Apply the well founded user pay principle for carbon tax

Comments on Robert Gottliebsen “A dangerous Australian dollar-carbon combo” 23/03/2011, http://www.businessspectator.com.au/bs.nsf/Article/Bluescope-Steel-Graham-Kraehe-carbon-tax-pd20110323-F7SF5?OpenDocument&src=sph

A border adjustment for carbon tax will be much more complex than Robert Gottliebsen argued for.

Firstly, how will the so many different products be differentiated for their different carbon contents?

Secondly, how will the different actions in different countries be accounted for?

Thirdly, how will the huge differences in the levels of per capita emissions be accounted for and adjusted for through the user or polluter pay principle?

This is because how international compensations should be done is not a matter for Australia alone to decide whether it is fair or not. One must use an internationally accepted framework.

The main reasons why it has been so difficult to reach an international agreement on how to reduce emissions and why Copenhagen had failed, are that the rich and high emitting countries didn’t want people to apply the principle of user pay for pollutions.

While the principle has merits, one has to design a scheme very carefully, be internationally equitable and fair, and avoid complexity in its implementation.