The idea is to make people cut back on their use of carbon fuels, thru the um, whatchamacallit, marketplace. Less carbon fuels, less air and mercury pollution.
Will Americans cut back on Chinese products, or will we pay their tax so they can build the windmills we should have been building?
The Benefits of Carbon Tax
The primary purpose of carbon tax is to lower greenhouse-gas emissions. The tax charges a fee on fossil fuels based on how much carbon they emit when burned (more on that later). So in order to reduce the fees, utilities, business and individuals attempt to use less energy derived from fossil fuels. An individual might switch to public transportation and replace incandescent bulbs with compact fluorescent lamps (CFLs). A business might increase energy efficiency by installing new appliances or updating heating and cooling systems. A utility company might use wet scrubbers, low NOx-burners or gasification to reduce their emissions (see What is Clean Coal Technology?). And since carbon tax sets a definite price on carbon, there is a guaranteed return on expensive efficiency investments.
Carbon tax also encourages alternative energy by making it cost-competitive with cheaper fuels. A tax on a plentiful and inexpensive fuel like coal raises its per British Thermal Unit (Btu) price to one comparable with cleaner forms of power. A Btu is a standard measure of heat energy used in industry. One Btu is the energy necessary to raise the temperature of one pound of water by one degree Fahrenheit.
And don't forget about all the money raised by the tax. It can help subsidize environmental programs or be issued as a rebate. Many fans of carbon tax believe in progressive tax-shifting. This would mean that some of the tax burden would shift away from federal income tax and state sales tax.
Economists like carbon tax for its predictability. The price of carbon under cap-and-trade schemes can fluctuate with weather and changing economic conditions. This is because cap-and-trade schemes set a definite limit on emissions, not a definite price on carbon. Carbon tax is stable. Businesses and utilities would know the price of carbon and where it was headed. They could then invest in alternative energy and increased energy efficiency based on that knowledge. It's also easier for people to understand carbon tax.
Carbon tax seems straightforward enough, but how is the rate actually determined? At what point is the tax levied? We'll find out the answers to these questions and more in the next section.
science.howstuffworks.com
=
How does the carbon tax work in Australia, and which countries have already introduced a carbon pricing scheme? Check our quick guide.
The Climate Commission says by 2013, 33 countries and 18 sub-national jurisdictions will have a carbon price in place.
CARBON TAXES AROUND THE WORLD
CHINA (state-based action)
The Chinese Government plans to develop emissions trading schemes in seven key cities and provinces from 2013. These schemes will cover around 250 million people. The Chinese Government aims to
work towards a nation-wide approach after 2015.
UNITED STATES (state-based action)
There is no nationwide carbon tax levelled in the USA, although a few states have introduced the tax. The United States Administration has not been able to secure support for legislation to set either a price or a limit on greenhouse gas emissions. However, emissions trading has operated in the power sector in nine states since 2009. California’s emissions trading scheme will start in January 2013.
CANADA (province-based action)
Canada does not have a federal carbon tax, but two Canadian provinces have existing carbon taxes (Quebec and British Columbia). Alberta implemented emissions trading in 2006 and Quebec’s scheme will start in 2013. A further two provinces, British Columbia and Ontario, are considering emissions trading schemes.The Canadian Federal Government has no immediate plans to implement national emissions trading.
INDIA (tax on coal)
In July 2010, India introduced a nationwide carbon tax of 50 rupees per tonne (less than $A1) of coal both produced and imported to India.
SOUTH KOREA
The Republic of Korea passed legislation in May 2012 for an emissions trading scheme to start from 1 January 2015. The emissions trading scheme will cover facilities producing more than 25,000 tonnes of greenhouse gas emissions – expected to be around 450 of the country’s largest emitters.
JAPAN
In April 2012, Japan legislated for a carbon tax of approximately ¥289 per tonne ($A3.30) by increasing existing taxes on fossil fuels (coal and LPG/LNG) with effect from 1 October 2012. Half the revenue will
fund low-emissions technologies. Japan has emissions trading schemes operating in the Tokyo and Saitama regions, covering 20 million people.
