As energy requirements are rapidly increasing sources of energy production have drastically impact on climate globally due to carbon emissions. The European Union and the United States, it is to set up an administration energy policy to regulate and set a cap on total carbon emissions. Gilbert Metcalf an economist has calculations of costs and consequences of the implementation of such a policy. This policy shows that $15 per ton of carbon dioxide is charged and it becomes $85 billion annually.
Introduction to Gilbert Metcalf Policy
Gilbert Metcalf introduces adding this cost to the income tax to make this process simpler and divide the burden from low-income households. Implementation of carbon tax enables industries to calculate the near exact price. While the cap and trade tax methods provide less uncertainty to price calculation. A carbon tax is much simpler to administer and more efficient to deal with. Carbon tax will get implementation by a small number of taxpayers while it comes out from the ground. The political feasibility of implementation of cap and trade tax has been more favored due to its complicated system.
Gilbert Metcalf emphasizes how cap and trade tax is inappropriate to calculate and taxed all carbon emissions. It will get to implement on a partial system like the electric utility sector or some energy-intensive industry. While this would not apply to the transport industry. Initially, 25-40 cents were added to every fuel price gallon that has 40 percent of carbon emissions due to the transport sector.
The larger portion of carbon emissions comes from the electric utility and industrial areas. Gilbert Metcalf believes some of the clusters have worn off in the development of these kinds of [financial] instruments. I’m not sure what it will be. It means in terms of the relative attractiveness of a carbon tax vs. a permit system, However, I believe it has the potential to increase the tax. Far more politically appealing