Developed for Maryland and tested in several other states, the model is designed to be used by state agencies, legislative staff, and the environmental community. The user sets the carbon tax rate. The model then calculates the associated tax rates for electricity and different fuel types, and estimates revenues. Users can apply the model to a state by inputting state energy consumption estimates published by the U.S. Department of Energy and by entering other data.
States play an important role in formulating policies to reduce greenhouse gas emissions.
The major man-made source of carbon dioxide is the combustion of fossil fuels, also a leading cause of urban smog and acid rain. Carbon taxes are an attractive means of protecting the climate by reducing carbon emissions, while also raising revenues for states. Since 1991, carbon tax proposals have been advanced in the Maryland, Minnesota, and California legislatures. By increasing fossil fuel prices, the tax encourages more efficient use of energy and stimulates development of renewable technologies. By changing relative prices, it encourages a shift in consumption from coal and oil to cleaner-burning natural gas.