Carbon Tax

Carbon Tax is a tax on every ton of carbon emitted. Under a cap and trade, each emitter then has a quota on how much the organization is allowed to emit.

The magnitude of the tax will therefore depend on how sensitive the supply of emissions is to the price. The permit of cap and trade will depend on the carbon market.

Full auctioned equivalent emissions caps can in principle generate the same revenues as the carbon tax. A similar upstream cap and trade system could be implemented.

Regulation by cap-and-trade emissions trading can be compared to emissions fees or environmental tax approaches under a number of possible criteria.

Carbon Tax is a surcharge on the carbon content of fossil fuels that aims to discourage their use and thereby reduce carbon dioxide emissions, or a direct tax on CO2 emissions.

An upstream carbon tax might be the simplest to administer. Setting up a complex cap and trade arrangement that is comprehensive has high institutional needs.