How do we come up with these suggested numbers for our tax calculator?
If you want the short answer…
The calculator takes your major greenhouse gas (GHG) producing activities, and calculates an amount of carbon (most commonly this is “tons of carbon”) which is emitted into the atmosphere due to your activities. We then take a commonly used price for carbon (such as $ per ton of carbon) and come up with a total dollar cost for your emissions.
This what we consider a good estimate for the cost of your carbon footprint, acknowledging that there are varying estimates out there on what a “true” cost for carbon would be. Our view is that we want a value which has as much accuracy as possible, but recognizes that the purpose of the carbon tax does not depend on it being the absolute “right amount”. Part of the purpose is simply for us to move towards understanding, and taking some responsibility for, our impact on the planet. So use this calculator as a good estimate of your carbon footprint, and then decide for yourself what this means for you, whether it is actually paying some, all or more of this tax, or taking other actions!
And now if you want the longer answer! The big picture is this…
Why do we even need to pay a carbon tax?
Economic consumption – things we buy or do – produce greenhouse gases (GHG), which are what ultimately determines how much climate change occurs. Mostly we worry about CO2, because that is by far the largest amount of GHG produced. But, there are important GHGs like methane. Typically we convert the warming potential of these gases to an equivalent amount of CO2. (It’s like converting currencies – we convert euros to dollars, for instance, to demonstrate comparable prices for items.)
So, to prevent climate change, we need to decrease GHG emission, or somehow offset (“recollect”) those GHGs. A carbon tax does this in several ways. First, a carbon tax can be a motivational tool. Most of us don’t enjoy paying taxes, so decreasing our carbon tax liability can be a motivation for behaviors which decrease how much GHG we emit. In other words, we are hopefully motivated to do things like drive less, because then we pay less carbon tax! Second, the tax itself should go towards activities which lessen carbon emissions. At Community Mennonite Church in Harrisonburg, Virginia, for instance (for which this calculator was initially developed), the tax proceeds will help to fund solar panels, energy efficiency improvements, etc. This is especially important when they help people in our society who have fewer resources. Those in poorly maintained trailer homes, for instance, often have very “leaky” homes with respect to energy. As a consequence, they not only pay large energy bills, but their homes are emitting more carbon than they need to. Carbon tax proceeds which help insulate their homes can both help them reduce energy payments, and help the planet.
Is there a “right” amount of carbon tax?
In principle, we could calculate an amount of carbon tax which accurately reflects the real impact of your carbon footprint. Figuring out that “right” amount is a worthy goal. And fortunately there are lots of bright people continually refining these types of calculations.
But, in practice…it’s complicated! For instance, how to do we accurately count up all the indirect costs of driving a car? (the carbon emissions from making the car, from making the highways, from effects on our other types of consumption due to being able to drive a car…). As a consequence, different experts come up with different amounts for the cost of carbon, or the amount of carbon produced for a certain activity. These estimates can vary widely, for instance a recent study suggested the “social cost” of carbon dioxide was $220 per ton (when the US government estimate had been $37 per ton). A government technical paper had set a 2020 value of $45/ton, before the current administration lowered the estimate to between $1 and $6 per ton. Some advocate a current best estimate of around $40/ton as a good starting point, acknowledging this may underestimate the true social cost of carbon.
A still longer answer – the details for those who are gluttons for punishment..
Carbon tax is based directly on measurements of energy usage. The categories of energy usage, and their conversion is explained below:
Gasoline provides a baseline for the other types of fuels commonly used at the household level. Gasoline produces approximately 20 lbs of CO2 per gallon burned. At an “average” carbon cost of $10/metric ton (around the average of what various governments have used for federal carbon taxes), this would come out to a carbon tax of 9 cents/gallon. This calculator uses a higher value, of $0.50 per gallon (reflecting >$50/metric ton cost of carbon), in order make sure and account for all externalized costs. This higher tax rate is reflective of other examples of carbon taxes, such as in some Canadian provinces.
Natural gas (methane, CH4) is commonly measured as a “therm” (1 therm = 1000 cubic feet of gas). 1 therm has the CO2 equivalent of 5.68 gallons of gasoline, equivalent to a tax of $2.84 per therm (converting from the previous $0.50 per gallon value).
Liquid propane is sold by the gallon. LPG has a lower density than gasoline, with a carbon equivalent of 0.52 gallons of gas. 1 gallon of LPG is therefore taxed at $0.26 per gallon.
Electricity (based on VA standards):
Electricity is more complicated. It comes from 4 major sources; coal fired power plants, natural gas power plants, nuclear power and renewables (solar, wind, hydro, etc. lumped together). The mix varies depending on your location. In Virginia, for instance, renewables and nuclear account for 43% of Virginia’s electric energy mix. Coal is 16% and Natural gas is 41% according to best available figures for 2017. Coal emits 1lb of CO2 for every 0.96 kilowatt hour of electricity delivered. This would be a tax of $0.062 per kilowatt hour of electricity from coal. Natural gas is more efficient and is taxed at $0.0287 per kilowatt hour produced. Because only 16% of our electricity comes from coal and 41% from natural gas, with the rest coming from non-emitting sources, we used the following formula:
0.16*0.062+0.41*0.0287=$0.022/kwh for electricity use.
We use a value of $0.02 per air mile, which attempts to incorporate the social cost of carbon. One analysis of the airline industry comes up with a per passenger value of 0.24 lb CO2 per mile. At this rate, the above value of $0.02 per mile would be equivalent to a base value of $183 per ton, which is close to the social cost value of $220 per ton.
Note that air travel can be particularly problematic to calculate, given that climate impacts depend heavily on whether a passenger is in coach or first class, and how many legs are used in a flight (most fuel consumption comes with take-off and landing; so direct flights are much more fuel efficient). In general, the carbon cost of flying is similar to driving on a per mile basis, but distances traveled are much longer. Thus, the impact of flying is considered substantial.
Finally, why use this calculator rather than others?
Our tax calculator is by no means the only one out there. There are great ones, many of which communicate in more detail than ours. For instance, many calculators are designed more specifically to identify areas of your consumption that can be altered to lessen your carbon impact, or take into account secondary carbon impacts (such as food and clothing). So by all means, explore those calculators!
Of course, calculators use different assumptions. For instance, be aware that calculated offsets calculated from many of these sites are based on low values for the cost of carbon. The Carbon Footprint site uses $8.20 (July 2018) per ton of CO2, compared to a value of $40 per ton often considered a best estimate, or the much higher value incorporating the social cost of carbon (for instance, $220 per ton).
Our calculator is designed to give a value that we think reflects a particular approach – getting a good estimate of the cost of carbon using simple input of energy usage indicators that consumers can easily access (such as fuel bills).
Note: The CSCS project to start a Carbon Tax Calculator was initiated through a project of Community Mennonite Church in Harrisonburg, VA. It was modified by the research of CSCS staff.
 See also the 2014 commentary in Nature. https://www.nature.com/news/global-warming-improve-economic-models-of-climate-change-1.14991. Nobel prize-winning economist Joseph Stiglitz and former World Bank chief economist Nicholas Stern advocate a tax starting at $40/ton and rising with time.