Can someone explain how carbon taxes offset the negative environmental impact fossil fuels have on our environment?
In: 6
They don’t, they merely pass the costs along to other companies or consumers. The idea is, a company is taxed say 10 dollars for every 10 cubic feet of carbon it produces. The idea is that if they produce less carbon, the tax will be lower, so theoretically they’re incentivized to produce less. But, right now there’s often an option for companies to buy extra credits, so they don’t actually have to reduce their emission, they just pay a fee. Which usually just gets rolled into the price of whatever they’re producing, meaning in the end customers pay for it. And if a company isn’t large enough to buy extra, they pay the taxes, or if there’s a cap on how much CO2 is allowed to be produced per company, if they do not have the resources to upgrade or retrofit existing CO2 production, they may just close entirely, or dramatically cut back production.
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