What is a Carbon Tax?

The Carbon Tax Center:

A carbon tax is a tax on the carbon content of fuels — effectively a tax on the carbon dioxide emissions from burning fossil fuels. Thus, carbon tax is shorthand for carbon dioxide tax orCO2 tax.

Carbon and hydrogen atoms are present in every fossil fuel — coal, oil and gas.  The bond between carbon and hydrogen atoms is the primary source of energy from fossil fuels and of the heat released in fuel combustion. Essentially all carbon atoms are converted to CO2 when the fuel is burned. Carbon dioxide, an otherwise non-lethal and innocuous gas, rises in the atmosphere and remains resident there, trapping heat re-radiated from Earth’s surface and causing global warming and other harmful climate change. In contrast, non-combustion energy sources — wind, sunlight, falling water, atomic fission — do not convert carbon to carbon dioxide. Accordingly, a carbon tax (or CO2 tax) is effectively a tax on the use of fossil fuels, and only fossil fuels.

The carbon content of every form of fossil fuel, from anthracite to lignite coal, from residual oil to natural gas, is precisely known. So is the amount of CO2 released into the atmosphere when the fuel is burned. A carbon tax thus presents few if any problems of documentation or measurement. As discussed here, administering a carbon tax should be simple; utilizing existing tax collection mechanisms, the tax would be paid far “upstream,” i.e., at the point where fuels are extracted from the Earth and put into the stream of commerce, or imported into the U.S. Fuel suppliers and processors would pass along the cost of the tax to the extent that market conditions allow.

Per unit of energy (or Btu), natural gas emits the least CO2 of any fossil fuel when burned, and coal the most, with petroleum (oil) products such as gasoline occupying the middle range. Generally, a Btu from coal produces 30% more carbon dioxide than a Btu from oil, and 80% more than from natural gas. A carbon tax would obey these proportions, taxing coal somewhat more heavily than petroleum products, and much more than natural gas.

To the extent carbon is included in a manufactured product such as plastic, but is not burned, that carbon will not be taxed. Similarly, to the extent the carbon used to produce energy is permanently sequestered rather than released into the atmosphere, that carbon will not be taxed or a tax credit will be provided.

Very little taxation of carbon is presently in place in the world (see this page). Nevertheless, a large and growing number of economists, policy-makers and concerned citizens regard stiff carbon taxes as essential for combating the climate crisis that gravely threatens humankind and other living things. See Supporters page.

The carbon tax center says that CO2 emissions cause global warming — the prevailing wisdom of non-scientists.  The jury of earth scientists is still out about the exact impact of  CO2 emissions on global warming (Forbes, CSMonitor) , but the switch from fossil fuels to solar and wind energy is important for many reasons including: healthy air, soils, and oceans; reducing use of fresh water for electricity generation, and weaning ourselves off  a finite energy source, ultimately.   Whether reducing use of fossil fuels alleviates climate change or not, a liveable planet requires we do this, at the same time we limit population growth.


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