The way I see it, the major barrier to countries implementing carbon taxes is the fear their economic competitors won’t do the same, therefore hindering their economic growth needlessly. A valid concern.
Why don’t some nations build an ‘opt in’ style Free Trade Agreement that allows any country to join as long as they prove they have implemented and enforced a carbon tax. Those countries then have high financial incentives to only trade within the ‘carbon tax block’ and any country outside is at a serious trade disadvantage.
I’ve (quickly) looked and have not found anything like this proposed (which is frankly crazy).
Would you support your country jumping into this FTA?
What are the unforeseen downsides or objections to a plan like this?
Well the idea of a carbon tax, in the context of effects which are difficult to determine, is that it is simple and specifically does not attempt to determine those effects. It relies on the assumption that less carbon release is better, and after that, all the determinations about what specifically can be changed to reduce carbon usage is handled by the distributed decision mechanism of the market.
The difficulty in evaluating these effects isn’t just an obstacle to be overcome, but a design reality that determines the shape of a solution.
Specifically, it means the potential solution should not include that evaluation happening inside the government. That evaluation should be done by the more inclusive and thorough mechanisms of market interaction, rather than the shallow and cursory mechanisms of committee meetings.