| |
|
What is the Carbon Tax
|
Simply put, a carbon
tax is an environmental fee levied by governments on the production, distribution
or use of fossil fuels such as oil, coal and natural gas. The amount of the tax
depends on how much carbon dioxide each type of fuel emits when it is used to run
factories or power plants, provide heat and electricity to homes and businesses,
drive vehicles and so on. |
|
|
What is the Carbon
Tax
|
|
,, |
How Does a Carbon Tax
Work?
Essentially, a carbon tax—also known as a carbon dioxide tax or CO2 tax—is a tax
on pollution. It is based on the economic principle of negative
externalities.
In the language of economics, externalities are costs or benefits
created by the production of goods and services, so negative externalities are unpaid
costs.
When utilities, businesses or homeowners use fossil fuels, they
generate pollution that carries with it a cost for society, because the pollution affects
everyone.
A carbon tax factors the societal cost of greenhouse gas emissions
into the price of the fossil fuels that create them—so the people who cause the pollution have to
pay for it.
|
What is the Carbon Tax
|
|
.. |
How Does a Carbon Tax Promote Renewable
Energy?
By making dirty fuels like oil and coal more expensive, a carbon tax encourages utilities,
businesses and individuals to reduce energy consumption and increase energy efficiency. A carbon
tax also makes clean, renewable energy from sources such
as wind
and solar more cost-competitive with
fossil fuels.
How Can a Carbon Tax Reduce Global Warming?
A carbon tax is one of two market-based strategies—the other is cap
and trade—aimed at reducing greenhouse gas emissions and
slowing global warming. The carbon dioxide created by burning fossil fuels gets trapped in the
Earth's atmosphere, where it absorbs heat and creates a greenhouse effect that leads to
global warming—which many scientists
believe is causing significant climate changes.
As a result of global warming, polar ice caps are
melting at an accelerated rate,
which contributes to coastal flooding worldwide
|
| |
|
|