Guest essay by Eric Worrall

Harvard Professor and Guardian author Kenneth Rogoff thinks the best way to tackle climate change is to impose a global carbon tax, then use the money to help China and other poor countries eliminate their energy poverty and dependency on coal.

We must tackle global energy inequality before it’s too late

Kenneth Rogoff

There should be a worldwide tax on emissions backed by help for developing countries to cut CO2

While denizens of the world’s wealthiest economies debate the fate and fortune of the middle class, more than 800 million people worldwide have no access to electricity. And more than 2 billion have no clean cooking facilities, forcing them to use toxic alternatives such as animal waste as their main cooking fuel. Furthermore, per capita carbon dioxide emissions in Europe and the US are still vastly higher than in China and India. What right do Americans, in particular, have to complain as China increases production in smokestack industries to counter the economic slowdown caused by its trade war with the US? To many in Asia, the inward-looking debate in the west often seems both tone deaf and beside the point.

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Any solution to the problem requires two interconnected parts. The first and more important is a global tax on CO2 emissions, which would discourage activities that exacerbate global warming and encourage innovation. Equating the price of CO2 emissions globally would eliminate distortions whereby, say, a US-based firm might choose to relocate its most carbon-intensive production to China. Moreover, a worldwide carbon tax would achieve in one fell swoop what myriad command-and-control measures cannot easily replicate.

The second critical component is a mechanism that impels emerging and less-developed economies to buy in to emissions reduction, which can be very costly in terms of forgone growth. In recent years, the biggest contributor to the global increase in CO2 emissions has been fast-growing Asia, where roughly one new coal plant is being built every week. For advanced economies, where the average coal plant is 45 years old, phasing out such facilities is low-hanging fruit in terms of reducing CO2 emissions. But in Asia, where the average age of coal plants is only 12 years, the cost of taxing plants into oblivion makes doing so virtually impossible without outside aid.

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Kenneth Rogoff is professor of economics and public policy at Harvard University. He was the chief economist of the IMF from 2001 to 2003.