'A carbon tax is just common sense.'
During Tesla’s first-quarter 2021 earnings call, Musk said: “The right thing to do, I think from an economic standpoint, and I think almost any economist would agree, is to have a carbon tax. “Just as we have a tax on cigarettes and alcohol, which we think are more likely to be bad than good, and we tend to tax fruits and vegetables less.”
The idea would mean that big polluters have financial incentives to reduce their emissions. The World Bank notes that the most common form is a tax on the carbon content of fossil fuels. At present, 25 countries have a carbon tax in place.
Musk went on to suggest that the tax could help accelerate the transition to sustainable energy: “The same should be true, we should tax energy that we think is probably bad, and support energy you think is probably good. Just like cigarettes and alcohol versus fruits and vegetables. It’s just common sense. But on the plus side...I'm not suggesting anyone to be complacent, but sustainable energy, renewable energy will be solved. It is being solved. But it matters how fast we solve it. And if we solve it faster, that's better for the world.”
It’s an idea that has support from the American public. A June 2020 poll by the Yale Program on Climate Change Communication asked respondents how they felt about a revenue-neutral carbon tax, where fossil fuel firms pay tax on their pollution and the revenue is used to lower other taxes by the same amount.
The poll found that 68 percent of respondents supported the idea. However, Joe Biden has not (yet) made carbon tax part of his environmental strategy.
John Kerry, the special presidential envoy for climate, suggested this month that Biden could change his position on a carbon tax soon: “He [Biden] hasn’t decided or made an announcement about it, but we all know that one of the most effective ways to reduce emissions is putting a price on carbon.”