Carbon fees would decrease U.S. carbon dioxide emissions through 2050
EIA analysis projects carbon fees would decrease U.S. carbon dioxide emissions through 2050
Carbon fees as high as $35 per metric ton could decrease U.S. energy-related carbon dioxide (CO2) emissions by as much as 19% compared to 2020 levels, according to analysis from the U.S. Energy Information Administration (EIA). In its Analysis of Carbon Fee Runs Using the Annual Energy Outlook 2021,
EIA projects that U.S. energy-related CO2 emissions would decrease the most in the first 5–10 years but decrease at a significantly slower rate
beyond that period..
A carbon fee is a tax implemented on the sale of fossil fuels based on the amount of CO2 emissions those fuels generate. EIA considered three levels of carbon fees for its analysis, starting in 2023 at about $15, $25, and $35 per metric ton of CO2. The fees would grow by 5% each year through 2050.
“In all the cases we considered, carbon fees would have a significant initial impact on CO2 emissions, though we do not see significant additional reductions after the first decade,” said EIA Acting Administrator Steve Nalley.
EIA projected in its Annual Energy Outlook 2021 that following the pandemic, U.S. energy-related CO2 emissions would decrease through 2035 before leveling off and then increasing 5% over 2020 levels by 2050. EIA projects that with about a $15 carbon fee (which would increase to more than $56 in 2050), U.S. energy-related CO2 emissions would decrease 13% by 2050 over 2020 levels. About a $25 carbon fee (more than $94 in 2050) would create a 17% decrease, and an approximate $35 carbon fee (almost $132 in 2050) would create a 19% decrease over the same period.
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