News Feb 13, 2021 01:48 AM EST

Elon Musk Calls for 'Carbon Tax,' Tesla to Benefit?

By Erika Dickinson

Elon Musk launches brain electrode company Neuralink
Elon Musk launches brain electrode company Neuralink (Pascal Le Segretain/Getty Images)

Will carbon tax be imposed soon? Elon Musk thinks its the best way to decrease carbon dioxide emissions. 

Elon Musk Calls for Carbon Tax

In a podcast, Elon Musk shared what he thinks is the best way to reduce carbon dioxide emissions - something is that is not popular at all. 

"My top recommendation, honestly, would be just add a carbon tax," Musk told Joe Rogan on The Joe Rogan Experience podcast on Thursday. "The economy works great. Prices and money are just information. ... If the price is wrong, the economy doesn't do the right thing," he added. 

AT present, all the solutions being proposed to address emissions tend to avoid the topic of imposing tax. Instead, currently, there is no direct monetary consequence for businesses and industries whose production releases greenhouse gasses into the atmosphere. Even though there are calls for companies to be more responsible about their emissions, it remains technically free to create green house gasses, of which the most common and pervasive is carbon dioxide. 

Global warming is triggered mainly by carbon dioxide. This is released when fossil fuels, like coal and gas, are burned. When the amount of carbon dioxide becomes excessive in the atmosphere, it traps the heat and then causes the widely talked about global warming.

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Musk: 'Space X will Pay Carbon Tax, Too!'

Musk however dared to go where most would not. He calls carbon concentrations in the atmosphere and environment an "unpriced externality." 

In economic terms, an externality refers to the consequence of a production not adequately reflected in the market, Because the consequence of emissions is bad, it is a negative externality.

Musk firmly believes that a carbon tax would change that. "If we just put a price on [carbon emissions], the market will react in a sensible way. But because we don't have a price on it, it is behaving badly," Musk explained (via CNBC). 

Musk suggested a tax to be imposed at the point of consumption or in other words, a consumption tax. He also thinks the tax must be non-regressive and therefore, rates will be based on the income level. 

If a "low income" consumer who has to use a lot of gas and therefore cause massive carbon emissions, they could get a "tax rebate," Musk explained as an example. "That's the way to do it ," he added. 

Musk revealed he already talked to Biden about it but the Adminstration reportedly said it could be "politically difficult" to implement.  

Critics might imply that Musk is the one to ulimately benefit if a carbon tax is imposed.

This tax can affect most vehicle company, but not an electric vehicle company like Tesla. Instead, Elon Musk's Tesla might even be given a leg up in the market. But Musk seems to have already responded to critics by saying  "SpaceX would be paying a carbon tax too." 

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