The Carbon Tax Briefly Explained

David Lawrence, an energy industry veteran, held various leadership positions with Shell before retiring as the executive vice president of exploration and commercial for Shell Upstream Americas. Currently, David Lawrence leads Lawrence Energy Group, LLC, chairs the Yale Climate and Energy Institute Advisory Board, and serves as a regular contributor to The Energy Collective blog, where he writes on a variety of topics, including carbon taxation.

A carbon tax is a market-based policy instrument that aims to reduce air pollution by placing a price on greenhouse gas emissions. Effectively implemented, the tax would offer businesses and individuals an economic incentive for reducing their carbon emissions while generating revenue that could be used to cut other taxes, improve infrastructure, and invest in alternative energy, among other things.

Recently, leaders of six large European energy companies—including BG Group, BP, Eni, Royal Dutch Shell, and Total—called for a carbon tax as a way to combat climate change. Other companies have also endorsed a carbon tax, and government leaders from around the world will meet later this year in Paris to discuss the tax and other solutions to the climate change issue.

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