EC238 Lecture Notes - Lecture 3: European Union Emission Trading Scheme, Tonne, Externality
Document Summary
Bc imposed a carbon tax on each metric ton of carbon dioxide equivalent (co2-e) emissions from the combustion of fuel. The carbon tax is applied and collected at the wholesale level, using the administrative channels established earlier for collecting motor fuel taxes. The cost of the tax is ultimately passed forward to consumers via higher prices. The program established a cap on the total amount of certain ghgs. Under this cap, companies receive emission allowances (euas), which they can sell to, buy from, one another as needed. At the end of the year each company must surrender enough allowances to cover all its emissions or pay penalties on any excess. Companies can bank any spare allowances for future sale or for covering their future needs. In the first stage emitters face a fixed price for each metric ton of carbon emitted. The price started at (us. 8) per metric ton and rises at 2. 5 percent per annum in real terms.
