Capitalism’s shambolic response to Covid, especially that of the Johnson government, does not bode well for its ability to address the climate change crisis. Professor Henry D Jocoby’s advocacy in the Guardian on Tuesday, 5 January, of a fiscally neutral carbon tax to contain emissions is a timely reminder of the tough decisions that will be needed. A government such as ours which seems intent on not annoying its own most reactionary supporters while being willing to exploit workers, including teachers, NHS staff and other ‘key’ workers, to breaking point appears particularly unsuited for the task.
Professor Jacoby’s proposal is not a new one. A fiscally neutral carbon tax was advocated by James Hansen in his book Storms of my Grandchildren more than ten years ago and was endorsed in the discussion paper on Global Warming by the Communist University in South London (link below). As for the rate for such a tax, Professor Jacoby gives by way of example a rate of $0.50 per Kilogram of CO2, but James Hansen saw this tax as one that would be increased annually until even the least costly hydro-carbons to extract would not be worth extracting. Some indication of the eventual rate of such a tax is provided by the marginal cost of Saudi Arabian crude, which is thought to be currently around $4 per barrel and its selling price of around $60 a barrel. A barrel of oil contains around 0.4 kg of CO2. To keep Saudi oil in the ground would take a tax of $56 a barrel or $140 per kilogram of CO2. Some estimates of the cost of environmental damage per kilogram of CO2 are indeed of this order, but such a high final rate might not be called for as green energy sources would expand to replace first the more expensive hydrocarbons. Nevertheless, even less high carbon tax rates would not only impoverish workers, they would create an immense tax revenue that governments would be unable to spend efficiently. This explains the need for a fiscally neutral tax. This neutrality would be achieved by re-distributing most of the proceeds of the tax on a per capita basis, enabling workers to pay the higher energy costs resulting from gradually turning off the tap of hydrocarbons. The possibility of implementing a realistic Universal Basic Income might at last become a real possibility.
A carbon tax would, of course, not be confined to oil. It would apply to all hydrocarbons including those implicit in imports. Thus a system of assessing and accounting for carbon content in all commodities would be called for. Only in this way can governments be held to account for CO2 emissions and their inclination to meet national CO2 reduction targets simply by closing manufacturing and substituting imported products forestalled.
A capitalist government would, of course, be unlikely to distribute the tax proceeds from a carbon tax on a per capita basis. It is fundamental to a capitalist economy that labour receives only sufficient to enable it to reproduce while the social surplus is accumulated by capital. Whether this remains possible, i.e. whether capitalism can survive global warming, is an open question that will be tested.