New Zealand Insituting Carbon Tax

This news is all over the wires:

New Zealand’s government said it will tax power generators and industry for their use of coal, oil and gas from April 2007 as the country prepares to meet its obligations to reduce emissions.

The tax, which will be paid when companies buy their fuel, will be set at the equivalent of NZ$15 ($11) per metric ton of carbon dioxide, Pete Hodgson, convener of the government’s ministerial working group on climate change, said in a statement.

New Zealand is imposing the tax to help meet its obligations under the 1997 Kyoto Protocol on climate change. The treaty, which came into effect on Feb. 16, binds 35 countries and the European Union to reducing emissions of carbon dioxide and five other gases blamed for global warming by 5 percent from 1990 levels.

The carbon tax concept has been around for quite some time, and numerous economists support it; if I remember right, it’s in place in several European countries. This seems like an effective use of taxation: using it as a stick to encourage less pollution and cleaner energy sources. What do you think? Are “green taxes” an appropriate method of addressing climate change and other environmental ills? Will they encourage sustainable development, or merely move us towards more “cap and trade”-type measures without more positive steps?

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