Essay On Carbon Tax

This essay has outlined all the current positive aspects of Australian society, but we need to address the future and the sustainability of our environment for our grandchildren. The federal government is addressing this issue by introducing a carbon-trading scheme. This carbon trading scheme, where the tax on carbon producing goods and services go into a positive influence on the environment, for example planting trees. The Australian government is following leads by other countries in this circumstance.

Stewart Elgie, a University of Ottawa law and economics professor and chair of the green economy think-tank Sustainable Prosperity suggests that British Columbia’s per-capita fuel usage had fallen more than 4 per cent compared with the rest of Canada and its economy (Ebner, McCarthy, 2011) Evidently it is reducing the amount of green house gasses emitted by fossil fuel use. However this is not the concern many had with the introduction of the tax, but the concerns were focused upon the externalities caused by this and the effects it would have on the economy. Three years since the carbon tax introduction and the Provincial level of GDP has remained approximately the same, (Greenery in Canada: We have a winner) With the provincial level of GDP remaining around the same, this suggests that at the very worst the carbon tax has had no negative effects to the provincial economy. Furthermore the tax also promised to remain carbon neutral and promised to cut corporate and private income tax. British Columbia has become the province with the lowest income tax regime and the lowest corporate tax regime (Greenery in Canada: We have a winner). Although the carbon tax is being praised by many, it still faces concerns as many still argue the ineffectiveness of the tax and what that means for the province.

For the last two decades, the increased use of fossil energy caused the environmental problems. The evidence of global warming, like drying rivers, extinction of species, melting of glaciers, became more often around the planet. The climate change became a threat to healthy environment and prosperity of humanity and wildlife, and the world community started searching for solution to combat climate change. In 2008 British Columbia introduced carbon tax on greenhouse gas (GHG) emissions to reduce global warming. Starting from $10 per tonne of CO2, the price was increasing annually till it reached $30 per tonne in 2012. During that period British Columbia was reducing harmful emissions and improving economy comparing to the rest of Canada. However, since the price rise on carbon stopped in 2012, no improving changes in cutting emissions, economy, and overall quality of life have been noticed. In this essay I will persuade that British Columbia should continue gradually increase price on carbon tax to the level where it will significantly cut the use of dirty energy, provide enough investments into the green projects, and support low-income families.

An added twist on the cap policy allows firms to trade emission allotments between themselves based on the buyer of allotment bargaining with the seller over the proper price to pay for the extra allotment. A two-panel diagram is needed to better understand the logic of trading emission allotments. Figure 4 illustrates the marginal cost of reducing emissions of two firms. One firm is run on older technology with high abatement costs that goes from right to left with zero costs represented at the lower right-hand corner of the diagram. The other firm has newer technology in its plant with lower abatement costs that goes left to right with zero costs represented at the lower left-hand corner of the diagram. The width of the horizontal axis is the reduction in emissions that must be achieved overall to an efficient level.

The regulatory constraints on businesses from government have been subdued recent years. Fulfilling the function of the state, Prime Minister Tony Abbott’s government proposed a new climate policy that the government will put off the existing levy on emitters and set up fund with as much as $2.6 billion to subsidize the mining enterprises in cutting green-house gas emissions (Anderson, Scott 2014). The subsidy released the financial burden of carbon tax which cost BHP $77.5 million in 2013 (Financial Review 2014) as an enabler in mining industry (Conrad 1993).

A cap-and-trade program sets a maximum level of pollution, and distributes emission permits among firms that produce emissions (Carbon Tax, 2013). The purpose of which is regulation of specific emissions by stationary and mobile sources, and setting a specific level which all emitters are re-quired to meet. Cap-and-trade possibly has less of a direct economic component to it than the other alternatives to reducing emissions described due to the ability to trade permits versus the expendi-ture of resources improving technology, with some arguing it is to the detriment of the environment. As stated in the article found in Reclaiming the Environmental Agenda, by Ashford, N. et al., 2008, “being a market-based instrument, ‘the cap-and-trade option suggests that at least this form of MBI may be more environmentally effective than the usual command-and-control alternatives, in addition to being more economically efficient.” (Ashford, N. and Caldart, C., 2008, p. 908).

The cap on the market is set on carbon emissions, creating scarcity within the market. At the end of each year businesses within the scheme are required to ensure they have enough allowances to account for their installation’s actual emissions. Those firms that do not comply and pollute without sufficient permits are hit with heavy fines. (Euro 100 per ton). The aim of carbon trading is to create a market in pollution permits and put a price on carbon. In this way, policy can help internalise external costs of firms’ production and encourage lower emissions to tackle climate change. In a cap and trade system, the volume permits would gradually decline and total emissions, in theory, will diminish. The model of such can be shown as

Stephane Dion (2007) published a summary of the liberal party’s proposal intended to decrease the carbon emissions in Canada. The liberal party suggested making the carbon emissions reduction not only a governmental concern but also the businesses need to get involved. This proposal recommended having a targeted goal so that all the businesses can be on the same page. The industries that would respect these new regulations and reduce their carbon emissions would be recognized and those that do not would be penalized. The party believed that the long-term positive effects outweigh socially and economically the negative impacts. The liberal party was certain that this new plan took into account the human lives threaten by climate change. Reading this article, the question that arose is: would this plan affect the economy of the country if applied?