EUROPE (national-based action)
The European Union emissions trading scheme began in 2005 and now covers the 27 countries of the European Union, and three non-European Union members: Iceland, Liechtenstein, and Norway. Their current target is a 21 per cent cut of 2005 emissions by 2025 (Australia’s is a 5% cut of 2000 emissions by 2020).
A carbon tax was proposed by the European Commission in 2010, but a carbon tax has not been agreed upon by the 27 member states. The current proposal by the European Commission would charge firms between 4 and 30 euros per metric tonne of CO2.
Several European countries have enacted a carbon tax. They include: Denmark, Finland, Ireland, the Netherlands, Norway, Slovenia, Sweden, Switzerland, and the UK.
FINLAND
Finland introduced the world’s first carbon tax in 1990, initially with exemptions for specific sectors. Manly changes were later introduced, such as a border tax on imported electricity. Natural gas has a reduced tax rate, while peat was exempted between 2005 and 2010. In 2010, Finland’s price on carbon was €20 per tonne of CO2.
THE NETHERLANDS
The Netherlands introduced a carbon tax in 1990, which was then replaced by a tax on fuels. In 2007, it introduced a carbon-based tax on packaging, to encourage recycling.
SWEDEN
In 1991, Sweden enacted a tax on the use of coal, oil, natural gas, petrol and aviation fuel used in domestic travel. The tax was 0.25 SEK/kg ($US100 per tonne of C02) and was later raised to $US150. With Sweden raising prices on fossil fuels since enacting the carbon tax, it cut its carbon pollution by 9 per cent between 1990 and 2006.
NORWAY
In 1991, Norway introduced a tax on carbon. However its carbon emissions increased by 43 per cent per capita between 1991 and 2008.
DENMARK
Since 2002, Denmark has had a carbon tax of 100 DKK per metric ton of CO2, equivalent to approximately 13 Euros or 18 US dollars. Denmark’s carbon tax applies to all energy users, but industrial companies are taxed differently depending on the process the energy is used for, and whether or not the company has entered into a voluntary agreement to apply energy efficiency measures.
SWITZERLAND
A carbon incentive tax was introduced in Switzerland in 2008. It includes all fossil fuels, unless they are used for energy. Swiss companies can be exempt from the tax if they participate in the country’s emissions trading system. The tax amounts to CHF 36 per metric tonne CO2.
UK
In 1993, the UK government introduced a tax on retail petroleum products, to reduce emissions in the transport sector. The UK's Climate Change Levy was introduced in 2001. The United Kingdom participates in the European Union emissions trading scheme and is covered by European Union policies and measures. The United Kingdom has put in place regulations requiring all new homes to have zero emissions for heating, hot water, cooling and lighting from 2016.
IRELAND
A tax on oil and gas came into effect in 2010. It was estimated to add around €43 to filling a 1000 litre oil tank and €41 to the average annual gas bill.
COSTA RICA
In 1997, Costa Rica enacted a tax on carbon pollution, set at 3.5 per cent of the market value of fossil fuels. The revenue raised from this goes into a national forest fund which pays indigenous communities for protecting the forests around them.
BRAZIL
The state of Rio de Janeiro is exploring options to implement a state-wide cap and trade system.
SOUTH AFRICA
South Africa introduced a carbon tax on new vehicle sales in September 2010. South Africa is planning to introduce a carbon tax from 2013, starting at R120 ($A15) per tonne for emissions above a threshold. Each company will have 60 per cent of its emissions tax exempt, with higher exemption thresholds for cement, iron, steel, aluminium, ceramics and fugitive emissions as well as trade exposed industries. Agriculture, forestry, land use and waste will not be taxed.
NEW ZEALAND
The New Zealand Government set up an emissions trading scheme in 2008. The scheme covered forestry initially, and was then expanded in 2010 to cover stationary energy, transport, liquid fossil fuels and industrial processes.
sbs.com.au |
