Taxing tomorrow

Controversial plan would charge taxpayers of 2045 for climate action now Instead of dropping future generations into deep crisis by failing to address climate change, why not hand them a hefty tax bill - and use their money to pay for action now? Andrew Oswald isn’t shy about calling his proposed ‘global warming bonds’ a tax on the unborn. The idea is that today’s governments could issue long-dated bonds that would not actually start paying out anything until 2045. They would therefore cost the government (and thus the taxpayer) nothing now. They would, however, have a value straight away, as people - and pension funds - would want to buy them and trade in them for precisely those future benefits. So they could be issued as incentives - to reward people who reduced their household greenhouse gas emissions, to subsidise transport companies that introduced zero-emission vehicles, to encourage the development of low carbon technologies.... It may be heretical, contravening a basic principle of sustainable development that the position of future generations should not be compromised. But Oswald, a professor of economics at the University of Warwick, sees it as an innovative - and necessary - mechanism. Convinced that the financial carrot is a better motivator than the regulatory stick, he sees no better way to encourage the inhabitants of today’s world to adopt the kind of reduced-emission lifestyle choices from which we receive, as he puts it, almost none of the benefit and all of the inconvenience. “In return for a cooler globe, our offspring’s offspring would pay more tax to the governments of their era,” Oswald proposes. “Future generations pass us down their money; in return we pass them up our low temperature. All generations gain. And this would be fair, because those future generations will be richer than we are, and they want us to alter our actions to help them.” The paper containing these controversial ideas, Energy and Travel in the Future, was presented as the first in a series of 2045-oriented briefings at the University of Warwick’s London offices. andrew.oswald@warwick.ac.uk,
02476 523510, www.oswald.co.uk

15 March 2005