The problem of global warming is not exactly new to us and there are several ways in which transition to environmental-friendly energy sources is being prompted by NGOs and governments. In several cases, the government has taken an initiative by passing laws for environmental audits and legislation, such as effluent and exhaust treatment. However, the scale up to which such norms have affected the society has remained quite limited. Carbon and carbon compounds are still used today and are thereby causing drastic rises in the levels of carbon related emissions. These emissions as we know gradually lead to a rise in global warming and the destruction of the environment. Making legislation to impose compulsion and compliance is one way to discourage usage of carbon based fossil fuels. However, another way to make a complete transition towards completely eco-friendly methods of power generation is to impose a tax.
About Carbon Tax
This tax is a great way to promote the change from conventional fossil fuels to eco-friendly and renewable sources of energy. This tax can be levied with the help of two subjects, namely, the total fuel consumed or the total amount of emissions. Measuring the amount of emission is, well impossible, hence the best way to impose tax is use the per unit of energy or use the amount of fuel consumed as the base subject of taxation. Now there's another catch, in this system of measurement, fuels such as propane emit lesser carbon dioxide and carbon monoxide than coal. In such a case, it becomes fair, to impose taxes on the basis of the fuel consumed. This would include, the carbon content and volatile matter (which would become a pollutant) which gets combusted. Thus, on the whole, the government aims at restricting and curbing down the higher consumption levels of fossil fuels, and moreover, aims at eliminating production of pollutants. The best way that is used to compute the overall national tax structure is simple. A certain tax is computed on every ton of carbon consumed for energy production. This tax rate is then computed or rather transposed and applied for other fossil fuels. For example, gasoline in the United States is taxed at the rate of $0.11/US gal, or diesel will have a tax of $0.12/US gal.
This kind of tax computation is based upon an economic concept that is known as negative externalities. The term externalities is basically a synonym for cost, benefit or value that is derived as a result of production. Negative externalities are principally the costs that are borne by the society and the environment. The arithmetic value is not definable. It is principally a tax which is levied so that users of fossil fuels rightfully bear the monetary value of negative externalities which are incurred by the society and the environment as a result of carbon based emissions.
Carbon Tax Worldwide
Several nations have already passed laws or have presented a bill regarding this tax. Nations which have implemented the tax, include, South Africa, Japan, India, Taiwan, New Zealand, France, Denmark, Republic of Ireland, Netherlands, etc. The advantages, of course, outweigh the disadvantages. There are, however, some well argued drawbacks such as drop in sales of several power and petroleum companies, or even the difficult implementation argument. Another debate that is often brought forth is the tax vs cap-and-trade. The cap-and-trade is a mechanism where the government levies a cap on the permissible value of emission. The emissions above the cap are either taxed or totally banned. In some cases, an unused cap is often purchased by another firm or company. However the entire point of the carbon tax is to proceed to an environment-friendly world. The cap-and-trade would be basically a hindrance that would keep us from a clean pollution free world.
There are several other initiatives such as a hybrid car tax credit or low taxation for some energy-efficient and eco-friendly industries. Promotional and encouraging policies that indirectly contribute to a green world are used in several cases. This tax however is a more direct and imposed tax that discourages and in a way forces carbon fuel users to curb down the combustion of carbon and thereby, reduce carbon based emissions, which are killing our planet.
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