Putting a Price on Carbon – Five Different Ways

Five ways to put a price on carbon

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Putting a Price on Carbon – Five Different Ways

For decades, we’ve been paying the cost of climate change driven by carbon pollution. We’re paying for it in dollars, in lives and livelihoods, and in every way imaginable. The world has awoken to the harsh reality of industrial carbon pollution’s impacts on our planet, and the time has come to hold the polluters accountable.
The Climate Reality Project

The main purpose for carbon reduction is to reduce the amount of carbon being emitted into our atmosphere. The science is settled. Our planet is heating up, and carbon pollution from CO2 Emissions is to blame. The fossil fuel industry burns oil, coal and gas, sending heat-trapping emissions into the air. Ninety million tons of carbon pollution enter the atmosphere every day. That means a hotter world for all of us. It also leads to Dirty Weather, from extreme rainstorms to prolonged drought.

There are five ways to price carbon.

1.  The Status Quo: external costs of climate change are not internalized and the taxpayer is forced to pay for climate and health-related damages.

2.  Regulation: sector by sector regulation of all the sectors in the economy that produce carbon pollution.(1)

3.  Cap and Trade: put a mandatory limit (or “cap”) on some portion of national emissions, and allow firms to buy and sell rights to emit within the cap as well. This can be with or without offsets. A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for an emission made elsewhere.(2)

4. Carbon Tax: a tax based on greenhouse gas emissions generated from burning fuels. The tax may or may not be revenue neutral. A revenue neutral tax is one that does not have a net increase in overall federal tax revenues.(3)

5. Carbon Fee and Dividend: An incrementally increasing fee is placed on carbon pollution and 100% of the money is returned to households. The term fee is used deliberately to indicate clearly that it is a revenue neutral pricing system. Carbon Fee and Dividend, as proposed by Citizens Climate Lobby, is an upstream fee and is levied at point of production of fossil fuels (at the well head, mine or point of entry). A downstream tax, on the other hand, would be levied at the point of consumption of fossil fuels and/or products dependent on fossil fuels.

Five Ways to Put a Price on Carbon

(1) The Canadian and US government are currently both using regulatory mechanisms to mitigate greenhouse gas emissions. Examples are emission standards for cars and for coal-fired power plants. The oil and gas sector has yet to be regulated in Canada.
(2) QuebecCalifornia and the European Union are jurisdictions that have implemented cap and trade with offsets to mitigate their greenhouse gas emissions.
(3) British ColumbiaNorway and Sweden have carbon taxes.

Source of Five Ways to Price Carbon: Citizens’ Climate Lobby

What Can You Do? Find your cost of carbon pollution and Do Something About It.


Rolly Montpellier,boomer warriorRolly Montpellier is the Founder and Managing Editor of BoomerWarrior.Org. He’s also a  Climate Reality leader (Climate Reality Leadership Corps), a blogger, an activist, a Climate Change presenter and a member of 350Ottawa. He has been a contributor to the Climate Change Guide, The Canadian, ClimateMama, World Daily, Georgian Bay News, The Elephant, CounterCurrents and 350Ottawa.

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