Recycling revenue from an international carbon tax to fund an integrated investment programme in sustainable energy and poverty reduction

Sustainable energy supply, climate change and poverty are three critical, interrelated global problems that require urgent action, including substantial investment. We examine the feasibility of using an international carbon tax to finance an integrated investment programme in sustainable energy technology (including climate change mitigation) and the reduction of poverty (including climate change adaptation). A simple evaluation of responsibility for anthropogenic climate change based on cumulative greenhouse gas (GHG) emissions to stabilisation per capita (using current populations) suggests that currently India and China remain under-spent by 99% and 78% for stringent, 445-490 ppm CO2-equivalent (CO2-eq) targets, respectively, whilst the USA and EC are already overspent for targets of 710-855 and 545-590 ppm CO2-eq, respectively. It would therefore appear equitable to charge the tax only in developed nations. The potential advantages and disadvantages of an integrated investment programme and available policy instruments for a tax of this type are discussed, drawing on relevant literature. Although a cost-benefit analysis using suitable simulations that include revenue recycling is required, revenues estimated from documented carbon tax simulations appear sufficient to meet a significant proportion of the estimated investment requirement. With increasing public awareness and an integrated campaign, obtaining agreement for this type of ambitious international measures could soon become realistic. (C) 2008 Elsevier Ltd. All rights reserved.