carbon tax

[swatiraohnlu]

A carbon tax is an environmental tax on emissions of carbon dioxide and other greenhouse gases. The primary purpose of a carbon tax is to discourage the inefficient use of fossil fuels, which when burnt release carbon dioxide and other greenhouse gases into the atmosphere and contribute to global warming. In addition to discouraging the use of fuels that contribute to global warming, the intention of a carbon tax is to, by extension, encourage the use of non-combustion energy sources, such as wind, sunlight, hydropower, and nuclear, which do not directly emit greenhouse gases into the atmosphere and contribute to global warming. The main question confronting governments is: should governments adopt a carbon tax system as part of their comprehensive plans to combat global warming?

 

[swatiraohnlu]

* A carbon tax helps reduce emissions in all industries A carbon tax applies to all industries, broadening the scope of emissions reductions. This compares favorably to emissions trading schemes, which sometimes only cover a select group of industries.

* A carbon tax can be implemented immediately A carbon tax is simple enough that it can be implemented immediately. Emissions trading takes much more time. In the context of global warming, this is very important.

* A carbon tax provides superior incentives for green innovation "Doffing the cap". The Economist. 12 June 2007 - "some economists reckon that a cap-and-trade system produces fewer incentives than a carbon tax for climate-friendly innovation. A tax provides a clear price floor for carbon and hence a minimum return for any innovation. Under a cap-and-trade system, in contrast, an invention that reduced the cost of cutting carbon emissions could itself push down the price of permits, reducing investors' returns.

 

[swatiraohnlu]

* A carbon tax fairly treats all carbon emissions as "bad": A carbon tax essentially considers all carbon emissions harmful to the environment, and warranting of equal punishment. A cap-and-trade system only punishes carbon emissions above a certain level, treating only certain kinds of emissions as "bad". A carbon tax, therefore, sends a strong message to polluters that all their emissions are harmful, that they should be phased out, and that they should invest in environmentally-friendly sources of energy. This dramatic message may be particularly important if we view global warming to be a serious crisis.

* A carbon tax can be adjusted to achieve desired emissions reductions Ron Bailey. "Carbon Taxes Versus Carbon Markets". 25 May 2007 - "taxes can be adjusted over time to achieve whatever limits policymakers decide best balance the costs of climate change with the benefits of economic progress."

* Revenue from a carbon tax can be used to fund global aid programs The advantage of a carbon tax is that it generates revenue that can be used for good. It converts a social bad, pollution, into a social good.

 

[swatiraohnlu]

* A carbon tax passes costs on to consumers A carbon tax makes it more expensive for companies to do business. To compensate, businesses will raise the price of the products they are selling, which diminishes the pockets of the consumer. The consumer, therefore, pays a significant portion of a carbon tax. In this way, a carbon tax does not merely punish polluting businesses, but ordinary citizens as well.

* A carbon tax requires substantial government monitoring In a carbon tax, emitters would pay a tax for every ton of carbon emitted. This requires that the government know precisely how much carbon is being emitted by energy producers. This is not easy to determine, and requires that a government put in place monitoring mechanisms. Deploying these mechanisms universally would be very complicated, expensive, and require much administration. Then, ensuring that all these monitoring devices operate properly and that all energy producers comply with the tax would also involve a substantial administrative burden. This would be equally as complicated as a cap-and-trade system.

 

[swatiraohnlu]

* A carbon tax would damage an economy "Carbon tax to hit miners". The Australian. 5 Feb. 2007: "A $25 per tonne carbon tax would cost the state's alumina industry more than $200 million a year."[3]

* A carbon tax is "regressive". A "regressive" tax is one that disproportionately burdens poorer groups. Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. Because energy consumption would be taxed equally across social groups with a carbon tax (it's a "flat tax"), the costs of the tax would disproportionately affect poor groups.

 

[swatiraohnlu]

* Cap-and-trade systems ensure emissions reductions to the set cap: "Carbon tax vs. carbon market: who would win in a fight?". 15 Aug. 2006 - "In a cap-and-trade carbon market, total emissions are guaranteed to go down. The cap is the cap, and assuming some reasonably effective enforcement mechanism, not a pound more carbon can be emitted. A carbon tax, on the other hand, merely encourages people to emit less by making it more expensive to do so. And in the case of fossil fuels, people seem perversely resistant to financial incentives."

* Emissions trading incentivizes finding best way to cut emissions Bill Chameides, Chief Scientist at Environmental Defense. "Cap-and-trade: more effective than a carbon tax". Grist.org. 12 Feb. 2007 - "A carbon tax is a bad idea. First, most pundits see the chances of Congress passing a new tax as somewhere between zero and nil. But let's say it did. Then Congress would have a whole new pot of subsidy money to pass out to industry. Would you trust them to give it the right companies?...Subsidizing one or two targeted technologies with a carbon tax would discourage investment in others that may turn out to be more effective. Which technologies should receive these tax dollars? No one has a crystal ball that can determine for sure which will turn out to be most useful. History has shown that the marketplace does a better job of developing new technologies, and a tax takes money out of the marketplace. The solution is cap-and-trade. A cap-and-trade strategy provides the incentive for all segments of the economy to compete to discover the best ways to cut emissions."

 

[dimpy.handa]

A carbon tax helps reduce emissions in all industries A carbon tax applies to all industries, broadening the scope of emissions reductions. This compares favorably to emissions trading schemes, which sometimes only cover a select group of industries.