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LIVING GREEN
Carbon Tax

By Sally Deneen

They say two things certain in life are death and taxes. And in the fight to avoid lots of deaths from global warming, it's possible you'll soon be paying a tax — a carbon tax.

Carbon, of course, is one of two ingredients in carbon dioxide, the most prolific of the greenhouse gases. CO2 is produced when oil, gas and coal are burned.

Many environmental groups want Congress to mandate greater efficiency standards for cars and lower emission limits for industry. There's another way, say advocates of a carbon tax. They point out that a tax on all the processes that produce CO2, based on the amount of carbon spewed into the atmosphere, could produce those very results, elegantly and using the forces of the marketplace. No need for government command and control, they say — just use a little weight from government's hand on the scales that fuel our economy.

So, what would that mean? Run the numbers any way you want — there are literally infinite variations you could conjure — but think about $5-a-gallon gas. Consider $500-a-month power bills if you stick with your current electric-baseboard heating.

It sounds rough, financially, on the little guy. But advocates say that if gas were $5 a gallon, for instance, we'd see many fewer SUVs on the road. We'd see much more innovation in how to produce that winter heat on a way-slimmed-down energy budget – more weatherstripping, better insulation and so forth. The basic principle is that the economic pain of a carbon tax would spur all kinds of innovation to conserve fuel. And who does the most flying, driving and other use of fuel now? The rich, of course. There are ways to structure a carbon tax so that, overall, it is not regressive.

Or the changes could be much simpler. If it were a sure thing that we'd be paying a carbon tax for decades to come, it's likely that utilities would stop building so many coal-fired, carbon-intensive power plants and building a lot more to burn natural gas, which has half the CO2 coal does.

For this to really work and to help ameliorate the global warming already under way, the carbon tax would have to be administered worldwide, some argue. That's never been done. The European Union has toyed with the idea of a carbon tax in the EU alone, though. It remains to be seen whether that could be politically palatable and, if so, how it might affect Europe's economic fortunes.

Here in the United States, a vociferous defender of the auto industry, U.S. Rep. John Dingell, proposed a carbon (and fuel) tax with real bite: $10 per ton of carbon content, plus an additional 10 cents a gallon for gasoline and jet fuel. That would rise each year for five years to $50 a ton of carbon and 50 cents a gallon for gas and jet fuel. That works out to 63 cents a gallon for gas and 90 cents 100 kilowatt-hours, on average across the country, according to the Carbon Tax Center.


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