Understanding About Carbon Taxes

Carbon taxCarbon taxes are a form of carbon pricing levied on fuels containing carbon. This includes all hydrocarbon fuels such as coal, petroleum, and natural gas.They convert the hydrocarbon into carbon dioxide (CO2). This is in contrast to non-combustible energy sources such as wind, sunlight, geothermal, hydropower, and nuclear power.

When this conversion occurs it negatively impacts the climate. In fact, many scientists blame it for global warming. For this reason, a tax on these emissions were levied. This tax occurs at any point in the fuel’s product cycle.

There are both social and economic benefits to carbon taxes. At the same time, many people hope that leveraging these taxes will give an incentive to cut down on the harmful, unfavorable effects of these gases. They believe that when this happens climate change will slow down greatly. This is important because it will decrease the number of harmful effects on the environment and human health.

Simply put, carbon taxes could serve as a cost-effective way to reduce greenhouse gas emissions. Economically, this tax addresses those who don’t want to face the full social cost behind their actions. Oftentimes these are a regressive tax meaning that low-income groups are disproportionately effected. This is something that the government could change if they’d use the money raised by carbon taxes to help these groups.

Many countries throughout the world have implemented carbon taxes today. These are typically levied on energy products and motor vehicles instead of directly on CO2 emissions. Some have worried that businesses may choose to move instead of paying these taxes and this would cost people their job. However, proponents of the carbon tax argue that this is more efficient than direct regulation so more people may actually become employed. As this fight wages on, many of the countries who use a lot of energy and thus use a lot of carbon are resisting this taxation. This includes countries like the United States, China, and Russia.

Those who pay carbon taxes pay $15 – $30 per ton of CO2. Every year this brings in about $80 billion of revenue. This equates to about $250 per person living in the United States today or $1,000 for a family of four each year. While this is a lot of money, most people who support this tax actually hope it incentivizes companies to limit the amount of greenhouse gas pollution they produce. This is because they want climate change addressed.