Cap and trade is a system aimed at diminishing the rate at which carbon is emitted into the atmosphere by creating an economic system based on meeting a certain minimal threshold or paying low-emitting companies for the right to emit in their place. For example, if company A only emits half of the emissions cap, that company can sell (or trade) the remaining credits to company B, should company B choose to emit one-and-a-half times the cap. A main objection to the cap and trade system is that it is not a strong enough means by which to curb emissions of fossil fuels and is inferior to specifically stronger carbon taxes. While initially appealing, the notion of simply strengthening carbon taxes fails to properly stifle carbon emissions and to adequately incentivize “green” development in comparison to the cap and trade system, preventing carbon taxes from occupying a central role to mitigate carbon emissions.

But based on the previous analysis, for Canada, the method that can impact carbon dioxide emissions the most is the carbon tax system. A proper carbon tax will deter fossil fuels and encourage clean energy (Carbon Tax or Cap-and-Trade?, 2014). The carbon tax will provide a predictable price for carbon dioxide emissions for Canadians. As well, with the carbon tax system, there is more motivation to adhere to regulations because it will become a standard. The revenue generated from the taxation will also assist Canadians by ultimately facilitating greener practices by subsidization and funding environmentally conscious research. Finally, the practicality of reducing emissions under a carbon taxation system is much more functional than the cap-and-trade program. The carbon tax system has been cited to both grow the economy while reducing emissions. That is why a carbon tax system is a superior approach to the experimental cap-and-trade program for reducing emissions and growing the economy (Brander,

Government enacted solutions are probably the most effective ways to reduce carbon emissions and to control pollution since unfortunately the majority of individuals mainly act to their own self-interest and are not concerned with the future of the planet. This is a prime example of the tragedy of the commons, which is the exploitation of a common resource. In this case the common resource is the atmosphere. The first method proposed is the carbon cap trade system. The term cap means the limit or the maximum of the amount of pollutant to be emitted. A trade refers to the transfer of permits that have to be bought by firms that need to increase their volume of emissions from firms that require fewer permits 1. The carbon tax method is a tax on the carbon content of fuels — effectively a tax on the carbon dioxide emissions from burning fossil fuels 2. So, which system would be best for the government to enact to reduce carbon emissions in the atmosphere?

In Australia, there is an emerging consensus that the government should take further actions to help mitigate and combat climate change. The current most accepted policy by government is the introduction of a carbon tax followed by an ETS in 2015. However we are focusing on the carbon tax in this essay and not the ETS. Here is a brief explanation of the dynamics of a carbon tax. A carbon tax is a tax on energy sources, which emit carbon dioxide (Co2). Therefore, carbon taxes address the problem of negative externality. Externalities are the subsequent effects when individual production or consumption of a particular good or service imposes costs or benefits on others. Therefore negative externalities are effects, which pose harm to others without their direct interaction (Basic Economics 2011). However, usual market practices and transactions do not reflect these cost and benefits in the prices involved in the transaction, or take into account in their transaction decision. Therefore this is a form of market failure. By imposing a cost on these negative externalities, the hidden cost can be addressed. Ultimately the purpose of a carbon tax is to reduce emissions of carbon dioxide and therefore reduce

In February 2011, the Australian federal government declared a scheme to implement a Carbon Tax from July 1, 2012. Implementing this scheme has generated a controversial debate between Australians. The term “Carbon tax” refers to an environmental tax forcing polluters to pay per ton of carbon which they release into the atmosphere. This essay will provide the economical, social and political implication of carbon taxes, also with its introduction who will benefit and who would suffer.

However, the Gillard government has instituted one fairly radical and controversial policy: the new imposed carbon tax which took effect on July 1, 2012. The tax requires 500 of Australia's top polluting companies to "pay a fixed price, starting at Aus$23 per tonne, for their carbon dioxide emissions for the first three years. The mechanism would then shift

Since the beginning of the industrial revolution machinery and surface temperatures have been on the rise. Some may argue that the increasing temperatures are strictly due to the rise of machinery and less strict efficiency standards. The U.S has been debating what methods are efficient for combating increasing emissions some argue that a carbon tax has many positive impacts some say if one were to be adopted they would need reforms. This paper will dive deep into the the effects of climate of change and whether or not a carbon tax can fully help to decrease these emissions.