Carbon tax, a tax paid on businesses that emit carbon dioxide (CO2) as a result of their operations. It is used as an incentive to minimize the use of high-carbon fuels across the economy and to preserve the environment from the adverse consequences of excessive carbon dioxide emissions. It is critical to discourage the use of fossil fuels in order to reduce the concentration of thermal greenhouse gasses in the earth’s atmosphere. A carbon price might discourage the use of fossil fuels and stimulate a move to cleaner fuels, decreasing carbon dioxide emissions, which are currently the most prevalent greenhouse gas.
A carbon tax is intended to represent the exact cost of producing carbon. Those expenses are borne by the people who are affected, such as landowners, farmers, and, eventually, the government. Carbon taxes ensure that businesses and consumers bear the environmental consequences they inflict on society. Without measures to reduce greenhouse gas emissions, surface temperatures are projected to increase by about 4°C above the pre-industrial level by the end of the century (temperatures have already risen by 1°C), with soaring and irreparable hazard of collapsing glacial ice, disruption of ocean circulatory systems, upwelling of low-lying island states, and extreme weather events.
Many economists say that carbon taxes offer the most optimal and cost-effective solution to address climate change and global warming. A carbon tax, according to the Organization for Economic Cooperation and Development (OECD), is “a tool of environmental cost internalization.” It is an excise tax on raw fossil fuel producers depending on the proportional carbon content of those fuels.”
According to research, putting a price on carbon-based fuels in the form of a charge or tax can be an effective approach to decreasing GHG emissions and pollution levels globally. By levying greater taxes on carbon-based fuels, consumers and industry may reduce emissions and shift toward cleaner alternatives such as solar electricity and hydrogen engines. As a result, the establishment of a carbon tax system offers an incentive for firms and industries to create more environmentally friendly manufacturing methods. GHG emissions taxation supports renewable energy investments and leads to additional technical advancements. In recent years, data has demonstrated that technological advancements and ingenuity have enabled solar energy to be more efficient and beneficial for lowering pollution costs.
Implementing a carbon price policy may also generate considerable income for governments, which can then be utilized to repair the financial damage induced by the use of fossil fuels. Governments might, for example, utilize carbon tax money to decrease individual income taxes and future imbalances or invest in green technology and climate adaptation.
Bangladesh has made substantial economic and social progress as a result of persistent economic expansion, and it has been at the forefront of a number of development initiatives. Over the recent decade, economic growth has averaged 7.5 percent, assisting in the reduction of poverty to less than 4% by 2022. Bangladesh was one of the first developing nations to publish an integrated Climate Change Strategy and Action Plan (in 2009), as well as to establish its own Climate Change Trust Fund to aid in climate change mitigation and adaptation. It also modified its constitution to make environmental conservation a primary national goal.
The challenges for Bangladesh in this regard are still there. Bangladesh has several development requirements, including increasing electricity availability and transportation infrastructure, along with continued growth in social indices. It is one of the most susceptible countries to climate change, with yearly losses of roughly 2% of GDP expected by 2050. Floods and other climate-related concerns affect a large area of the country. At the same time, Bangladesh is a country with severely limited resources, with public sector earnings averaging barely 10% of GDP over the previous decade.
A carbon price can help Bangladesh demonstrate its unequivocal commitment to fighting climate change. A carbon tax can be part of a plan to decrease environmental harm caused by its development while also raising more funds for development. It may allow taxpayers to pay tax cuts on “goods” like labour and manufacturing while transferring the tax burden on “bads” like pollution. A carbon tax, when combined with other initiatives to decrease pollution, has the potential to benefit the nation’s health and environment.
Furthermore, by indicating to the world community that Bangladesh is willing to contribute to combating climate change, the country can acquire additional influence in the international arena and get access to resources (financial and technological) guaranteed under COP21. It will assist Bangladesh in meeting its COP21 Paris Agreement commitment to cut climate-harming emissions by 5% relative to the “business as usual” baseline by 2030.
To address the negative consequences of increasing sea levels, changes in weather patterns, and extreme climate events, governments must increase their efforts to cut GHG emissions. Nations that have yet to establish a carbon tax policy, in particular, should take inspiration from the successes of other nations that have effectively developed a carbon tax in order to build unique solutions to assist prevent global warming and climate change.