Chile Is Poised to Pass South America’s First Carbon Tax

It’s a big year for fighting climate change in Chile.  A carbon tax is set to go before its House of Representatives next week, as part of a larger tax reform package that includes measures intended to fight air pollution and climate change.  Chile would become the first country in South America to institute a carbon tax, and the second in Latin America after Mexico, which imposed its carbon tax in January.

A carbon tax is what it sounds like.  The government charges emitters of carbon pollution for every metric ton they release into the atmosphere.  Carbon taxes are gaining popularity as a way to massively cut the amount of carbon dioxide put into the atmosphere, while creating jobs, raising incomes, and cutting deficits in countries where they’re implemented.  British Columbia, Canada, has had a carbon tax since 2008 and has seen success cutting energy use and carbon emissions, and giving revenue from the tax back to low-income families to offset higher energy prices.

Chile’s initial tax will be $5 per ton of CO2, and Mexico’s taxes fuels at different rates, averaging out to about $3.50 per ton.  Those are both pretty low, but once a carbon tax is in place, it can be raised.  British Columbia’s started at C$10 per ton in 2008, ramping up over the years to C$30 in 2012.  A study in California found that even a $200-a-ton carbon price would actually help businesses and create jobs in the state, though it’s far higher than anything that has been tried yet.

There is currently no carbon tax in the United States, and any attempt to pass one would be extremely difficult, thanks in part to a pledge from the Koch-backed organization Americans For Prosperity that requires signers to “oppose any legislation relating to climate change that includes a net increase in government revenue.  ”A third of the U.S. House of Representatives and a quarter of Senators have signed the pledge.

Chile Is Poised to Pass South America’s First Carbon Tax