Can someone explain how carbon taxes offset the negative environmental impact fossil fuels have on our environment?
In: 6
They don’t directly.
What they do is give a financial incentive to companies to reduce the emissions. One of the driving factors behind companies resisting the steps to reduce emissions is cost of creating and implementing the reductions. So the idea is to use taxes to make the cost of NOT doing so higher than the cost of reduction.
With the pitched upside that the money gained from the taxes can be used to fund green initiatives and other programs.
But if the taxes aren’t high enough, they just become another cost of doing business.
Editing to add another down side I forgot but saw in u/DarkAlman’s answer. The taxes also don’t work when the company is able to use the extra tax to justify higher prices. So they just pass the tax on to customers and keep their bottom line.
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