World Leaders Discuss Proposals for a Carbon Tax at Davos


The president of Singapore has proposed a global carbon tax to force companies into transitioning away from power sources such as coal and oil.

Singapore’s President Tharman Shanmugaratnam has called for a global carbon tax as a solution to the destructive potential of man-made climate change during a panel discussion at the recent World Economic Forum (WEF) in Switzerland.

Climate change occurs naturally on Earth and has for over hundreds of millions of years, being marked by both gradual and sudden changes like the coming and going of ice ages. However, many researchers believe that our industrialized societies—which have learnt to burn coal, oil, and gas for energy—are releasing greenhouse gasses that they fear will heat the earth in a manner that causes shifts to climate that are faster than our civilization can handle.

According to Mr. Shanmugaratnam, there is no “realistic solution” to fighting man-made climate change without a globally coordinated system of carbon taxes. Switching to alternative energy sources such as wind, solar, and nuclear has been presented by some policy makers as a solution to reducing the risks of climate change, combined with taxes to force the energy transition.

Carbon taxes can come in several different forms, but the Centre for Climate and Energy Solutions says that most of the time, a government is best placed to set the price that emitters must pay for the greenhouse gas emissions they release. In theory, it would force companies to limit their emissions or switch to other energy sources—many of which remain intermittent in nature, cost more, or are still in development—to reduce their tax burden.

Mr. Shanmugaratnam says these systems have a perception of hindering industrial growth and spurring inflation in poorer countries that can’t afford the tax while also being unjust and unfair and leading to inflation—a characterization he disagrees with.

“In fact, quite the contrary. If we don’t do this, the countries that will suffer most ultimately are the developing countries. They’re going to be the worst affected by climate change,” he said of the U.N.’s climate change predictions, which have faced criticism for the lack of accuracy to date in their near-term models.

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“What we need is a system of carbon taxes coupled with subsidies for vulnerable households and a stream of funding for the developing world to allow them to engage in investments and mitigation and adaptation that allows them to keep growing,” the Singaporean leader said.

He added he believes a carbon tax is a “real opportunity” and the only “fair and realistic solution” to combating man-made climate change.

Saudi Finance Minister Says New Tax Would Be Difficult Politically

According to modeling published by the United Nations, man-made climate change could devastate the world, and there may only be a few years left to act. The U.N. predicts that resulting shifts in weather patterns could make it harder to grow food and could increase the need for migration, which will place additional strain on countries’ financial stability. However, skepticism of these dire forecasts has been growing, as many of the IPCC’s past predictions have failed to pan out.

Mohammed Al-Jadaan, finance minister for Saudi Arabia, agreed with parts of President Shanmugaratnam’s proposal, specifically that there be “Subsidies to those in need.” However, he also stressed that another tax being passed onto the public that still allows companies to do as they like with carbon emissions would be a bitter pill for many to swallow.

“There is a lot of political resistance from developed nations—politically, internally. I mean, we have heard just now some of the comments,” he said.

“So to say that we will put a tax but then that we will redirect some of that to low-income countries is going to be very difficult politically, extremely difficult.”

Instead, in Mr. Al-Jadaan’s opinion, the focus should be on helping poverty-stricken countries create better conditions for their people so they can “fuel their own transition.” He said there are over 600 million people in Africa without access to basic modern conveniences, such as electricity, while the forum members were sitting in a climate-controlled building.

“So to say to them, go and eat cake, why are you looking for bread, is hypocrisy in my opinion,” he said.

“They have their own endowment, allow them to use their own endowment. Help them to use their youth, empower their youth, reskill their youth, train their youth. That is what is really going to change Africa and other low-income countries,” he added.


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