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Taxes on gasoline and diesel fuel taxes are obvious forms of carbon taxation. Consider experience in developed nations.

Motor fuel taxes (u.s. $ per gallon) (2012)
U.K. $3.75
Czech $2.70
Germany $2.60
Sweden $2.53} x̅ = $2.53
Netherlands $2.34
Italy $2.34
France $2.33
Austria $1.97
U.S. Federal 28 Cents per gallon
States (varies: 10 cents – 30 cents)

The average tax was $2.53 per gallon, compared to a U.S. federal tax of only 28 cents and 38 cents in some states and 48 cents in others. The combined U.S. taxes do not begin to cover the costs of maintenance and repair of roads.

European rates are about 4 times higher than U.S. and 10 times higher than Venezuelan rates. The typical U.S. rate combining Federal plus state tax is 65 cents per gallon.

By any measure, U.S. taxes on vehicle fuels are well below the marginal cost of road use a clear violation of the economist’s condition for efficiency in resource allocation. We have seen in Chapter 17 that the resulting costs of wear and tear on roads can be very high.

In any case, the U.S. could contribute notably to efforts to reduce global warming simply by raising gasoline and diesel fuel taxes high enough just to cover the mc of road and highway use by vehicles.

4. cap and trade systems

Cap and Trade systems attempt to place a price on global emissions of carbon, a major contributor to global warming. Ideally, such systems work in the following fashion:

A cap and trade system imposes strict quantitative limits (caps) on emissions from industry or agriculture. Then permits are granted for emissions. A market is created wherein the permits can be sold by those who emit less and purchased by those who emit more. How is this done? The sequence for implementing a system is as follows:

  1. Government first establishes a limit on the amount of CO 2 released by industry.
  2. Then, governments issue a fixed number of emission permits,
  3. Ideally, these permits are then auctioned (or given away) by the governments.
  4. Firms are allowed to sell excess permits that they do not need.

This system, it is hoped, will allow market forces to then distribute and price emission allowances. One or another form of Cap and Trade systems have already been introduced in the EU, the U.S. State of California, and China.

The European Cap and Trade system has, to date, been executed poorly. There, the carbon trade market is grossly oversupplied because the EU gave away to many credits. By November 2014, carbon permits traded for less than $8.00 per metric ton, and Europe was in that year burning more coal than before the Kyoto agreement of 1997. This experience does not at all mean we should ignore this tool. It means that the European mistakes must be avoided.

As the caps decrease year by year, the permits become more valuable (unless the government increases them).

Firms producing products that led to CO 2 emissions bid for these in the market. The price goes up. Emissions of CO 2 become increasingly more expensive. So firms are given incentives to reduce emissions, either through new technological innovations, or cut-backs in production that causes emissions.

Questions & Answers

where we get a research paper on Nano chemistry....?
Maira Reply
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
Application of nanotechnology in medicine
what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
yes that's correct
I think
Nasa has use it in the 60's, copper as water purification in the moon travel.
nanocopper obvius
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
analytical skills graphene is prepared to kill any type viruses .
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
in a comparison of the stages of meiosis to the stage of mitosis, which stages are unique to meiosis and which stages have the same event in botg meiosis and mitosis
Leah Reply
Researchers demonstrated that the hippocampus functions in memory processing by creating lesions in the hippocampi of rats, which resulted in ________.
Mapo Reply
The formulation of new memories is sometimes called ________, and the process of bringing up old memories is called ________.
Mapo Reply
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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