ECONOMY AND ENVIRONMENT

• Carbon taxes are typically levied on the carbon content of fossil fuels, such as coal, oil, natural gas, and their derivatives (e.g., gasoline and diesel).
• The tax is based on the amount of CO2 emissions that will result from the combustion of these fuels.
• Carbon taxes effectively put a price on carbon emissions. By making carbon-intensive activities more expensive, they create a financial incentive for individuals, businesses, and industries to reduce their emissions.
• The primary objective of a carbon tax is to reduce greenhouse gas emissions, particularly CO2 emissions, which are a major driver of climate change.
• By encouraging a shift to cleaner energy sources and more energy-efficient technologies, carbon taxes aim to mitigate the impacts of global warming
• Carbon taxes can generate substantial government revenue, which can be used in various ways. Some countries allocate revenue from carbon taxes to finance renewable energy projects, energy efficiency programs, or other climate-related initiatives.
• To minimize the economic burden on households and businesses, some governments implement revenue-recycling mechanisms. This involves using the revenue collected from carbon taxes to reduce other taxes, such as income or sales taxes, or providing direct rebates to citizens
• Carbon taxes are often viewed as administratively simpler than cap-and-trade systems, another market-based mechanism for reducing emissions. They involve fewer regulatory complexities, making them easier to implement
• Unlike cap-and-trade systems, which use market dynamics to determine the price of emissions allowances, carbon taxes provide price predictability. This can help businesses plan investments in cleaner technologies with greater certainty
• The environmental effectiveness of a carbon tax depends on the tax rate and how well it aligns with emissions reduction targets. If the tax rate is too low, it may have limited impact on emissions. Therefore, setting an appropriate tax rate is critical.
• Carbon taxes promote economic efficiency by encouraging the adoption of cleaner technologies and reducing emissions at the lowest possible cost. They provide incentives for innovation and energy conservation
• While carbon taxes can be implemented at the national or subnational level, there is a growing interest in international cooperation to establish carbon pricing mechanisms, such as carbon taxes or cap-and-trade systems, to address emissions on a global scale.

• Green accounting quantifies the costs of environmental degradation, pollution, resource depletion, and other negative environmental impacts associated with economic activities.
• It also accounts for the benefits of preserving natural resources, maintaining ecosystems, and reducing pollution
• Green accounting recognizes natural capital, which includes the Earth's resources such as clean air, water, forests, and biodiversity, as an essential component of wealth. It assigns economic values to natural capital to reflect its importance to the economy.
• Green accounting highlights the interdependencies between the economy and the environment. It aims to measure how economic activities affect the environment and how environmental conditions, in turn, impact the economy.
• One of the primary objectives of green accounting is to assess whether economic growth and development are occurring in a sustainable manner. It helps identify whether the benefits of economic activities outweigh the environmental and social costs.
• Green accounting advocates for "full cost accounting," which includes not only the private costs borne by businesses but also the external costs (externalities) imposed on society and the environment. By internalizing external costs, green accounting encourages more responsible decision-making
• In addition to environmental factors, green accounting may incorporate social aspects, such as labor conditions, employee well-being, and community impacts. It recognizes that sustainable development encompasses economic, environmental, and social dimensions
• Green accounting provides policymakers, businesses, and organizations with information to make informed decisions about resource management, environmental protection, and sustainability planning
• Green accounting encourages organizations to disclose their environmental performance and impacts through sustainability reports. This enhances transparency and accountability.
• Some countries and regions use economic instruments, such as environmental taxes and cap-and-trade systems, to align economic incentives with environmental goals. Green accounting can help assess the effectiveness of these instruments.