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Definitions and Frequently Asked Questions


        Revenue-neutral carbon tax: The tax is levied on energy sources which emit carbon dioxide. The tax is an example of a pollution tax, which many economists view favorably because it taxes a "bad" rather than a "good" (such as income). Most proposals for the tax return the majority or all of the proceeds to the American people. For example the revenue is returned as an expansion of the Earned Income Tax Credit, or as equal dividends to all U.S. residents. Therefore the tax motivates reductions in usage of fossil fuels, while the dividend can be used to meet any expenses whatsoever, including those for food or rent. For quick communication, the phrase “tax-and-dividend” is used rather than “tax-and-expansion of the Earned Income Tax Credit”.

        Trading: In emissions trading (or emissions “cap-and-trade”), the government sets a limit or cap on the amount of pollutant that can be emitted.  In a political process, companies are issued permits to pollute, which represent the right to emit a specific amount. The total amount of permits cannot exceed the overall cap. The cap is supposed to be reduced each year. Companies that pollute beyond their permits must buy permits from those who pollute less than their cap, or face penalties. This purchase or transfer is referred to as a trade. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions.

        Carbon cap-and-trade comes in two main versions: cap-and-trade as well as cap-and-auction. In the cap-and-trade system, permits are given free to historic polluters. The greater the output of pollutants in the past, the more permits the company receives. This historic basis is called “grandfathering.” As the overall cap on emissions is lowered each year, the price of fossil fuel rises. Everyone pays more, but the historic polluters that received the most permits reap windfall competitive advantages in a tightening fossil fuel market.

        Under the cap-and-auction arrangement, permits are sold to polluters, not given away free. Permit revenue goes to the government rather than to private companies.  What the government does with the money is then up to public officials; the majority would get returned to the public in a plan called cap-and-dividend. However expenses due to income extracted by beneficiaries such as traders, brokers, and attorneys would not be returned to the public.

        Offsets involve purchasing permits to pollute, paying someone else to reduce their heat-trapping gas emissions or to absorb carbon dioxide, in order to try to compensate for one's own contribution to emissions.

        Leakage: Offset leakage is the displacement of greenhouse gas emissions from inside the project boundaries to somewhere outside of project boundaries, thereby transferring but not reducing those emissions. Or more generally leakage means any unaccounted or unintended effect caused by the offset project that makes the project less effective or ineffective in reducing global warming.

        Renewable Portfolio Standard: A regulatory policy that requires the increased production of renewable energy from sources such as wind, solar, biomass, and geothermal energies.

        Feed-in tariff: An incentive structure that encourages the adoption of renewable energy through legislation. For example: The electricity utilities are obligated to buy renewable electric power at above market rates. This difference in price covers the extra cost of adopting renewable energy sources.

Frequently Asked Questions

        How can one person influence a national debate? Only one advocate is needed to work part time and short term with a city, town or county government, to help get the resolution passed (see the action plan). Once passed, copies of the resolution are sent by the local government to officials representing it at the state and national level. In a matter of months, many local governments could pass versions of this resolution, sending a strong signal to the federal government that a carbon tax is politically possible.

        How can I learn more about this debate? The summary of key points and topics in the debate distinguish the carbon tax from emissions trading. The resolution itself is an outline, with references below it. The Carbon Tax Center offers an extensive list of FAQs and answers (www.carbontax.org).

        What is the relation between federalcarbontax.org and climatehealth.org? Both were started by Sylvester Johnson (more about him at Sylvester’s CV) as public services on a non-profit basis. climatehealth provides free access to resources such as over 180 slides, handouts, references and a book. The subjects are climate change and separately, support of health and healing.

        The pages on both federalcarbontax and climatehealth are listed on the Site Map. At Sylvester’s CV the presentations are described, that he donates without taking the speaker’s honorarium.

        For convenience in website management, both internet addresses, also called domain names, access the same computer folder of information that gets displayed on the screen. The “.net” extension works as well for each name as the “.org” extension.

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