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Environmental tariffs could be a game changer
By Daron Acemoglu  |  Aug 24, 2022
Environmental tariffs could be a game changer
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As climate change devastates the environment, all mitigating means must be considered. Some countries have turned to carbon taxes, but not the world’s biggest emitters the US, China, and India, where political barriers prevent this. Environmental tariffs, however, could circumvent such obstacles and even more effectively achieve their aim via incentives.

CAMBRIDGE, MASSACHUSETTS - Environmental tariffs may be humanity’s last hope for mitigating climate change, which is on course to become increasingly devastating if countries do not curb their greenhouse-gas (GHG) emissions.

The most straightforward way of confronting this unprecedented global threat is through a multilateral agreement that locks in a ‘green transition’ in all - or at least most - countries. The key is to boost renewable energy production while simultaneously significantly reducing fossil-fuel consumption, a process that calls for coordinated policies on three fronts: regulation, subsidies for cleaner technologies - including renewables - and carbon taxes.

Unfortunately, this type of global agreement currently seems out of reach, both because the fossil fuel industry remains politically powerful, and because some of the world’s biggest emitters - including the United States, China, and India - are not adopting the necessary policies.

Though regulation and subsidies are essential to achieving an effective energy transition, the carbon tax is the bedrock, because that is what will increase the costs of emitting carbon dioxide, methane, and other GHGs. Several countries have already adopted such taxes, including Sweden, which has the world’s highest 

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