A carbon tax has a solid theoretical basis in economics, which is why a great many economists favour it to address global warming. If you want more of something, they explain, provide incentives. If you want less of something — in this case carbon dioxide — tax it. As economists like to say, incentives matter.
Honest, intellectually rigorous economists — I’m excluding those who tout carbon taxes to promote an ideological global warming agenda — may soon need to put their climate models through new paces, however. To date, they’ve debated the economic cost of damage resulting from carbon dioxide emissions and the size of the tax needed to persuade individuals and industry to curb their emissions — should it be $50 a tonne, or $100 or $200 a tonne? With scientists increasingly pondering, and predicting, a long-lived period of global cooling, the debate may soon shift to whether we should be offering a bounty of $50, $100 or $200 a tonne to those willing to put additional carbon dioxide into the atmosphere.