The Azimuth Project
Carbon pricing (changes)

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This page considers various options on putting a price on carbon. It also lists existing carbon prices: either explicit carbon taxes, or implicit carbon prices built into taxes on gasoline, etc. See also Carbon trading.


The most popular plan is to create a scheme which places a price on carbon, then increase the price (directly or indirectly) to force efficiency and non-carbon energy sources. There are three possible approaches:

  1. Price the energy on consumed items. So if a car is imported from China the carbon price for the construction of the car will be paid by the purchaser of the car. This might be the fairest method, but it has two big disadvantages: (a) It is probably impossible to say how much carbon went into the production in a foreign land; (b) It is probably in breach of WTO rules. To solve (a) would need something like a carbon-added tax (similar to VAT) between all participating countries, with non-participants being slugged on a high estimate basis. To solve (b) would need a fair bit of goodwill.
  2. Price the carbon as it comes out of the ground. Since coal is the main culprit, and there are only a small number of major coal producing countries, this is the option that might actually work. However it would require those countries to decide to forego the profit from digging up their coal.
  3. The third option is the only one under consideration anywhere. Tax the carbon as it is emitted into the atmosphere. This has no chance to work since it will just move the production elsewhere. In fact not only is Australia planning to move its jobs elsewhere by this method, but it will be happy to ship the coal there as well.

Existing taxes


The Germans have an energy tax, which you pay for all forms of carbon that you need to burn. If you scroll down to this paragraph on the German version of Wikipedia, you will see prices both per kilogram and per kWh.

Let us set ct = cent = 0.01 Euro.

“Erdgas” (natural gas) is 18.03 ct/kg, which is 180 euros per tonne.

“Benzin” (gasoline) is 65.45 ct/l (cent per litre). According to the US Environmental Protection Agency, one gallon of gasoline produces about 8.8 kilograms of CO2. That means one liter produces about 8.8 / 3.79 = 2.32 kilograms of CO2. And that means one liter contains about 2.32 / 3.666 = 0.63 kilograms of carbon.

So, a German gasoline tax of 65.45 European cents per liter corresponds to 65.45 / 0.63 = 1.03 euros per kilogram of carbon. That’s roughly 1000 euros per tonne of carbon burnt.


In July 2011 the Australian government proposed a carbon tax:

This tax, set to start in July 2012, charges the 500 largest carbon-emitting companies A$ 23 per tonne of carbon burnt. At July 2011 exchange rates this equals 17.5 euros per tonne of carbon burnt.


Households, on-road business use of light vehicles and the agriculture, forestry and fishery industries will not face a carbon price on the fuel they use for transport.

There are, however, existing taxes on fuel, mostly set at A$0.38 per litre. As of July 2011 an Australian dollar is about 0.76 euros. We saw that a liter of gas contains 0.63 kilograms of carbon. So, the Australians are paying a tax of 29 eurocents per liter of gasoline, which means 460 euros per tonne of carbon burnt.

United States

In the United States, gasoline taxes vary widely. California is near the top at $0.69 per gallon when you include both federal and state tax. Texas is nearer the bottom at $0.44/gallon. Alaska is at the very bottom: $0.24/gallon.

Let’s translate these into European units. A gallon is 3.785 liters and right now a dollar is 0.71 euros, so a dollar per gallon is just 19 eurocents per liter.

So, Californians pay a tax of just 13 eurocents per liter of gasoline, or 81 200 euros per tonne of carbon burnt.

Alaskans pay a tax of only 4.4 eurocents per liter of gasoline, or 28 70 euros per tonne of carbon burnt . So, the German gasoline tax is 36 14 times that paid by Alaskans.