless they constitute a significant component of total greenhouse gas emissions from the use of natural gas. Control strategies aimed at stabilising greenhouse gas emissions from the use of fossil fuels should encourage more efficient production, treatment, transport and use of energy. They should not include control measures simply aimed at emissions resulting from their use. Control measures, such as a carbon tax or a CO2 tax would distort the energy mix, would impact most on those in the community who are least able to afford the cost and would not take account of total greenhouse emissions associated with energy use. In fact, they could result in a real increase in greenhouse emissions. In addition, it would hasten depletion of scarce resources of energy, ultimately leading to an increase in greenhouse gas emissions from the production of transport fuels by conversion technologies.