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    Carbon Taxes Slide

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    Amrendra Kumar
    A carbon tax is a tax placed on the carbon content of fuels. It is a form of carbon pricing designed to reduce greenhouse gas emissions. When fuels are combusted, carbon is converted to carbon dioxide (CO2) which is emitted. Over half the world's population already lives in areas with some regulation on CO2 emissions. India has had a nationwide carbon tax on coal since 2010. While cap-and-trade systems are often proposed, carbon taxes and cap-and-trade both use market mechanisms to lower emissions through price signals.

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    Carbon Taxes Slide

    Uploaded by

    Amrendra Kumar
    53 views26 pages
    A carbon tax is a tax placed on the carbon content of fuels. It is a form of carbon pricing designed to reduce greenhouse gas emissions. When fuels are combusted, carbon is converted to carbon dioxide (CO2) which is emitted. Over half the world's population already lives in areas with some regulation on CO2 emissions. India has had a nationwide carbon tax on coal since 2010. While cap-and-trade systems are often proposed, carbon taxes and cap-and-trade both use market mechanisms to lower emissions through price signals.

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    describe the mechanism of carbon taxes

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    A carbon tax is a tax placed on the carbon content of fuels. It is a form of carbon pricing designed to reduce greenhouse gas emissions. When fuels are combusted, carbon is converted to carbon dioxide (CO2) which is emitted. Over half the world's population already lives in areas with some regulation on CO2 emissions. India has had a nationwide carbon tax on coal since 2010. While cap-and-trade systems are often proposed, carbon taxes and cap-and-trade both use market mechanisms to lower emissions through price signals.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    53 views26 pages

    Carbon Taxes Slide

    Uploaded by

    Amrendra Kumar
    A carbon tax is a tax placed on the carbon content of fuels. It is a form of carbon pricing designed to reduce greenhouse gas emissions. When fuels are combusted, carbon is converted to carbon dioxide (CO2) which is emitted. Over half the world's population already lives in areas with some regulation on CO2 emissions. India has had a nationwide carbon tax on coal since 2010. While cap-and-trade systems are often proposed, carbon taxes and cap-and-trade both use market mechanisms to lower emissions through price signals.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 26

    A carbon tax is a tax levied on

    the carbon content of fuels.

    It is a form of carbon pricing.

    Carbon is present in every hydrocarbon fuel

    (coal, petroleum, and natural gas) and

    converted to carbon dioxide (CO2) and other

    products when combusted.


    In reality, more than half of the worlds population lives in places

    where CO2 consumption/production is regulated in some form.

    India has charged a nationwide carbon tax on coal since 2010.


    As national and international debates about climate change continue to gain

    momentum, carbon taxes often sit in the shadow of cap-and-trade proposals.

    These two market-based approachestaxes and permit tradingsend price signals

    that can reduce greenhouse gas emissions, so they share much in common, but

    policymakers around the world will be making decisions about which one to use or

    whether to combine the two.


    When the Group of Eight met in Japan in July 2008, the leaders of major economies in

    the developed world recognized the role of market based instruments in reducing

    greenhouse gas emissions:

    Market mechanisms, such as emissions-trading within and between countries,

    tax incentives, performance-based regulation, fees or taxes and consumer labeling can

    provide pricing signals and have the potential to deliver economic incentives to the

    private sector. We also recognize that they help to achieve emissions reduction in a cost

    effective manner and to stimulate long-term innovation. We intend to promote such

    instruments in accordance with our national circumstances and share experience on the

    effectiveness of the different instruments.1


    considering the use of broad-based energy taxes to reduce greenhouse gas emissions

    The basic formula for taxation is universal and relatively simple, building on three

    fundamental components and a very straightforward mathematical formula. The tax

    base multiplied by the tax rate equals the tax revenue:

    Tax Base x Tax Rate = Tax Revenue


    Energy-related taxes are defined by the fact that the tax base (the commodity being
    taxed) is some form of energy.

    The specific tax base can vary significantly depending on the design of the tax.

    In the case of a carbon tax, the tax base is either the carbon content of fuels or the
    carbon dioxide (CO2) they produce when combusted, usually measured in tons.

    By defining the tax base as carbon or CO2, the tax is limited to fossil fuels.

    If the tax base also draws in non-fossil forms of energy, such as nuclear power or
    hydropower, it is often called a broad-based energy tax.

    A classic broadbased energy tax would define the tax base in terms of the energy content
    of the identified range of energy sources.
    However, the tax base for a broad based energy tax could also be defined in terms of the
    market price per unit of energy or in terms of the volume of the fuel (such as a tax per
    barrel of oil).

    In the climate change context, using either carbon or CO2 as a tax base would be
    preferable because the tax base provides the most direct link to the environmental
    problemthe emission of CO2.

    However, greenhouse gas emissions more broadly might also serve as a tax base.

    A classic greenhouse gas tax would define the tax base in terms of tons of emissions,
    adjusted for their global warming potential based on CO2 equivalents.
    Reference:
    1.G8 Hokkaido Toyako Summit Leaders Declaration 33 (July 8, 2008), http://www.g8summit.go.jp/eng/doc/doc080714__en.html.

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