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A tax on the emissions caused by the burning of coal, gas, and oil, aimed at reducing the production of greenhouse gases.



A carbon tax is a tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel (coal, petroleum, and natural gas) and is released as carbon dioxide (CO2) when they are burnt. Carbon taxes offer a potentially cost-effective means of reducing greenhouse gas emissions. From an economic perspective, carbon taxes are a type of Pigovian tax.  They help to address the problem of emitters of greenhouse gases not facing the full social cost of their actions. Carbon taxes can be a regressive tax, in that they may directly or indirectly affect low-income groups disproportionately.

The regressive impact of carbon taxes could be addressed by using tax revenues to favour low-income groups.A number of countries have implemented carbon taxes or energy taxes that are related to carbon content. Most environmentally related taxes with implications for greenhouse gas emissions in Organization for Economic Cooperation and Development countries are levied on energy products and motor vehicles, rather than on CO2 emissions directly.

What actions do you propose?

Government categories the industry as well as build a law for carbon tax according to green house gas emission .Then, implement the law for industries to pay carbon tax. The tax would be included in the price of the coal, oil and natural gas supplied to wholesale users and ultimately passed on to consumers in the price of electricity, gasoline and other energy-intensive products. Coal, which generates the greatest amount of carbon per unit of energy (BTU), would be taxed at a higher rate per BTU than oil or natural gas. By raising the price of carbon-based energy, the tax would create incentives to reduce energy use, stimulate demand for more energy-efficient products, and promote a shift to cleaner fuels and renewable energy.

A carbon tax could be revenue-neutral: all revenues could be rebated directly to every citizen (tax-and-dividend) or could be used to reduce existing taxes (tax-and-shift). Alternatively, revenues could be invested in development and deployment of new clean-energy technologies (tax-and-invest) and/or in energy efficiency programs (tax-and-caulk).

Companies that are able to reduce their emissions at low cost can sell their surplus permits to companies for whom the cost of reducing emissions is high. Each company has the flexibility to choose how to meet its emissions target, but market incentives encourage companies to invest in new technologies or employ conservation measures to lower the cost of reducing emissions. Over time, the emissions cap is tightened to achieve more aggressive pollution-reduction targets, requiring companies to adjust their strategies to comply with the new levels.

Who will take these actions?


Where will these actions be taken?


How much will emissions be reduced or sequestered vs. business as usual levels?

Emission will be reduced or calculated according to revenue generation  from carbon tax

What are other key benefits?

  • Promote a shift to cleaner fuels and renewable energy
  • Reduction of the green house gas
  • Healthy Environment

What are the proposal’s costs?

Depending upon type of program.

Time line

Within 1 year baseline survey and build carbon tax law.

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