Carbon Tax

CARBON TAX:Is Imposition of Carbon Tax An Effective Tool To fight Global Warming ?
What Is Carbon Tax ?
A carbon tax is an environmental tax on emissions of carbon dioxide and other greenhouse gases. The primary purpose of a carbon tax is to discourage the inefficient use of fossil fuels, which when burnt release carbon dioxide and other greenhouse gases into the atmosphere and contribute to global warming.
Motive Of Carbon Tax:
In addition to discouraging the use of fuels that contribute to global warming, the intention of a carbon tax is to, by extension, encourage the use of non-combustion energy sources, such as wind, sunlight, hydropower, and nuclear, which do not directly emit greenhouse gases into the atmosphere and contribute to global warming.
Pertinent Questions That Government, World Regulators (UN,WTO,etc), Businessmen, Environmentalists, Economists, Citizens, and Humanity should try to address:
The main question confronting governments is: should governments adopt a carbon tax system as part of their comprehensive plans to combat global warming?
Additional questions help frame the debate: Is a tax a good way to incentivize reductions in greenhouse gas emissions?
Can a carbon tax have a major impact on global warming? In this regard, how does a carbon tax compare to its main market-based approach - emissions trading or cap-and-trade systems?
What are the economic implications of a carbon tax?
Will it harm businesses and industries? Will it harm consumers?
Are emissions-trading schemes a more efficient and economically-friendly way to reduce emissions?
Is a carbon tax simple to understand and implement, particularly when compared to cap-and-trade systems?
Will a carbon tax require much government oversight?
How about a cap-and-trade system?
Is a carbon tax more feasible and manageable? How might the revenues generated by a carbon tax be spent?
Overall, is a carbon tax system fair? Can it be implemented equitably and without political biases?
Are there any other alternatives?
Examples of Countries practising carbon tax system:
While the European Union considered a carbon tax covering its member states, it ultimately initiated an emissions trading scheme in 2005. The United Kingdom, however, unilaterally introduced a range of carbon taxes and levies to accompany the EU ETS trading regime. For the rest of the world, the question of whether to adopt any of these approaches, and which one, remains an open question.
Emissions: Is a carbon tax effective at lowering emissions and combating global warming?
Carbon tax adds a clear cost to pollution that incentivizes reductions: The higher prices for the most damaging fuels would encourage people and companies to use them less and more of other types of energy, including nuclear, solar, wind and bio fuels. This approach also would affect all sources — not just cars, which account for only one-fifth of all U.S. carbon dioxide emissions."
A carbon tax helps symbolize political will to fight global.
A carbon tax helps reduce emissions in all industries: A carbon tax applies to all industries, broadening the scope of emissions reductions. This compares favourably to emissions trading schemes, which sometimes only cover a select group of industries.
A carbon tax can be implemented immediately.
A carbon tax provides superior incentives for green innovation.
Criticism:
Cap-and-trade systems ensure emissions reductions to the set cap: In a cap-and-trade carbon market, total emissions are guaranteed to go down. The cap is the cap, and assuming some reasonably effective enforcement mechanism, not a pound more carbon can be emitted. A carbon tax, on the other hand, merely encourages people to emit less by making it more expensive to do so. And in the case of fossil fuels, people seem perversely resistant to financial incentives.
Carbon trading incentivizes companies to cut emissions: A cap-and-trade system provides companies with credits if they are able to reduce their emissions below an established level. They can then sell these credits for a profit. So, if a company takes action to reduce its carbon emissions below the designated level, than it can make a profit. This is a powerful market incentive that is more likely to cause companies to invest money in finding ways to reduce their carbon emissions. A carbon tax, conversely, only provides the incentive of cutting costs, and does not offer this important profit motive.
Fairness: Is a carbon tax fair?
A carbon tax fairly treats all carbon emissions as "bad": A carbon tax essentially considers all carbon emissions harmful to the environment, and warranting of equal punishment. A cap-and-trade system only punishes carbon emissions above a certain level, treating only certain kinds of emissions as "bad". A carbon tax, therefore, sends a strong message to polluters that all their emissions are harmful, that they should be phased out, and that they should invest in environmentally-friendly sources of energy. This dramatic message may be particularly important if we view global warming to be a serious crisis.
Revenue from a carbon tax can be used to fund global aid programs: The advantage of a carbon tax is that it generates revenue that can be used for good. It converts a social bad, pollution, into a social good.
Economics: Is a carbon tax economical?
A carbon tax is less volatile than a cap-and-trade system A carbon tax is predictable, as are most simple tax systems. A cap-and-trade system, on the other hand, is subject to market fluctuations, speculation, and volatility. This could have a bad effect on energy prices. Additionally, predictability is a trait desired by corporations.
A carbon tax would better distribute the costs of carbon emissions A carbon tax will distribute the costs to all companies that emit greenhouse gases. It will not discriminate. There is much more room in a cap-and-trade system for discrimination.
Carbon taxes are simple and easy to understand Like most taxes, a carbon tax is very straight forward, assigning a specific cost to the emission of greenhouse gases
Criticism:
A carbon tax would damage an economy "Carbon tax to hit miners". The Australian. 5 Feb. 2007: "A $25 per tonne carbon tax would cost the state's alumina industry more than $200 million a year."
A carbon tax is "regressive". A "regressive" tax is one that disproportionately burdens poorer groups. Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. Because energy consumption would be taxed equally across social groups with a carbon tax (it's a "flat tax"), the costs of the tax would disproportionately affect poor groups.
A carbon tax passes costs onto consumers. A carbon tax makes it more expensive for companies to do business. To compensate, businesses will raise the price of the products they are selling, which diminishes the pockets of the consumer. The consumer, therefore, pays a significant portion of a carbon tax. In this way, a carbon tax does not merely punish polluting businesses, but ordinary citizens as well.
A carbon tax requires substantial government monitoring In a carbon tax, emitters would pay a tax for every ton of carbon emitted. This requires that the government know precisely how much carbon is being emitted by energy producers. This is not easy to determine, and requires that a government put in place monitoring mechanisms. Deploying these mechanisms universally would be very complicated, expensive, and require much administration. Then, ensuring that all these monitoring devices operate properly and that all energy producers comply with the tax would also involve a substantial administrative burden. This would be equally as complicated as a cap-and-trade system.
Conclusion:
Carbon Tax or NO Carbon Tax.....World or Humanity should understand the ramification of Global Warming and instead of debating, the matter concerning global warming, they should undertake steps to control Global Warming initially, and then gradually reduce pollution levels to zero. Otherwise, the writing is ON THE WALL and sooner rather than latter, there might not be any wall for us to write “GLOBAL WARMING”.