July 12, 2021—G20 finance ministers last week agreed carbon pricing could be an effective tool to help fight global climate change. During their meetings at the G20 High Level Tax Symposium on Tax Policy and Climate Change in Venice, Italy, the ministers also reaffirmed a 2050 target for net zero emissions of greenhouse gases, using carbon taxes as a way to get there.
Tools At Their Disposal
While the ministers did not approve a carbon tax proposal, they acknowledged that different countries had many tools at their disposal to reduce emissions, but international cooperation is ultimately critical.
Carbon Pricing, Explained
Carbon pricing is a fee or tax on companies to cover the external costs of greenhouse gas emissions, such as for health care, crop loss, and loss of property to rising sea levels (Read more at the World Bank).
The next step is a report on carbon pricing by the International Monetary Fund and the Organization for Economic Co-operation and Development for the ministers to examine when they meet again in October.
Taxing carbon emissions is a long-discussed but rarely used weapon. Although never explicitly levied in the U.S., the federal tax on transportation fuels (gasoline, diesel, and special motor fuels) some have framed it that way in hindsight. That 18.4 cents per gallon tax, however, has not changed since 1993 and is seen mainly as a fundraiser to maintain federal highways.
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