Why tax carbon emissions? Here’s why…

Washington state has proposed a tax on carbon emissions for both residents and big business. Following the lead of roughly 20 countries worldwide, already taxing citizens on their carbon footprint. British Columbia has seen a 13 percent decrease in fossil fuel consumption since their tax took effect. Hari Sreenivasan takes a look at the Washington proposal including alternate energy options.

TRANSCRIPT

Washington State has proposed a tax on carbon emissions for both residents and big business, following the lead of roughly 20 countries worldwide already taxing citizens on their carbon footprint.

British Columbia has seen a 13% decrease in fossil fuel consumption since their tax took effect.

Next, we take a look at the Washington proposal, including alternative energy options.

[ Chicken cheeps ]

This is Sally.

She's like most chickens her age.

She'll grow up in a place like this.

And that means Sally's hiding something -- a carbon footprint.

[ Roosters crow ] Sally's farm uses electricity from a coal-fired power plant, her farmer drives a diesel pickup, and her feed comes from a factory that consumes its own electricity and fuel.

Now meet Colin.

Colin was raised on a solar-powered farm eating locally sourced feed.

Today, raising Colin is more expensive than raising Sally, because carbon-free energy is currently more expensive than fossil fuels.

But someday soon, Sally's carbon footprint could tip the scales.

Why?

If we want to keep a livable climate, we have to put way less carbon dioxide into the atmosphere.

You've got two basic options.

You could make a law that limits how much fossil fuels a person or company can burn and penalize them if they break the law.

Sort of like a speeding ticket.

Laws like that aren't always popular, though.

That's where the second option comes in -- putting a price on carbon emissions.

Right now, you can put as much carbon dioxide into the air as you like without paying a dime.

But what if people had to pay?

Almost 20 countries around the world have adopted a carbon tax.

Here's how it works -- Companies pay a tax when they buy fossil fuels, like coal or natural gas.

The price is based on how much carbon is in the fuel.

And then they try to pass those costs on to customers.

That means with a carbon tax, the cost of raising Sally goes up.

And ultimately, when it's time for Sally to go to the great chicken afterlife... ...it should be easier for consumers to pick Colin for dinner.

But a carbon tax isn't the only way to make carbon more expensive.

Enter cap and trade.

A bunch of countries have tried this, too, and so has California.

Under cap and trade, Sally's farmer can put as much carbon into the air as he wants, but if it goes above a certain amount -- the cap -- he'll need a permit.

The government only hands out so many of these permits.

So if you don't have enough permits for all the carbon you want to put in the air, you can buy or trade for them.

Cap and trade supporters say the law gives us more control over emissions.

With a carbon tax, we don't know what exactly will happen to emissions, but we have a better idea how much it will cost to try to curb them.

Either way, both laws ultimately make carbon more expensive to emit, with the hope that people and companies will change their buying habits.

So, how much more will Sally ultimately cost?

It all depends on the details, like where Sally left her carbon footprint.

In Mexico, burning carbon costs an extra dollar a ton.

In California, that same ton costs $13, and in Sweden, $130.

In any case, the more pricy we make carbon, the more competitive solar, wind, and other non-carbon-based energy sources become.

The question is, who's willing to stomach the cost?