There’s been a lot of noise around the increase in carbon tax in the latest budget here in Ireland. Understandably so, perhaps, when you consider that carbon taxes disproportionately affect the people who use CO2 emitting devices rather than those who make them. In other words, the user pays not the producer.

At first glance, this makes sense with cars where the bulk of CO2 emissions occur after manufacture. But the system, as it is, effectively allows manufacturers to escape the consequences of their actions. For instance, the huge increase in sales of SUVs which cause far more damage to the environment and emit far more CO2 than normal cars, was driven by the manufacturers. If a business builds something that, by the very nature of its existence, will cause CO2 emissions and damage to the climate, it’s not unreasonable to expect that it should have to shoulder some of the cost for that.

Passing that cost on to ordinary people who have no choice and are forced to use cars because the government has neglected public transportation for years is deeply unfair. Some will argue that if diesel and petrol cars are more expensive to run, that will force people to consider electric alternatives, but the fact is that if car manufacturers had led the charge on electric cars we would have already migrated to them.

People forget that many of the first cars were electric. In fact, the first real electric car was designed in 1888. Not only that but electric cars were preferred to diesel and petrol equivalents in the late 19th and early 20th century. In 1900, 28% of cars on the road in the US were electric. But then came the electric starter motor, advances in internal combustion engines and the mass production of diesel and petrol vehicles which led to the decline of electric vehicles. The rest is history/missed opportunity (*delete as appropriate).

Can you imagine where we would be today if the carmakers had stuck to developing electric vehicles instead of going down the petrol and diesel route? Not just in terms of electric vehicles themselves but also regarding the CO2 emissions and pollution that would never have been released.

It feels only fair that car manufacturers should bear some of the responsibility for the emissions from their products. Those that fail to change to more climate friendly technologies, such as electric, should be penalised in the form of additional charges to cover the environmental cost of their vehicles. This should be done at governmental level because the problem with leaving the market to decide is that it takes too long and the wrong people have to pay for the consequences of that delay.

Meanwhile, there are other industries, such as IT, where most of the CO2 emissions occur in the manufacturing process rather than after the product has been sold. In these instances, it might be fairer to apply a carbon charge on the manufacturer to gain some recompense for the environmental damage associated with its product. This would have to be done before the sale or applied retrospectively. If such a charge were to be applied, it would encourage manufacturers to improve their processes to reduce their emissions.

The problem with the carbon tax as it is currently applied is there is very little incentive on producers to change their behaviour quickly because the punitive aspect of the tax is visited squarely on the user and it is the user who pays the cost for the producer’s transgressions. Over time, pressure from users will prompt producers to introduce products that are more environmentally friendly and emit less carbon dioxide but why should users have to pay the cost for the time it takes manufacturers to make that change?

There’s an old country song called If You’ve Got The Money, I’ve Got The Time. That pretty much sums up how the carbon tax works. Users pay the money and producers get the time.