When carbon-based fuels, such as coal and gas, are burned, carbon tax is imposed. In a deeper sense, carbon tax is the government’s main policy aimed at minimizing and eventually eradicating the burning of fossil fuels, a known cause of major climate imbalance. It is one way – if not the only way – that users of carbon fuels can make up for the climate challenges they cause by throwing carbon dioxide into the atmosphere. When set at the right rate, it can motivate industries to shift to clean energy just because it becomes a more economical option.
Carbon chemistry is both powerful and simple simultaneously. The amount of CO2 that burning fossil fuel delivers into the air is directly proportional to the carbon found in the fuel. Therefore, on the fuel itself, the carbon tax may be levied “upstream” when it is pulled out from the ground or brought to the U.S., thus making administration easier. Carbon and hydrogen atoms are responsible for the energy found in fossil fuels.
When these atoms are burned, heat energy is released and carbon is converted to carbon dioxide. Coal has the most carbon while natural gas, which its high ratio of hydrogen to carbon, has the least. The CO2 released by burning these fuels reaches the upper atmosphere and remains there for about a hundred years, trapping heat that comes from the earth and back and leading to global warming and other harmful forms of climate change.
The precise amounts of anthracite,natural gas, heating oil and other types of fossil fuel content are known. Carbon tax is determined according to these proportions, where petroleum products are taxed less than coal, and coal is taxes much more than natural gas. This simplifies the process of documenting and measuring carbon tax.
Carbon tax is paid “upstream,” meaning at the point where fuels are pulled out from the ground and introduced into the stream of business or transported to the U.S. Fuel suppliers and processors can pass along the cost of the tax up to how much market conditions permit. With carbon tax, consumers and producers get a monetary reward for reducing their CO2 emissions.
Tax will not be collected if carbon that is chemically mixed into manufactured products, as in the case of plastics, is not burned. As well, if CO2 from energy production is confined instead of delivered into the air, there will be no tax or offsetting tax credit will be received. Additionally, certain tax proposals come with exemptions for businesses that are export-dependent to keep them competitive in the global market.