Carbon Tax

Ways To Combat Carbon Emissions  There are two viable ways in which politicians are able to reduce carbon emissions 1. Carbon Trading- Also Known as Cap-and-Trade scheme.  Governments sets caps that companies must meet. If companies are unable to meet caps, then they must reduce their emissions or buy another company’s credit.

1. Carbon Tax  Governments set a price per ton of carbon emitted. This is then translated into a tax in electricity, natural gas or oil.

What is a carbon tax?  A carbon tax is a tax on the emissions of carbon dioxide from burning fossil fuels. Fossil fuels include coal, oil, and gas.  When carbon dioxide is release, it rises and stays in the atmosphere. As a result, it traps heat that is re-radiated from the Earth's surface and causes global warming and changes in climate patterns.

The Essence of the Carbon Tax  The Carbon Tax would be a fair tax in which all the companies would be taxed equally.  The tax would be based on BTU content of the carbons, in order to promote use of more efficient and cleaner fuels and carbons.  The tax could be implemented at various stages of production and consumption. Producers, distributors or consumers could be targets of the tax.

Carbon Emission Sources  Based on numbers given by the Environmental Protection Agency and Energy Information Administration, nearly 6 billion metric tons of carbon dioxide was emitted in the United States in 2007.  Of this, most of the CO2 emitted comes from transportation, followed by the industrial sector, the residential and the commercial.

Carbon dioxide emissions by sector and fuel •According to the EIA, it is projected that at the rate we are emitting CO2, an additional 500 million metric tons of CO2 will be emitted by 2030. •In the residential and commercial sectors, electricity is the main source of CO2 emissions. •In the transportation and electricity generation sectors, petroleum is the main source of emission. •The industrial sector is more evened out between electricity, natural gas and petroleum.

Carbon Dioxide Emissions by Sector •A more graphical representation of CO2 emissions by sector, and how it has changed over the years.

2008- A decline in Petroleum and Coal Use  There was a significant drop in petroleum use from 2007-2008, and a smaller one in coal. Why was there a drop?  The rising price of gasoline at the pumps and the start of the recession drove people to save money and consume less.

What We Should Do Now  The decrease in petroleum use when a barrel of oil reached $150 is an indicator to us that people will try to find alternatives when money is a factor.  The carbon tax will therefore drive people and companies to look for other processes that will be more efficient (because these alternative power and fuels will be more cost-competitive).

What we can do with the revenue obtained?  Most economics agree that the tax money could be used as a rebate for income or sales taxes.  Others believe that it could be used to fund environmental programs that will look for alternative fuels and energy.  We believe…

France’s Carbon Tax  On September 10, 2009, France became the first major economy in Europe to approve a carbon tax to be effective starting next year.  Carbon emissions would be taxed at €17 ($25) per ton of CO2. More expensive rates would be gradually phased in as time progresses.  Electricity has been exempt from this tax, based on the grounds that 90% of France’s electricity comes from nuclear plants.  Both residential and industrial sectors of economy would be taxed.  Revenues from the carbon tax would be reimbursed through cuts in other taxes and “green checks.”

What We Can Do to Make a Better Carbon Tax  Using the French Carbon Tax as an example, we can implement additional amendments to our bill, in order to create a carbon tax suitable to our society and needs.  Propose a tougher stance on the price of ton of carbon emissions.  Tax all aspects of industry to insure a fair tax.