Reports have been circulating (examples here & here) hinting that China will be taking the lead towards seriously instituting a tax on carbon; this is something the US has been resisting for years, citing inaction from BRICs as a justification for holding out. The MODIS image shown above which was captured by NASA's TERRA satellite this past January highlights the visible severe air pollution which all but shut down activity in Beijing for days, and this episode may prove to be the catalyst for proceeding with market mechanisms coupled with technological solutions towards clearing the air. When this MODIS image was retrieved via satellite, the Air Quality Index (AQI) in Beijing was reported to be 341; AQI values above 300 are hazardous to human health. During the peak of this recent air pollution episode, the index spiked to 775.
Introducing a tax and implementing are of course two different items, so we will wait and see if the Chinese announcement is followed by action. So where does the US stand? For several reasons, I will not be holding my breath for the passage of the 'Fee and Dividend' Climate Bill proposed by Sens. Sanders and Boxer, but I do look forward to the dialogue that it should stimulate. Regardless, the Chinese announcement is clearly is a much needed step towards implementing market based solutions towards the pricing of environmental externalities.