Economics
Carbon Tax
A carbon tax is a fee imposed on the burning of carbon-based fuels, with the aim of reducing carbon dioxide emissions. It is designed to incentivize individuals and businesses to reduce their carbon footprint by increasing the cost of activities that contribute to climate change. The revenue generated from the tax can be used to fund environmental initiatives or offset other taxes.
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10 Key excerpts on "Carbon Tax"
No longer available |Learn more- (Author)
- 2014(Publication Date)
- University Publications(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an internationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, significantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- University Publications(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an internationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, significantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. ________________________ WORLD TECHNOLOGIES ________________________ Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- Academic Studio(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an internationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, significantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies. In addition to creating incentives for
No longer available |Learn more- (Author)
- 2014(Publication Date)
- University Publications(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an internationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, signi-ficantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies. In addition to creating incentives for
No longer available |Learn more- (Author)
- 2014(Publication Date)
- University Publications(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an interna-tionally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, significantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies. In addition to creating incentives for
No longer available |Learn more- (Author)
- 2014(Publication Date)
- College Publishing House(Publisher)
Carbon Taxes are one of the policies available to governments to reduce GHG emissions. In the Kyoto Protocol, CO 2 emissions are regulated along with other GHGs. Different GHGs have different physical properties: the global warming potential is an inter-nationally accepted scale of equivalence for other greenhouse gases in units of tonnes of carbon dioxide equivalent. Economic theory A Carbon Tax is an indirect tax—a tax on a transaction—as opposed to a direct tax, which taxes income. A Carbon Tax is also called a price instrument, since it sets a price for carbon dioxide emissions. In economic theory, pollution is considered a negative externality, a negative effect on a party not directly involved in a transaction, which results in a market failure. To confront parties with the issue, the economist Arthur Pigou proposed taxing the goods (in this case fossil fuels) which were the source of the negative externality (carbon dioxide) so as to accurately reflect the cost of the goods' production to society, thereby internalizing the costs associated with the goods' production. A tax on a negative externality is called a Pigovian tax, and should equal the marginal damage costs. Within Pigou's framework, the changes involved are marginal, and the size of the externality is assumed to be small enough not to distort the rest of the economy. Some argue that impact of climate change could result in catastrophe and non-marginal changes. Non-marginal means that the impact could, at some time future date, signi-ficantly reduce the growth rate in income and welfare. The amount of resources that should be devoted to avoiding low-probability, high cost climate change impacts is controversial. Policies designed to reduce carbon emissions could also have a non-marginal impact. Prices of carbon (fossil) fuels are expected to continue increasing as more countries industrialize and add to the demand on fuel supplies. In addition to creating incentives for
eBook - PDF- Quan Cui(Author)
- 2019(Publication Date)
- Delve Publishing(Publisher)
8.1. DEFINING Carbon Tax All the fossil fuels contain carbon. A tax is normally imposed about the amount of carbon contained in the fossil fuel. All the hydrocarbon fuels contain carbon that can be converted easily into other products when burning of the fossil fuel takes place. Examples of hydrocarbon fuels include petroleum, natural gas, and hydrocarbon. However, this is not applicable in the case of the non-combustion energy sources such as geothermal, hydropower, sunlight, wind. These energy sources cannot convert the hydrocarbons to carbon dioxide. Carbon dioxide is a greenhouse gas that traps a lot of heat in the atmosphere, and this has a negative effect on the climate as it leads to increase in the global temperature (Staudt et al., 2008). It is possible to impose a tax at any point in the life cycle of the fossil fuels since the GHG emissions that occur because of burning the fossil fuels are related to the carbon content of the particular fuel. Emissions resulting from the burning of the fossil fuels are taxed accordingly to regulate the number of carbon emissions. Many economic and social benefits can be attached to the Carbon Tax. The Carbon Tax can influence positively the impacts of carbon emissions on the climate change today while at the same time contribute to the economic development of a country. The sole purpose of having the Carbon Tax in place is to regulate the number of carbon emissions and reduce the impacts of such emissions on the environment. By reducing the impact of carbon emissions on the environment, Carbon Tax helps in decelerating the negative effects of climate change (Nordhaus, 2012). Carbon Tax and Its Effects on Environment and Economy 171 Figure 8.1 : A Cottam coal-fired power station in Nottinghamshire AFP/Getty; the manufacturing sector emits more carbon into the atmosphere.
