Could Carbon Taxes Lose Us a Cold War with China?

Could Carbon Taxes Lose Us a Cold War with China?

With global carbon pricing a possibility after Article 6 of the Paris Agreement was finally ratified at COP26, multiple governments are now looking to cooperate on imposing a carbon tax on high-emission fossil fuel producers. This collaborative international action is not unprecedented. The G20 Summit preceding world leaders’ trip to Glasgow produced a 15 percent corporate tax imposition agreement, garnering 136 signatories. The impediment to policy makers is not one posed by bean-counting an appropriate tax rate, but by precarious international relations. As an energy security Cold War brews, any carbon tax commitments must endeavor not to undercut the economic improvement of developing nations, which could drive them toward China for financial aid.

China’s Belt & Road Initiative (BRI) is a superficially enticing prospect for countries playing catch-up to the UK, the Americas, and Europe in infrastructure,…

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