Taxes are needed to finance the fight against climate change: spending alone will not be possible

There are many ways to approach the same problem. The solution usually lies somewhere in between, a sort of perfect mix of options. Climate change is one such case. The fight against the increase in temperature on earth poses stratospheric numbers: trillions and trillions of euros of investment in the coming years if we want to reach 2050 with guarantees of (certain) success. If the solution lies mainly in public spending — investment and subsidies –, “public debt-to-GDP ratios will rise so high that they will put the debt sustainability of advanced countries at risk by 2050,” according to the International Monetary Fund (IMF). Alternative: increase taxes for polluting.

In economic policy, a new trilemma is making its way – with the permission of Dani Rodrik’s for globalization–. To meet the targets set – net-zero CO₂ emissions by mid-century – it will be necessary to combine:

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