China’s Chance to Lead – Maximilian Auffhammer and Richard Carson

An op-ed in the Washington Post argues for China to impose a tax on the carbon content on its fossil fuel consumption:

China would gain in several ways from implementing a substantial carbon tax. By reducing its fossil fuel consumption, China would prevent the deaths of hundreds of thousands of citizens because of the short- and long-term consequences of from burning coal. Investments in energy-efficient durable goods, encouraged by a carbon tax, would generate energy savings over the lengthy life of these investments. The demands of China’s rapid economic growth are outstripping the country’s ability to provide the infrastructure necessary for continued growth; a carbon tax would slow short-term growth and allow infrastructure investments to catch up. Ultimately, this would lead to greater long-term growth. If China fears a drag on its economy from the carbon tax, it could make such a tax partially or fully revenue neutral by reducing other taxes. [Full text]