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3 things every business should know about a carbon tax
Over three-fourths of Americans believe research for renewable energy sources deserve funding, according to Yale researchers. Another 74 percent believe that CO2 should be regulated as a pollutant. Sixty-three percent of Americans want strict limits on existing coal-fired power plants, and the majority of Americans believe global warming will harm people - if not themselves personally - in the U.S.
Yet, only 44 percent of the people in the country support legislating a carbon tax, even if it could be refunded to every American household.
"44% of the people in the country support legislating a carbon tax."
Opposition for a carbon tax - a measure that would levy a tax on fossil fuel use in homes and businesses - is predictable. Increasing taxes in any regard is rarely a sexy idea. Moreover, taxing cheap materials, such as low-efficiency cars, coal and gasoline, is something many Americans on a budget would prefer to avoid. Even with loopholes and exceptions for low-income Americans, many would prefer a system without the added complication.
However, scientists and a number of politicians are still pushing for carbon regulation in some context strictly because researchers predict impending danger. Economic incentives may be the most assured way to reduce reliance on currently cheap fossil fuels.
The tug-of-war between proposing and abstaining from issuing a carbon tax has been a hot topic for years, but change - climate or otherwise - could be right around the corner. Here are three things every business should know about the carbon tax future.
1. Power plants and light utility vehicles first, manufacturing next
Carbon production in the U.S. is spread over a host of industries. However, two of the sectors that contribute carbon the most heavily are power plants and light utility vehicles, according to Bloomberg News. Not surprisingly, these are also the two sectors that have been targeted by lawmakers.
The Environmental Protection Agency and the Department of Transportation have already mandated auto efficiency standards that require every newly produced vehicle in the U.S. achieve at least 54.5 miles per gallon by 2025. At the same time, President Barack Obama's administration has introduced two rules this past summer that effectively cap the amount of carbon dioxide permitted by new and old power plants.
While these are perhaps the sectors with the greatest potential for improvement, manufacturing is the next highest carbon producing area, according to the industry research. If the nation intends to keep decreasing carbon production - President Obama announced in November the administration intended to decrease emissions by 26 percent below levels in 2005 by 2025 - it may be reasonable to believe manufacturing regulations could be a future possibility.
2. Some say now is the best time for a carbon tax
Even if the manufacturing industry isn't targeted specifically, a carbon tax would still affect businesses big and small, and some analysts believe now is the perfect time to introduce that tax. Namely, Lawrence Summers - economic advisor to President Obama from 2009 through 2010 and former president of Harvard University - believes the time is now.
"61% of Americans believe global warming will harm future generations."
"The case for carbon taxes has long been compelling. With the recent steep fall in oil prices and associated declines in other energy prices, it has become overwhelming," Summers wrote in The Washington Post. "There is room for debate about the size of the tax and about how the proceeds should be deployed. But there should be no doubt that, given the current zero tax rate on carbon, increased taxation would be desirable."
Moreover, Summers argues that advocating for a carbon tax is a logical market decision, as it is one way to force organizations to pay for the negative effects fossil fuel causes - both in regard to health effects and climate change concerns. Instead of operating without repercussions, which often leads to overuse of fuel, users will pay for the predicted damage beforehand.
3. Uncertainty today turns into a sure thing tomorrow
Yale's research noted that the majority of Americans do not believe global warming is currently harming citizens. In fact, only 42 percent of respondents believed global warming would harm them within 10 years. That changes drastically for younger people, however. The same study showed that 61 percent of respondents believed global warming would harm future generations a great or moderate amount.
While this doesn't reflect the thoughts of younger respondents per se, it does show that more Americans are in agreement that there are long term effects that younger individuals will face. Therefore, it may be reasonable to believe millennials and younger generations of voters could become more comfortable with aggressive carbon taxes.
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