What is the Carbon Tax?

What is a carbon tax?

A carbon tax is a tax based on the use of carbon fuels including coal, petroleum and natural gas that when burned gets released as carbon dioxide into the atmosphere. It’s a form of carbon pricing to counteract the effects of global warming triggered from the burning of fossil fuels. Renewable energy resources such as wind, sunlight, and hydropower do not convert to hydrocarbon and don’t harm the environment. Carbon dioxide is considered a greenhouse gas that gets trapped in the atmosphere and contributes to global warming.

A tax on these gases is used to discourage the use of nonrenewable fuel resources and is a tax effective means of reducing greenhouse gas emissions. Furthermore, it’s a regressive tax that may disproportionately affect low income groups. Numerous countries in the world have implemented a carbon tax on energy consuming products and motor vehicles; however, many large users of energy including the United States, Russia and China have not implemented a nationwide policy of carbon taxing.

In America

While there is no nationwide carbon tax in the United States, several states have implemented their own carbon tax policies including Colorado, California, and Maryland. Voters in Boulder, Colorado passed the first municipal carbon tax on carbon emissions in November 2006, which was implemented in residential utility bills. The goal was to reduce emissions and promote renewable energy resources. In May 2008, the San Francisco Bay Area passed a carbon tax on businesses that was 4.4 cents per ton of carbon dioxide emissions. In 2006, the whole state of California proposed a law for carbon tax emissions called AB-32 that has yet to be implemented. Finally, in May 2010, Montgomery county in Maryland passed a carbon tax law of $5 per ton of CO₂ emissions.

Supporters of a Carbon Tax

There are several advantages to a carbon tax, but most importantly, it will lower the rate of greenhouse gas emissions released into the atmosphere. Imposing a carbon tax incentivizes individuals to find alternative energy resources and lower their energy consumption rate. Additionally, the use of a carbon tax incentivizes companies to research renewable energy resources because energy derived from fossil fuels becomes far too costly. Furthermore, the money raised from carbon taxes may be used for environmental initiatives such as planting more trees that will reduce CO₂ emissions in the long run.

Opponents of a Carbon Tax

There are many opponents to carbon taxes who often cite that it’s difficult to measure the amount of carbon a company or individual produces and the amount of greenhouse gases released into the atmosphere from these emissions. Others believe that it’s difficult to calculate the environmental cost of these carbon emissions for future generations when all theories are still hypothetical.

Other problems include the high possibility of evasion of these taxes. Another criticism is the fairness of subjecting all countries equally to a carbon tax considering most developed countries are responsible for CO₂ emissions and that income welfare is higher in developed than developing countries. Finally, without worldwide participation on carbon taxes, some countries are sure to free ride without contributing their fair share of carbon taxes.

In the End

Most of the scientific community agrees that the use of burning fossil fuels is altering the climate and may have serious impacts in future generations. While it’s impossible to accurately calculate the effects of climate change, a carbon tax may be a way to reduce the detrimental impact of greenhouse gas emissions and prevent future environmental disasters.