A carbon tax will help Hong Kong breathe easy

Anirudh Kannan
Anirudh Kannan |

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The skyline of Shanghai on a polluted day. Although clean, renewable energy is becoming cheaper, most countries in the world still rely mainly on carbon-based fuels.

This past month, Hong Kong was tormented by reports of incoming winds from China, carrying not good luck or prosperity to start the year with, but smog.

Air pollution, however, is just one of the plethora of environmental problems plaguing Hong Kong – and the world as a whole. While the issue of climate change and global warming may seem nebulous, complex, and, at times, intractable, it basically boils down to one thing: carbon.

Our consumption of carbon in the form of various fossil fuels means that we have been releasing copious amounts of the substance into the atmosphere to the tune of tens of billions of tonnes annually. This prevents heat from escaping the Earth’s surface, and therefore warms the planet.

Another issue that arises from our carbon consumption is that the carbon also gets into the oceans, which makes them more and more acidic, and acidic oceans are dangerous for marine life.

With clean renewable energy becoming ever cheaper and more efficient, many of us are left scratching our chins, wondering why we haven’t moved on from carbon-based fuels. It’s not so easy, though – this would require replacing the energy system worldwide, a costly and time-consuming process. Also, despite their declining prices, renewables are still more expensive than their polluting counterparts in most countries, and so it only makes economic sense that we buy cheaper fuels.

But is there anything we can do while we wait for the world to clean up its energy production?

Since it’s an economics problem, let’s turn to an economics solution: instituting a carbon tax. A carbon tax is a tax imposed on the purchase of carbon-based fuels, therefore reducing demand and consumption of those fuels, and moving consumers towards renewables. It’s an idea that is often held up by economists as a practical and effective solution to our dependence on carbon fuels. It’s not just academics who support this, however: Elon Musk, CEO of Tesla, Inc, an electric car and solar energy company, is also a proponent of the idea. He spoke in favour of it during a speech in 2015.

The idea has recently been picking up momentum and credibility, and the Canadian government is looking to institute a widespread carbon tax, with the tax already being implemented in the provinces of Quebec and British Columbia (BC). Sweden, one of the first countries in the world to implement such a tax, has experienced success in reducing emissions through this, thus proving that it does work in practice.

It’s not all rosy, though. One common criticism of the carbon tax is that it adversely impacts low-income households, and this has been shown to be true. Canada again leads the way in this regard. Canadian Prime Minister Justin Trudeau expects that the revenue the government receives will be used to help citizens offset the increased costs that come with a carbon tax. This, too, has been put in place: in BC, families that earn less than C$38,000 (HK$225,000) per year qualify for lower taxes.

But really, one of the main reasons that such taxes aren’t already widespread is because of the financial clout of oil companies, which gives them a lot of influence in politics.

So in this democracy of Hong Kong, like in many others, it’s up to us to take a stand and push for a carbon tax. Not only will it allow us to literally breathe easy, but it will accelerate the transition towards cleaner energy. All this, without placing low-income earners at a further disadvantage.

If it sounds too good to be true, it isn’t. Just ask Canada.

Edited by Sam Gusway