USA
David Bufalo
Professional Engineer (Civil), Career with large engineering companies and the U.S. Army Corps of Engineers
The Issue of Limiting CO2 Emissions Through a “Carbon Tax” Many world leaders, the main stream media, and the United Nation’s Intergovernmental Panel on Climate Change seem to be contemplating the imposition of a carbon (in reality, this means carbon dioxide written as CO2) tax. The idea is that a tax on carbon will increase the cost of fossil fuels and other commodities whose production and/or through the manufacturing processes emit CO2. It is, perhaps naively, assumed that such increased costs will curb consumption, which in turn will reduce CO2 emissions. This begs the question of just how expensive will a gallon of gasoline or cubic foot of natural gas or commodities in general and especially portland cement have to be to discourage consumption. Rex Tillerson, former U.S. Secretary of State and former CEO of Exxon Mobil favored a carbon tax. I would opine that his endorsement was based on the belief that the government was contemplating some sort of regulation on the oil and gas industry that would create havoc in the day to day operations of developing and processing crude oil and natural gas. Ergo, a simple tax at the wellhead would be a very easy thing to accommodate, as opposed to complying with myriads of government imposed regulations. Moreover, a carbon tax would be simply passed on to consumers. Bear in mind that about over one half of a barrel of crude oil goes to the manufacture of consumer products as noted here: Here’s a partial list (from http://www.whgbetc.com/petro-products.pdf) of over 6,000 products made from petroleum. One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make other products like other fuels, asphalt, plastics, toys, computers, clothing, synthetic rubber used in tires, paraffin wax, fertilizer, pesticides, herbicides, detergents, phonograph records, photographic film, furniture, packaging materials, surfboards, paints, and artificial fibers used in upholstery, carpet backing, and Vaseline Petroleum Jelly just to name a few. A carbon tax will thereby increase the cost of just about everything for consumers. The impact of higher costs of consumer products will be borne by everyone. Low income families will be the most adversely affected. Some have proposed to make a carbon tax revenue neutral as the cost of living will go up. So, to afford the price increases, consumers will get a credit to be able to offset higher prices. Consumers can then afford to buy the higher priced commodities. Therefore, there is no longer an incentive to discourage consumption, and consumption will continue just as before a tax was implemented. How will a revenue neutral tax work? Perhaps by giving a tax credit administered through the IRS. Such a tax credit would most likely be based on one’s income. Higher 1
income earners would not get a credit; after all, the “rich” can afford higher prices. Lower income earners would get the credit, or in many cases for those who pay no federal income tax, a direct cash reimbursement. The idea of a carbon tax has nothing to do with reducing CO2 emissions, but everything to do with an income redistribution scheme.
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