By scrolling to the bottom of the page, you will find a downloadable pdf file which describes Congressman John Dingell's draft legislation which includes a national carbon tax. Directly below is an explanation of what a carbon tax for Michigan could be.

A Carbon Tax for Michigan

In the May/June issue of “Sierra” magazine, the cover article summarized a round-table discussion on what can be done about climate change. Eight expert panelists, of which the most well-known was Al Gore, met at Sierra Club headquarters shortly before Christmas of 2006. In the course of the day, three panelists in quick succession agreed that the single most effective step to counter global warming would be a carbon tax.

Nobody disagreed. However, the discussion then continued in another direction, without anyone detailing just what a carbon tax would be. This article will spell out what a State of Michigan carbon tax could be, and how it could fix Michigan's government budget problem while cutting Michigan's greenhouse gas emissions.

The idea, of course, is to tax what you don't want. We don't want carbon dioxide emissions, so if we tax them, people and businesses paying the taxes will be motivated to avoid carbon emissions. Specifically, since different fuels have different proportions of carbon in them, we would tax them in proportion to the amount of carbon dioxide they produce when burned. Below is a table showing an example of such a tax:

Unit	Fuel	Quantity (used in 2003)	BTU/Unit	Pounds of CO2/Unit	Carbon Tax/Unit	Tax Revenue (1 year)
Pounds	Coal	74.34 billion	10,133	2.07	$0.0269	$2 billion
CCF	Natural Gas	9.23 billion	100,000	11.64	$0.1515	$1.398 billion
Gallons	Diesel	1.237 billion	138,673	22.23	$0.2893	$358 million
Gallons	LPG (propane)	864.3 million	86,430	11.99	$0.1561	$135 million
Gallons	Gasoline	4.999 billion	124,000	19.21	$0.2500	$1.25 billion
					TOTAL	$5.14 billion

The numbers used come from two publications, both available from the US Department of Energy on the Energy Information Administration web site. The “Quantity Used” and BTU figures come from “State Energy Data 2003.” “BTU” stands for British Thermal Unit. The BTU is a common way to measure energy. In this case, it measures the energy content of the various fuels. The 2003 data were published in 2006, and are the most recent available at this time. Carbon dioxide numbers are derived from “Unit Conversion, Emissions Factors, and Other Reference Data, November 2004.” Calculations based on these figures are mine.

There are other products made from oil, included in the state energy data but not shown in this table. The other products include asphalt, some specialized fuels (aviation gas, jet fuel, kerosene), solvents and chemical feedstocks. These other products, in terms of energy, make up about 1/8 of the total, and the three oil based fuels in the table are the other 7/8ths. We can make a reasonable estimate of the effects of a tax without considering the other oil products.

With Michigan's current energy use, the tax would bring in over 5 billion dollars. If Michigan's energy consumption were cut by 10%, it would still bring in 4-1/2 billion dollars. This would cover the complete shortfall of state tax revenues, including that due to the repealed Single Business Tax. What's more, it would bring in at least an extra billion dollars that should be used to help the poorest people, who would be hurt by the new tax.

There are, of course, strongly felt arguments against such a tax. Most of these boil down to, “It would hurt the economy!” These are exactly the same arguments used to weaken, delay and deny any effective action to combat climate change. Others are along the lines of, “We should do something else (perhaps a carbon cap and trade system) instead of this.” Actually, other actions with the same goal are completely compatible with a carbon tax, and a carbon tax is not the only thing we could or should do.

It might be reasonable to exempt from the tax any operation that could demonstrate it is sequestering (for a least a century) the carbon dioxide resulting from burning fuel. It might be reasonable to exempt methane fuel recovered from a landfill, since methane not recovered will go unburnt into the atmosphere and will trap more heat than the carbon dioxide resulting from its burning. It might or might not be reasonable to exempt “renewable” fuels such as ethanol or biodiesel.

There are numerous details to be worked out in the creation of a comprehensive carbon tax. What is fixed by science is the proportioning of amounts among the various fuels. If gasoline is to be taxed at a dollar a gallon, diesel will be taxed at $1.1572 a gallon, because burning a gallon of diesel emits 115.72% as much carbon dioxide as burning a gallon of gasoline.

Making all carbon emitters pay an equal price per pound of carbon will encourage them to move to truly clean sources of energy such as solar or wind power, where the carbon tax is $0.00 for any unit. It will also motivate people to use the most carbon-efficient types of fossil fuel energy. A carbon tax will, for instance, discourage use of coal, the least carbon-efficient fuel.

Unit	Fuel	BTU/Unit	Energy Equivalent to 1 Gallon of Gasoline	Pounds of CO@ per Equivalent Energy	Carbon Tax for Equivalent Energy
Pounds	Coal	10,133	12.24 lbs.	25.29	$0.3292
CCF	Natural Gas	100,000	1.24 CCF	14.43	$0.1878
Gallons	Diesel	138,683	0.89 gal.	19.88	$0.2587
Gallons	LPG (propane)	86,430	1.43 gal.	17.21	$0.2239
Gallons	Gasoline	124,000	1.00 gal.	19.21	$0.2500