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Old 08-13-2019, 07:44 AM
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Carbon Taxes: where does the money go?


If taxes on emitting carbon dioxide are enacted (primarily I presume to make burning fossil fuels more expensive and therefore alternatives more competitive), what is the money used for? If it's to mitigate the effects of global warming, how do you even begin to measure or allocate that? Are carbon taxes earmarked in any way?
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Old 08-13-2019, 07:53 AM
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In Canada they go into income tax rebates. The basic idea is that if you use less than your "fair share" of fossil fuels, you will come out ahead, while if you use more you will come out behind. This gives an incentive to use less.

In all fairness, I have to add that this disadvantages the rural and suburban people vs. urbanites.
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Old 08-13-2019, 07:55 AM
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The money goes to the government, and it is used for all of the things the government uses money for. Money is fungible, and one dollar is just like any other dollar. Some government revenue streams are said to go towards one particular cause, but that's just marketing: It doesn't make any real difference.
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Old 08-13-2019, 10:06 AM
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Carbon tax is regressive (larger burden on poor people than the rich, as a percentage of their income). So ideally, the income tax rate for the lower brackets will be reduced, and the shortfall in tax revenue will be made up by the carbon tax.
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Old 08-13-2019, 02:13 PM
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The money goes to me


And others who generate electricity with solar. We are paid thru SRECs - Solar Renewable Energy Credits. They are paid on the basis of how much electricity is generated by a system. SREC programs are in effect in; the District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania and Ohio.
SRECs are a contributing factor in the payoff of a system. My system, which consists of 14 panels, should be paid off 5-6 years following installation. Any excess energy generated goes back onto the grid and I am paid about $.02/KWH while I pay about $.14/KWH for what I purchase. I normally generate more than I use and pay a monthly facility charge as a minimum.
The system is the most boring gee-whiz investment I have made. It just sits there and works. I read a meter once a month and send it to the SREC administrator. When I've earned an SREC credit, they send me a check.
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Old 08-13-2019, 02:28 PM
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Originally Posted by Anita Dayoff View Post
SREC programs are in effect in; the District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania and Ohio.

Out of those places, only Montgomery County in Maryland actually has a carbon tax. None of the other jurisdictions you listed (and none of the other counties in Maryland) have one.
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Old 08-13-2019, 02:37 PM
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And others who generate electricity with solar. We are paid thru SRECs - Solar Renewable Energy Credits. They are paid on the basis of how much electricity is generated by a system. SREC programs are in effect in; the District of Columbia, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania and Ohio.
SRECs are a contributing factor in the payoff of a system. My system, which consists of 14 panels, should be paid off 5-6 years following installation. Any excess energy generated goes back onto the grid and I am paid about $.02/KWH while I pay about $.14/KWH for what I purchase. I normally generate more than I use and pay a monthly facility charge as a minimum.
The system is the most boring gee-whiz investment I have made. It just sits there and works. I read a meter once a month and send it to the SREC administrator. When I've earned an SREC credit, they send me a check.
Is that carbon tax credits, or just selling back excess electricity to the grid?

Last edited by Mikemike2; 08-13-2019 at 02:38 PM.
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Old 08-13-2019, 02:48 PM
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Yes, in Canada the revenue goes to assorted social uses, fed back into the community; as well as rebates for those with lower incomes. There was an item in the news that one province refused to participate in the carbon tax by implementing their own, so the federal tax came into effect. The provincial government refused to accept the grants from that, so the federal government is looking into distributing the money directly to school boards and municipalities. (Can you say "dog in manger", boys and girls?) Their excuse "it would be hypocritical to accept the money from the tax while challenging its validity in court". But then, it's not like the money already collecting will be given back to anyone who made a purchase in the last few months if the feds lose the case.

Also note that when the carbon tax came into effect, the price at the pump jumped 16 cents / litre - 5 cents for the federal carbon tax, and 11 cents by the oil companies because they were due for a revenue enhancement anyway. They simply snuck it in the same day so people would blame Trudeau. (16 cents/litre = 60 cents a gallon, or about 45 cents in real dollars; the tax itself 19 cents / gal or about $0.14US)

Last edited by md2000; 08-13-2019 at 02:50 PM.
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Old 08-14-2019, 09:48 AM
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It's carbon tax money


Quote:
Originally Posted by Mikemike2 View Post
Is that carbon tax credits, or just selling back excess electricity to the grid?
Each SREC credit I earn is contracted at $174. I earn 2-3 per year.
Excess power generated is credited on my power bill.
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Old 08-14-2019, 12:07 PM
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In Europe there is the ETS, where a decreasing proportion of emission allowances are given to polluters for free.

Polluters can sell these to other polluters. Buyers, then, pay that carbon tax to other polluters as an extra bit of profit for the latter.

An increasing proportion of ETS allowances are no longer given away for free but auctioned.

