Asian carbon tax debate set to warm up

New strategy

"The region has to embrace a new growth strategy that can turn the trade-off between economic development and environmental protection into a win-win synergy in which going green drives economic growth," the report stated.

Meanwhile, "the Asia-Pacific region cannot achieve its development goals fully by following conventional growth strategies," according to Lorenzo Santucci, economic affairs officer (environment and development) with UN-ESCAP in Bangkok. "We think a carbon tax of $10 a ton is reasonable as there would be trade-offs," he said. "Where our proposal differs from the Australian model is that we recommend that a carbon tax be introduced while at the same time reducing other taxes."

Based on models used in countries such as the United Kingdom and Denmark, Santucci said, such a move will not only increase gross domestic product but also employment. "Our modeling has shown that a $10 a ton carbon dioxide tax in Asia, if accompanied by reductions in other taxes such as corporate tax, would help reduce global carbon emissions by 8 percent by 2020, while boosting economic growth by up to 2.8 percent," he pointed out.

According to Santucci, in European countries where environmental tax reforms have been introduced, there have been positive gains in GDP of as much as 0.5 percent, while fuel demand has fallen by 2.6 percent on average and emissions have decreased by 2 to 6 percent.

"The resource-intensive growth patterns of the region which have propelled the economic boom over the last decade cannot be sustained as they now stand," he said.

Meanwhile, the International Atomic Energy Agency has predicted that in spite of the uncertain short-term global economic outlook, demand for energy is expected to increase by more than 30 percent from 2010 to 2030.

The World Economic Forum has said that "business as usual is no longer an option".

"Unless we break the present link between growth and consumption of resources, some $2 trillion of global economic output could be lost by 2030," the WEF said earlier this year.

Global demand for metals such as copper and aluminum has doubled over the last 20 years, said the UN's International Panel for Sustainable Resource Management and has cautioned that unless future end-of-life recycling rates are dramatically increased, critical specialty and rare earth metals (such as lithium, neodymium and gallium) will become unavailable for use in modern technology.

According to ESCAP, the days of abundant resources and falling prices are over and has warned that resource constraints, price volatility and the climate crisis have removed business as usual as an option and urged governments to seriously re-examine resource- and carbon-intensive growth strategies.

"If our region is to sustain the high economic growth that we need to achieve our development goals, we must shift to a different growth trajectory," ESCAP said. "Regionally, we must improve resource efficiency and urgently set in motion a new economy in which improving efficiencies and investing in natural capital become the drivers of economic growth."

Contact the reporter at karlwilson@chinadailyapac.com