eBook - PDF- L. Castellucci, A. Markandya, Gustavo Piga, L. Castellucci, A. Markandya, Gustavo Piga(Authors)
- 2012(Publication Date)
- Palgrave Macmillan(Publisher)
Updating from previous periods involves updating allowance allocations based on emission performance in the previous allocation periods. In an output- based allocation system installations would receive permits proportional to their share of their industry’s output. Source: adapted from N EUHOFF K. (2008) and G RUBB M. et AL . (2009). 154 Alberto Ansuategi and Ibon Galarraga 4. - Carbon Tax As it has already been mentioned, a properly designed Carbon Tax system can also be a cost-effective policy instrument for en- vironmental protection (Baranzini et al., 2000; World Bank, 2005). In any event, the debate on the “double dividend” (Pearce, 1991) 6 and the lack of strong empirical evidence to support it (Boven- berg and de Mooij, 1994) indicates that environmental taxation faces many difficulties in the design and implementation phase that should be properly addressed. A profound analysis on the im- pacts of Green or Environmental Fiscal reforms in Europe can be f found in Skou and Ekins (2009) where they looked at the use of carbon and energy taxes to reduce other taxes that might distort the economy . A Carbon Tax is an excise duty defined by the carbon content of fossil fuels. In some cases, the Carbon Tax might be approxi- mated through energy taxes (a fixed amount per unit of energy i.e. r kilowatt-hour) as the latter indirectly also fixes a price over CO 2 emissions. However, it should be noted that Carbon Taxes and energy taxes are essentially different. For instance, a Carbon Tax will not be incurred by nuclear energy while an energy tax will do (Zhang and Baranzani, 2009). But let us describe the main issues arising when discussing the use of Carbon Taxes: The first issue to be highlighted is that there is only limited experience in the use of Carbon Taxes and thus empirical evidence regarding the impacts is limited.
eBook - ePubBlueprint 2
Greening the World Economy
- David Pearce(Author)
- 2013(Publication Date)
- Routledge(Publisher)
3 Global Warming: Economics of a Carbon Tax Scott BarrettWhenever fossil fuels are burned, carbon dioxide, an important greenhouse gas, is emitted into the atmosphere. Hence users of fossil fuels, however small, contribute to future potential climate change, and the damage associated with such change. Carbon dioxide is only one of many greenhouse gases; others include methane, chlorofluorocarbons (CFCS ) and nitrogen oxides. Emissions of all these gases increase atmospheric concentrations of greenhouse gases, and as a general rule one would like to take a comprehensive approach and abate all these pollutants (Stewart, 1990). However, carbon dioxide is particularly important, both because it is emitted in vast quantities and because it persists in the atmosphere for a long time. Any policy intending to reduce atmospheric concentrations of greenhouse gases will therefore have to reduce emissions of carbon dioxide.In the absence of government intervention, users of fossil fuels will not bear the full costs associated with their actions; these will be borne almost entirely by other people, living in other places and at other times. Hence, we can be sure that emissions will be excessive unless government intervenes. One sensible intervention would be for government to calculate the full damage associated with current use of fossil fuels, and make users of fossil fuels pay for this damage. Users would then seek to avoid having to pay for the damage, and would therefore reduce their emissions.This proposal for making the polluter pay has many attractions. Economic theory suggests that users would abate emissions as long as the cost of doing so did not exceed the penalty associated with failing to do so – the damage caused by the emissions. In other words, the sum of damages and abatement costs would be minimized. While this is a commendable objective for policy, implementation poses a number of difficulties.One difficulty is that the potential damage is hard to calculate. An attempt has already been made, and suggests that the figure is between $3 and $107 per ton of carbon (Nordhaus, 1990). However, many people will disagree with these estimates, not least because of the ethical views that lurk behind them. Another difficulty is that each country is likely to care only about the damage it
No longer available |Learn more- Janice Eberly, James H. Stock, Janice Eberly, James H. Stock(Authors)
- 2019(Publication Date)
- Brookings Institution Press(Publisher)
Pindyck (2017) is a prominent critic of using the Interagency Working Group’s methodology to set the tax rate on carbon dioxide. 37. Heal (2017) argues that an 80 percent reduction by 2050 could be achieved at “reasonable cost”; he estimates a cost of about 1 percent of GDP. His scenario, however, requires strong financial incentives and political support along with significant reductions in the cost of renewables and battery storage. Williams and others (2014) come to a similar conclusion. 424 Brookings Papers on Economic Activity, Spring 2019 predictable way between now and some future date to increase the likeli-hood of hitting emission reduction targets 15 to 30 years out. 38 Next, I describe three Carbon Tax systems in some detail. They are unique in various ways. British Columbia has a Carbon Tax on emissions associated with provincial consumption; its tax is one of the most broad-based Carbon Taxes in place. Switzerland’s Carbon Tax has a unique feature: a tax rate that is adjusted statutorily if emission reduction goals are not met. Sweden’s Carbon Tax has the highest rate in the world, and it has gradually moved to eliminate all discounted rates for energy-intensive sectors subject to the tax. III.A. British Columbia As part of a broader package of tax reforms, the Canadian province of British Columbia (BC) enacted a broad-based Carbon Tax in 2008 starting at $10 (Canadian; hereafter, C$) per metric ton of CO 2 and increasing by C$5 per year to its current C$35 (as of 2018), equivalent to US$27. 39 The tax is scheduled to increase by C$5 per year until it reaches C$50 per ton in 2021. The tax is a broad-based tax on the carbon emissions of all hydro-carbon fuels burned in the province. Given the existing federal and pro-vincial taxes already in place, the Carbon Tax raised the overall excise tax on gasoline by roughly one-fifth.
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