It also means the current generation of normal people have no incentive to put pressure on the large industries of their country, the more they use the more money they get and the more messed up they leave it for the next generation.

“Normal people” don’t have to put pressure for this to work.

Every point along the supply chain absorbs the price signal and will find cheaper (ie less CO2-producing) options where possible, raising the price a little. Where not possible the price goes up by the full CO2 tax amount. (In other words if it’s still the cheapest option to just pay the extra tax, like jet fuel, then the price just goes up.)

The consumer might hypothetically not get any different choices, but still see a CO2 tax cause all deliveries to use electric trucks, for example.

Consumers “putting pressure on companies” is a terrible way to fix this problem because few consumers have a clear picture of the current landscape of CO2 intensity and possible best fixes across the whole economy. But if you just price the externality in, then the market constraint-solves the problem for you.

(To be clear I don’t think markets are perfect, they are just much better than human coordinators at solving this class of problem.)

Taxing carbon is fine, that isn't the problem, the problem is giving that money to the current generation in the form of payouts.

Why should a random citizen get paid more just because in their country there's heavily polluting industries? It makes no sense.

> Why should a random citizen get paid more just because in their country there's heavily polluting industries?

Because everyone - including that random citizen - experiences harm from said heavy pollution. That's my air being contaminated, my water being poisoned, my planet being wrecked; by what rationale would I somehow not be justified in demanding compensation for that harm?

Ah I see, so is your concern that we aren’t putting that revenue to work on explicitly decarbonizing projects to invest in the future? Or is it more that you think there is a perverse incentive where residents might prefer e.g. a cement factory to move to their country because it will result in more CO2 rebate?

Giving everyone a single vote in democracy makes no sense, we should just air drop paper pamphlets all across the country and let anyone who collects them vote once for each pamphlet. If they fall on privately owned land, the owner of the land gets all of the pamphlets.

> Why should a random citizen get paid more just because in their country there's heavily polluting industries? It makes no sense.

I'm not following. Random citizen also pays more in tax.

Okay but at an individual level you're still incentivized to reduce your own emissions. Every $1 of carbon tax you pay is $1 out of your wallet, but you're only getting $1/(39 million) back through the carbon rebate.

But that does absolutely nothing to help the atmosphere.

This is a common misunderstanding, I think. But it actually still works. What matters is that the tax makes fossil fuels expensive relative to other energy sources. To take the extreme examples to make it clear: if you go 100 off fossil fuels, you pay no tax but get the dividend, so you win. On the other hand, if you were to for whatever reason choose the maximally carbon-intensive lifestyle you could, you'd pay way more in tax than the average dividend.

In other words, the tax you pay varies with your carbon emissions, while the dividend is constant (or rather, depends only on the total emissions of everyone). You still have a very strong incentive to reduce emissions, as it would reduce your living costs substatially but reduce your dividend by only a fraction of a penny (I.e. the change in total tax collected divided by the population).

So the 9.1% inflation we just experienced did more for the environment than an 8% carbon tax? Am I understanding this correctly? Did the emission of carbon actually go down because of inflation?

I think, to the degree that inflation is driven by rising gas prices, yes, it'll have a pretty substantial effect on reducing emissions. But my understanding is that inflation is also driven by things like federal reserve policy, stimulus bills, and supply issues due to the pandemic. Even then, if people are just consuming less and doing less fossil-fuel intensive stuff due to feeling squeezed economically, that'll reduce emissions. So it's kinda complicated. In the short term, it really depends on so many factors that I couldn't tell you, though I bet someone well versed in this sort of thing might be able to give a rough answer.

But also consider: in the long term, higher gas prices due to supply shortages encourage companies to drill for and produce more oil -- because they are getting the profits. But higher gas prices due to a carbon tax have the opposite effect -- the buyer is paying more, but that's because the producer is paying the tax, and passing on some or most of that cost to the buyer. They aren't making more profit, but less -- reducing their incentive to pull more oil out of the ground. So that's something powerful that a carbon tax does that inflation doesn't.

And inflation is (ideally) a temporary thing, and variable. A carbon tax is intended to be permanent (and ideally, slowly and steadily increasing), something predictable and inevitable that people can plan around. You'll act differently if you think gas is going to go back down by 20% than if you think it's going to stay at the higher prices forever, or keep getting more and more expensive over time.

My understanding is that even the possibility of a future carbon tax has caused some companies to start reducing their fossil fuel dependency, because if a tax happens, they'll be in a better place than if they did business as usual.

Inflation, recessions/depressions, and other economic maladies do indeed suppress carbon emissions, but I'd hope you'd agree that a more precise and direct lever (like a carbon tax) would be vastly preferable.

> So the 9.1% inflation we just experienced did more for the environment than an 8% carbon tax?

It probably helped a little, temporarily, but it probably helped a lot less than a carbon tax.

Imagine if anything that runs on electricity was immune to the inflation. That's closer to what you'd get, though still very different in other ways.

Not exactly the same, but emissions dropped pretty dramatically after the 2008 crash.