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Photo: Reuters
Photo: Reuters

Carbon taxes

Critics of Indian climate change policy should see that it has used opportunity provided by lower oil prices to cut fuel subsidies and impose carbon taxes

India has become the convenient whipping boy at the Paris climate change talks. Few seem to appreciate its basic negotiating point that the average Indian’s carbon footprint is one of the world’s lowest.

Meanwhile, the further decline in global oil prices this week has led to a lot of commentary on the economic impact of cheaper oil. But it has another effect as well. International Monetary Fund economists Rabah Arezki and Maurice Obstfeld argue in a recent blog that sustained low fuel prices could derail the overdue transition to clean energy despite the recent technological advances in wind, solar, hydro and geothermal energy.

Their solution: fiscal measures to increase the relative price of carbon.

That is a solution—a Pigou tax—which this newspaper has for long agreed with. Global critics of Indian climate policy should also see that it is one of the few countries that has actually used the opportunity provided by lower oil prices to cut fuel subsidies as well as impose carbon taxes.

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