I’ve been thinking recently on the concept of a carbon tax. I like the general idea of levying a tax for higher carbon production – particularly if it’s somewhat like a Carbon-Added Tax. It’s way to charge for an externality as well as fuel innovation by leveraging the market through customers wanting to pay lower prices.

The problem is what to do with those funds. There’s always some discussion that those funds would be used to help poorer nations mitigate the damage from climate change – floods, crop losses, migration to cities.

Except, I don’t trust the governments of the world with such a scheme. It would be too easy to divert those funds to pet projects and friends. I also don’t trust governments to properly levy how much tax should be paid. Finally, no government is going to let go of a revenue stream – regardless of how carbon-efficient technology becomes.

There’s part of me that thinks a large NGO could manage the carbon tax funds. Something like the IMF or WTO. Yet, I don’t trust their incentives any more than the government.

I await someone coming up with a workable scheme.