Our hope is we will see politicians start to use the new cash sources to invest in an overall reduction of debt and in programs that seed efficiency, better transportation systems, restoration of all of their assets, including historic buildings and natural resources, and their own sustained push into large projects of better grids and clean energy.
We know the early signs of smart growth are rising. Let's not take steps backwards and misuse the fruits of our labor and the momentum that is clearly swinging to a wonderful balance between economic expansion and good environmental practices.
Proportion of UK income from carbon pricing should be used for wider government projects, according to new LSE report
Revenue received by the UK government from the EU's emissions trading scheme (ETS) should not be spent solely on green initiatives, according to a new report released today by the London School of Economics (LSE).
In the report, published by LSE's Grantham Research Institute on Climate Change, LSE economist Alex Bowen argues a small proportion of funds collected from carbon pricing schemes and other environmental taxes could be used to tackle broader government objectives, such as reducing the deficit.
Treasury revenues from green initiatives - particularly carbon pricing mechanisms - are likely to grow substantially over the next decade. In the next 10 years, the European Union is expected to raise €150bn via its emissions trading scheme, the equivalent of 0.1 per cent of its likely GDP over the same period. The report predicts that in coming decades environmental taxes could amount to "several percentage points of global income", as exchequers expand so-called 'polluter pays' schemes in order to help meet emissions targets.
The report argues not all of this revenue should be immediately earmarked for green projects - partly because it is unlikely the money raised will always match the funds needed for certain low carbon initiatives.
Instead, green revenues could "be used to help improve the tax-benefit system as a whole, to finance additional spending on other government objectives or to reduce outstanding public debt", the report suggests. The money could also be used to fund policies that offset the adverse effects of carbon taxes, for example providing support for the households and businesses hardest hit by the effects of carbon pricing, the report suggests.
The report urges governments to identify broader spending priorities for future green tax revenue. For example, some money could be used to provide climate finance to help poorer countries adapt to climate change.
Ultimately, it advises governments against adopting a single, simple rule for green tax revenues - advocating instead a flexible approach where policymakers regularly reassess where revenue is spent.