Carbon Tax - quick overview

2. GLOBAL WARMING IS …
 Triggering a climate crisis that threatens
massive and irreversible damage to our
global environment, public health, world
peace, national security and economic
well-being.
 No longer seriously contested by anybody
other than vested interests, their hired
“experts” and indebted politicians.
 Its an Inconvenient Truth !

3. CHEMISTRY → RESPONSIBILITY
Because CO2 stays
“resident” in the
atmosphere for at
least a century, one
hundred years of
fossil-fuel use drive
climate responsi-
bility. U.S. still has
a 40-50-year lead.
U.S. China
X

4. “In an alliance of
denial, China and
the United States
are using each
other’s inaction as
an excuse to do
nothing.” – New
York Times
editorial, 4-20-07
U.S.
China
X
CHEMISTRY → RESPONSIBILITY

5. NO MORE FREE DUMPING
“Since the dawn of the industrial revolution,
the atmosphere has served as a free
dumping ground for carbon gases. If people
and industries are made to pay heavily for the
privilege, they will inevitably be driven to
develop cleaner fuels, cars and factories.”
— Avoiding Calamity on the Cheap, Nov. 3, 2006
New York Times editorial

6. PUTTING A PRICE ON CO2 EMISSIONS
High taxes on carbon emissions from coal, oil
and natural gas will:
 Reduce fossil fuel use and CO2 emissions
√ Substitution of clean fuels and technology
√ More efficient use of energy

7. WHAT IS A CARBON TAX?
√ Excise tax levied on fossil fuels in proportion to the
CO2 emissions which they produce, roughly
equivalent to carbon content.
√ Assessed as $ / Ton of C or $ /Ton of CO2 emissions.
According to MARKAL engg. CO2 conversion factors of
various types of energy are as follows:
Coal (3.53 tons CO2/KLOE),
Oil products (2.89 tons CO2/KLOE),
Natural gas (2.09 tons CO2/KLOE) and
Hydropower, Nuclear power and most of Renewable
energy have no CO2 emission.

8. CARBON TAX PROPORTIONS
0
1
2
Relative tax
rate per btu
Gas
Oil
Coal
Fuels are
taxed by
their
carbon
content
per btu

9. EXAMPLE - ELECTRICITY
 Utilities and other generators will
 Respond to price signal by substituting lower-
carbon fuels
Renewables
Natural Gas
Invest in efficiency on demand- and supply-
side
 Consumers will
 Respond by using less
 Substituting low- or non-carbon energy

10. According to Research simulation, impact of carbon tax on the
economy to be significant if the tax rate is
By imposing a Higher carbon tax (US$22.2/CO2(Ton)) in one-step
approach, [1999 Swedish example]
CO2 emissions expected to decrease by 26% for economy as a
whole
 The energy demand in relation
To coal has the largest decrease, which is –36.45 percent,
Oil products (–23 percent),
electricity (–15.76 percent) and natural gas (–14.23 percent).
Economy as a whole, the GDP deflator increase by ~2%, effect
on output growth for the economy as a whole, GDP will decline by
1.57%.
Alternatively, a progressive approach to achieve the same goal of
CO2 reduction, while minimizing its impact on the economy. Using
a progressive ad valorem tax approach.
Impact of Carbon Tax as a whole?

11. ISSUES – REGRESSIVITY
 Carbon tax applied in isolation IS
REGRESSIVE (transportation/residential
costs).
 Can be addressed through revenue recycling
(progressive income tax restructuring, direct
benefit payments, etc.)

12. ISSUES – WINNERS AND LOSERS
 WINNERS
 Nuclear Industry
 Hydropower
 LOSERS
 Traditional Industry
 Agriculture

13. ISSUES – TIMING AND ADJUSTMENT
 Short term costs to workers and communities.
 Phase in over time – allow industry to adjust at rate
closer to traditional market conditions.
 Recycle revenue to buffer adjustment costs- worker
retraining, partial compensation, efficiency subsidies.
 Index to inflation – tax base shrinks by design.

