The threshold for solvency is global modelling, not domestic support. And a tax is inherently progressive even absent dividends.

Since carbon tax is regressive, the initial burden of the Just Energy Transition falls disproportionately on the indigent people within these countries, which should be avoided. “Given the increasing inequality within the economies, it is best to formulate taxes within these individual economies based on their consumption pattern across the classes and also to formulate a policy mechanism by which the poor in these countries can be shielded from the added burden of this tax.”308 Other major studies also found that if all countries adopt the necessary uniform global carbon tax and return the revenues to their citizens on an equal per capita basis, it will be possible to meet a 2 °C target while increasing wellbeing, reducing inequality, and alleviating poverty.309 Thus, it is possible for a society to implement strong climate action without compromising their goals for equity and development. Furthermore, the benefits are often large, particularly for those at the lower end of the income distribution. The overall benefits to society are even greater if total carbon tax revenues are returned on an equal per capita basis globally, which directs more of the revenues towards the poorest populations in the world (rather than solely the poorest within each country or region).310 In fact, many recent models have ignored the possibility that the revenues from a carbon tax could be used in a progressive way that generates immediate net benefits for the poor.311 It has been an “important oversight” that progressive revenue recycling models have not been incorporated into the policy analysis at a global level.312 Instead, research has often presumed that climate action must harm the current poor, where the opposite is actually the case.313 Moving forward, action and further research on carbon taxation must account for and correct this built-in bias against mitigation. Examining the impact of the equal per capita refund on all income groups in the United States, China, and India—chosen to represent countries at all levels of wealth—shows that more than half of the population (namely those in the lower income groups) benefits in the short-term—specifically those in the bottom quintile.314 In India, the lowest 40% of their population never experience any loss at all.315 This monetary distribution has a positive effect on alleviating poverty.316 A study focusing on the continent of Africa also demonstrates the potential for positive impact both on overall carbon reductions and poverty alleviation. This study assumed a $75 per ton carbon tax, which is the benchmark tax estimated by the International Monetary Fund to keep global warming below 2 ºC.317 This would increase fuel prices at the pump by $0.17 per liter. 318 When multiplied by current oil consumption in Africa—approximately 4 million barrels per day—the policy would generate $40 billion in additional annual tax revenue across the continent.319 Although such a tax may seem regressive at first, “if revenues are used for pro-poor redistribution policies, the result would actually be progressive because the lowest-income households consume significantly less fuel than wealthier ones.”320 Of the African countries, only South Africa’s carbon tax is expected to be regressive.321 In Gabon, Cameron, and Morocco, the effect of the tax on the lowest income groups is expected to be lower compared to the rest of the continent.322 However, elsewhere on the continent, carbon taxes can directly reduce income inequality via effective redistribution.323 Carbon reduction strategies are especially important in Africa because their aggregate carbon emissions have approximately doubled since 1990.324 This trend commonly occurs for nations in the initial stages of development. This is still troublesome given the duality of climate change and the need to develop not only African countries, but also many other regions and nations around the world. One major problem with a global approach to emission reductions via a carbon tax is that it might not be supported by local politicians who are subject to short election cycles. However, local offsets create tangible local benefits.325 Local offsets would support jobs, promote economic development, and benefit the local environment. 326 These outcomes gain valuable political support. For example, a significant number of carbon offsets in California come from lands managed by the Yurok tribe, a Native American tribe in Northern California.327 Although some tribal members initially opposed the use of offsets since they perceived them to be a type of environmental injustice or neocolonial exploitation of the natural world, the offsets have become a significant share of the tribe’s discretionary income in addition to a visible force in state politics.328 Thus, when push comes to shove, the market philosophy of “shop the world” seems to give way to “buy local.”329 Carbon offsets have greater political support when they create local benefits, no matter the quality or price of those offsets.330 Restricting far-flung offsets faces fewer political barriers than would limits that restrain domestic offset benefits.331 In short, politicians prefer projects that deliver local economic, environmental, and political benefits.