Fighting climate change through carbon taxes


  • Research shows that putting a price on carbon-based fuels, in the form of a levy or a tax, is an effective way to reduce GHG emissions and pollution levels around the world.
  • A carbon tax policy can generate significant revenue for countries, which can then be used to address economic damage caused by burning fossil fuels.
  • Countries that have not yet implemented a carbon tax should learn from the experiences of places like South Africa and British Columbia in Canada that have successfully implemented one.

In 2020, we witnessed several extreme weather events around the world. Hot, dry weather conditions have resulted in record-breaking wildfires in large areas of California, Brazil and Australia. And that year’s hurricane season featured 30 named destructive storms in the North Atlantic and 12 storms that made landfall in the United States.

For the Atlantic hurricane season 2021, meteorologists at Colorado State University predict that there is about a 6 in 10 chance of another active hurricane season to come. Research further shows that long-lasting droughts have destroyed agricultural products and pushed millions of people into hunger in Madagascar and Zimbabwe. As a result, it was projected that global warming has the potential to condemn more than a third of the planet’s animal and plant species to extinction by 2050 if greenhouse gas (GHG) emissions continue to rise unchecked.

Given the possible effects of climate change on health, the World Health Organization (WHO) predicts that climate change is expected to cause an estimated 250,000 deaths per year between 2030 and 2050, and 38,000 from heat exposure in the elderly. Thus, urgent action is needed to curb the effects of global change, including the possibility of introducing carbon taxes as a means of tackling environmental pollution.

The case of carbon taxes

Many economists have argued that carbon taxes are the most effective and cost-effective way to curb climate change and tackle the problem of global warming. According to Organisation for Economic Co-operation and Development (OECD), a carbon tax is “an instrument for internalizing environmental costs. This is an excise tax on producers of crude fossil fuels based on the relative carbon content of these fuels. ”

Research shows that putting a price on carbon-based fuels, in the form of a levy or a tax, can be an effective way to reduce GHG emissions and pollution levels around the world. By imposing higher taxes on carbon-based fuels, households and industries can reduce the level of pollution and seek alternatives such as solar energy and hydrogen engines, which have a lower impact on the environment. The implementation of a carbon tax system therefore encourages companies and industries to develop production processes that are more respectful of the environment. Taxing GHG emissions encourages investments in renewable energies and leads to new technological developments. During the last years, proof has shown that technology and innovation have made solar energy more effective and efficient in order to reduce the costs of pollution.

In addition, the implementation of a carbon tax policy can generate significant revenues for countries, which can then be used to address the economic damage caused by the burning of fossil fuels. Governments could, for example, use carbon tax revenues to reduce personal income taxes, future deficits, or to invest in clean energy and adaptation to climate.

Carbon pricing initiatives

Image: C2ES

A notable example is the implementation of a carbon tax in the Canadian province of British Columbia since 2008, which has also been celebrated globally as a classic example of carbon taxation in a sub-state actor, because it covers about 70% of provincial GHG emissions. . the fair coverage the purchase and use of fossil fuels by households and industries in the province was seen as a waiver of carbon taxes in other countries that exempted politically influential industries. In general, British Columbia’s carbon tax policy has been successful in significantly reducing the level of GHG emissions in the province without compromising economic growth and development.

African countries have also participated in the establishment of carbon taxation systems. South Africa is a good example of an emerging economy pursuing actions against global warming and climate change by introducing a carbon tax system. South Africa’s carbon tax came into effect in June 2019 and focuses on carbon emissions from processes in the industrial, power, construction and transport sectors. South Africa’s carbon tax targets carbon emissions above a certain level from fuel combustion, power generation and industrial processes, and covers 80% of the country’s GHG emissions. The progress seen in South Africa’s carbon tax policy led to increased calls to Kenya, Uganda, Nigeria, Rwanda and other African countries to reform existing tax laws to introduce a carbon tax system to reduce pollution environment in the extractive sector.

Business leaders in mining, metallurgy and manufacturing are changing their approach to integrate climate considerations into complex supply chains.

The Forum’s Mining and Metals Blockchain initiative, created to accelerate an industrial solution for supply chain visibility and environmental, social and corporate governance (ESG) requirements, has released a unique proof of concept to trace emissions throughout the value chain using distributed ledger technology.


Developed in collaboration with industry experts, it not only tests the technological feasibility of the solution, but also explores the complexities of supply chain dynamics and defines requirements for future use of data.

In doing so, the proof of concept responds to stakeholder demands to create visibility and accountability “from mine to market”.

The World Economic Forum Mining and Metals community is a high-level peer group dedicated to ensuring the long-term sustainability of their industry and their society. Find out more about their work and how to reach them, via our Impact Story.

The adverse effects and consequences of global warming and climate change are undoubtedly getting worse every day. The world continues to see rising temperatures and rising sea levels. Extreme weather events – such as heat waves, torrential rains, cyclones, blizzards and droughts – will undoubtedly continue to occur more often and with greater intensity if the level of GHGs released into the atmosphere remains unchecked. In light of this, there is a need for countries around the world to introduce a carbon tax system that aims to discourage pollution, promote greater energy efficiency and improve the use of cleaner carbon innovations. – so many essential elements for success in the greening of the world economy.

If the world is to cope with the adverse effects of rising sea levels, changing weather patterns and extreme weather events, countries must step up efforts to reduce the level of GHG emissions. In particular, countries that have not yet implemented a carbon tax policy should learn from the experiences of other countries that have successfully implemented a carbon tax, with a view to developing unique strategies that will contribute to mitigate global warming and climate change.


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