14. ADDITIONAL BENEFITS
 Carbon tax receipts may also be used to finance
 Energy efficiency, further reducing use of fossil fuels
and related emissions.
 Energy R&D.
 Will also reduce dependence on Fossil Fuels,
External Energy dependency, with major
national security benefits.
 Prevent Economic activity flowing overseas.

15. A “STARTER” CARBON TAX-SHIFT
 $37 / ton of carbon =
 10¢ / gallon of gasoline, jet fuel, etc. =
 0.72 ¢ / kWh (U.S. retail average)
 Reduces U.S. CO2 emissions ~ 4%
 Repeat 10 X (while standards and incentives
also cut emissions)

16. Examples Of Carbon Tax
(1st-year Starter Tax Shown For Comparison)
$0
$10
$20
$30
$40
$50
Sweden EU #1 EU #2 Boulder "Starter"
Per
ton
of
car-
bon

17. Singapore in 2016 joined more than 120 countries to
ratify the Paris Agreement, formally committing itself to
reduce climate change.
As part of the agreement, Singapore pledged to cut
emissions intensity by 36 per cent below 2005 levels by
2030 and stabilise emissions with the aim of peaking
around 2030.
Singapore Case

18. Singapore Case

19. Singapore Case

20. Projected 2020 Business-As-Usual
Greenhouse Gas Emissions
Singapore Case

22. Carbon Tax - Singapore Case

23. Carbon Tax - Singapore Case

24. Revenue from the carbon tax will help fund measures by
industries to reduce emissions.
The tax may also spur new opportunities in green growth
industries such as clean energy
"the most economically efficient and fair way" to reduce
greenhouse emissions
It will create a price signal to incentivise industries to
reduce their emissions, complementing the regulatory
measures which we are also introducing
Carbon Tax - Singapore Case

25. Introduced a volume-based duty at $0.10 /Ltr on diesel.
Reduce current lump sum & annual Special Tax on
diesel vehicles.
Basically shift away from an annual amount of tax to the
one related to usage and to incentivise users to reduce
diesel consumption.
Carbon Tax - Singapore Case

26. Singapore’s mitigation strategy
Singapore's Climate Action Plan sets out 4 strategies to achieve:
(i) improving energy efficiency,
(ii)reducing carbon emissions from power generation,
(iii)developing and deploying cutting-edge low-carbon technologies, and
(iv)encouraging collective action among government agencies,
individuals, businesses, and the community.
A tax on greenhouse gas (GHG) emissions will incentivise emitters to
factor in the costs of their GHG emissions in their business decisions.
This would encourage companies to improve their energy efficiency and
innovate to reduce their GHG emissions
Carbon Tax - Singapore Case

27. The carbon tax will target largest emitters of
greenhouse gases, rather than individual users
of electricity
The carbon tax will generally be applied upstream, for
example, on power stations and other large direct
emitters.
For stationary emissions, the government is looking at a
proposed threshold of 25,000 tCO2e of greenhouse gas
(GHG) emissions annually.
Based on current data, there are around 30-40 of such
large direct emitters.
Carbon Tax - Singapore Case
“Create a price signal” to incentivise industries to reduce
their emissions".

28. The six greenhouse gases covered under the carbon tax
1) Carbon dioxide (CO2),
2) Methane (CH4),
3) Nitrous oxide (N2O),
4) Hydrofluorocarbons (HFCs),
5) Perfluorocarbons (PFCs), and
6) Sulphur hexafluoride (SF6)
What are the 6 GHGs covered under Carbon Tax
Carbon Tax - Singapore Case

29. Operating cost up from a S$10-20/tCO2e carbon tax is
 Equivalent to a US$3.5-7.0/bbl up in crude oil prices.
 6.4% to 12.7% increase from current oil prices,
compared to historical quarterly oil price fluctuations
which have ranged from -29% to +35% from 2011 to ‘16.
Greater support for industrial energy efficiency.
Energy efficiency improvement opportunities,
Enhance existing energy efficiency incentives, and
Provide capability-building for better energy
management systems.
The government will study modes of assistance to help
businesses with the transition.
Expected impact on buisenesses
Carbon Tax - Singapore Case