Most of the money paid in these auctions are distributed to EU member states according to complex formulas and criteria.

The aforementioned web page contains a link to a complex study of how member states have used that money.

There are no European renewable energy certificates. There is a patchwork of voluntary and mandatory, country-specific or multi-country or privately run schemes.

I get no subsidy, no FIT nor any other official credit for my excess solar electricity. I do get a good deal for sold electricity, entirely as a private special offer from my utility which they give to systems that include batteries.
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Old 08-14-2019, 02:14 PM
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Originally Posted by Anita Dayoff View Post
Each SREC credit I earn is contracted at $174. I earn 2-3 per year.
Excess power generated is credited on my power bill.

That's not a carbon tax. A carbon tax is a tax on the use or sale of fuels that emit carbon, not a credit for generating electricity using solar panels.
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Old 08-14-2019, 04:02 PM
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A carbon taxes purpose is to "internalize the externality". That is, for an entity, whether it be an individual or corporation, that is planning to pollute the air with CO2, the carbon tax is ideally equal to the dollar value of the damage of that pollution to other people.

Just like if you had a car that drops turds behind it as it operates and there is no practical way not to emit turds - the poop tax would be the cost for someone else to pick up the turds plus some compensation for those who have to smell them.

It doesn't matter what the carbon tax money is spent on. Main thing is to make sure decisions made whether to burn fuel or not are pricing in the full cost.
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Old 08-14-2019, 07:10 PM
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Quote:
Originally Posted by Chronos View Post
The money goes to the government, and it is used for all of the things the government uses money for. Money is fungible, and one dollar is just like any other dollar. Some government revenue streams are said to go towards one particular cause, but that's just marketing: It doesn't make any real difference.
It's not always marketing. Some of it is actual accounting. When politicians say that lottery money goes towards education they may be right, but unless education is funded by a specific tax or taxes and the tax revenue held in a specific fund to which the lottery profits are added, then it all goes out of the general fund. But there absolutely can, in theory, be different funds that are used by a taxation jurisdiction, and they need to be accounted for separately. The money in them is fungible and can be freely transferred, but someone needs to keep track of how much there is in each abstract fund that is for certain revenues that must used for certain purposes.

Quite often the funds necessary for a specific goal exceed those raised specifically for that purpose, and so the general fund covers the shortfall, and thus no money is reported in each of those funds, which means they don't appear on a statement of financial position. But that doesn't mean that the jurisdiction can freely spend the money raised by a special revenue source without showing that they spend at least as much money on the target expenses of the special revenue fund as they receive into that fund during the year, and if they don't, show it as a positive fund balance on their financial statements that can't theoretically be used for any old operation. So yes, special revenue funds are often meaningless because they are in a shortfall position and any extra special revenue funds simply means less general funds, but the opposite is definitely not the case.
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Old 08-14-2019, 07:35 PM
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A carbon taxes purpose is to "internalize the externality". That is, for an entity, whether it be an individual or corporation, that is planning to pollute the air with CO2, the carbon tax is ideally equal to the dollar value of the damage of that pollution to other people.
How do you even begin to estimate that?
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Old 08-15-2019, 01:45 PM
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How do you even begin to estimate that?
If we did, nobody would be able to afford to drive.

But seriously, one main point of the carbon tax is to raise the price of carbon-generating activities for the end user. the money collected is just a bonus. the more it costs for a gallon of gas, the less you will drive at a certain price point - smaller giant SUV, fewer trips, etc. Every bit helps. Ditto, if heating a building or running a production line starts to cost more, people will think about spending to make the consumption (and hence cost) less. Economics 101.

If it generates extra money that can also be put toward projects that can reduce emissions - insulating buildings, more efficient production machinery - then even more bonus.

The problem today is that you pay very little for the privilege of baking the planet and swamping Florida, since there's a glut of oil on the market thanks to environmentally friendly fracking.
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Old 08-15-2019, 02:35 PM
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Yes, glowaks, it's theoretically possible that an earmark on a revenue stream could be relevant, if that revenue stream turned out to be unexpectedly much greater than anticipated. But it almost never happens.

Quote:
Quoth Lumpy:

How do you even begin to estimate that?
The simplest method would be to use the cost of some method of carbon sequestration (such as planting trees). This may be an overestimate, since it may be that the marginal climate change you're preventing by sequestration isn't actually all that bad, but it shouldn't be an underestimate, because if the climate change is worse than that, you can always prevent it via sequestration.
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Old 08-15-2019, 03:45 PM
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How do you even begin to estimate that?
The simplest way is you can build a chemical plant today that removes CO2 from the air. The dollar price to remove 1 ton of CO2 and store it permanently is a good starting point for the right to emit 1 ton of CO2.

Same with my turd tax example: if you pay a person to scoop turds 10 bucks an hour and on average they scoop 100 turds, then...
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