Put carbon tax in place before price cuts

The government should reconsider its plan to reduce the price of furnace oil. While this move may seem popular, in the absence of a more coherent policy on energy pricing and subsidies, it will not help improve long-term energy security and sustainability. The government needs to put its house in order before proceeding with cuts to energy prices. It should use the fall in global prices of crude oil of 70% since the summer of 2014 as an opportunity to eliminate costly subsidies on fossil fuels and to introduce a carbon tax, as recommended by the World Bank. A carbon tax on greenhouse gas emissions generated from burning fossil fuels makes more fiscal sense now while oil prices are relatively low, than later. It is also logical because rating energies have warned that that, while a prolonged period of low international oil prices might keep the cost of imports down, it could also have a negative economic impact on Bangladesh by reducing remittances. The government needs to move away from the historic regime of costly subsidies which encourage wasteful use and increase greenhouse emissions. Had a market-based pricing policy been in place, Bangladesh Petroleum Corporation would not have incurred huge losses in previous years when oil imports were costlier, and consumers might have benefited from price changes flowing through earlier. Energy companies would have also had more incentive to invest in new energy production and renewables. Tax-payer money saved on subsides can be better invested in education and health or on directly helping poorer consumers. Discouraging fossil fuel use is essential to cut greenhouse emissions and to stimulate more investment in clean renewable energy. It is also vital to reduce dependence on a finite resource which can only get costlier to import in the long run.