Effects of U.S. Tax Policy on Greenhouse Gas Emissions (2013) / Chapter Skim
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1 Overview and Scope of the Study
1 Overview and Scope of the Study
Pages 11-22
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From page 11... ...
We label the latter set "broadbased provisions" in this report. Moreover, we interpreted the charge to include any tax code provisions that might significantly affect emissions, whether by increasing or decreasing them, that is, whether they increase revenue (as in the 1 Congress made its request as part of the Energy Improvement and Extension Act of 2008 (P.L.
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From page 12... ...
The study will not recommend particular new taxes or tax incentives or changes in existing provisions of the tax code but may outline principles and criteria for formulating climate-sensitive tax policy in the future. It may evaluate the efficiency and effectiveness of different tax measures in reducing GHG emissions relative to other policy instruments.
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From page 13... ...
In each of these areas there are major controversies about the goals of policy, the relative priority of objectives, and the tools or policies that are best suited to attain the objectives. Studying the tax code's effects on GHG emissions necessarily focuses on energy use, because a preponderance of emissions comes in the form of CO2 released during the combustion of fossil fuels.
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From page 14... ...
The committee summarized its task in the following way: To what extent do provisions of the U.S. federal tax code -- with special attention to tax provisions focused on the energy sector -- contribute in a negative or positive way to slowing the pace of climate change by affecting greenhouse gas emissions?
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From page 15... ...
While very few, if any, provisions in the tax code were explicitly, or as a matter of priority, designed to affect emissions, all provisions have at least an indirect impact. This study focuses on provisions meant to encourage or discourage activities that affect GHG emissions directly, especially energy-related activities, but also examines broad-based provisions that may have an indirect effect.
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From page 16... ...
Further, the consulting firms that carried out the modeling work regularly employ JCT estimates when analyzing policies. Understanding the Link Between Taxation and GHG Emissions Understanding the mechanism by which the tax code affects greenhouse gas emissions is central to the analysis and findings of this report.
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From page 17... ...
For example, the oil depletion allowance is a tax expenditure that reduces the costs of producing petroleum and thereby encourages domestic oil production. If the increased production lowers world oil prices, consumption of oil and associated GHG emissions will increase.
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From page 18... ...
Prices of goods, services, and inputs Market infrastructure: Quantities of Markets for inputs and Regulations, goods, services, outputs mandates, … and inputs Tax provisions (gasoline tax, oil depletion CO2 and other allowance, production greenhouse gas credits,…) emissions FIGURE 1-1 Schematic representation of how taxes affect GHG emissions through the market.
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From page 19... ...
While our analyses do not include every provision that affects global economic activity, the aim of the present report is to assess the impacts of the main provisions of the tax code that affect global greenhouse gas emissions. The Link from Emissions to Climate Change Although this report focuses primarily on the impact of the tax system on emissions of CO2 and other greenhouse gases, Congress's ultimate concern in requesting this study is not with these gases per se, but with their impact on earth systems such as climate and also the health of oceans and biological systems.
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From page 20... ...
Observed Changes in Greenhouse Gas Concentrations Greenhouse gases include water vapor, carbon dioxide, methane, nitrous oxide, and fluorinated gases such as the hydrofluorocarbons that are used as refrigerants in appliances such as refrigerators or air conditioners. While some greenhouse gases have natural sources, many greenhouse gases are also emitted by human activities, including carbon dioxide emissions from combustion of fossil fuels, nitrous oxide emissions from agricultural fertilizer use, and methane emissions from leaks in natural gas pipelines.
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From page 21... ...
Thus, scientists can use the models to make hypotheses about the strength of background noise in the climate system, as well as how climate responds to changes in factors such as increased concentrations of greenhouse gases, volcanic eruptions, and the strength of solar output. Comparisons of model calculations and historical data indicate that the observed magnitude and pattern of warming in the atmosphere and ocean are not consistent with the background noise in the climate system, nor with observed changes in solar output or volcanic eruptions, but are consistent with measured anthropogenic increases in atmospheric greenhouse gas concentrations (IPCC, 2007; and Santer et al., 2013)
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From page 22... ...
The contribution of increasing atmospheric concentration of greenhouse gases to Earth's changing climate is well understood, as is the connection between a changing global climate and many of the changes in regional climate, including changes in the frequency and magnitude of extreme weather events. The well-established climate changes that have already occurred -- and those that are likely to occur in the future should greenhouse gas concentrations continue to rise -- motivated the congressional direction to undertake this study, and thereby provide the context in which the committee has executed its charge.
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