The Tax Code & Environment Protection

Last updated on June 24, 2022

Energy-tax provisions control greenhouse gas emissions in order to protect the environment, but current energy taxes are doing very little to reduce greenhouse gas emissions, meaning tax expenditures and subsidies are not effective in keeping down greenhouse gases while costing the government revenue.

The impact of the current provisions is unclear because of the complexity of the U.S. tax code. A study by the National Research Council has revealed that energy-sector tax expenditures, which include oil and gas depletion allowances, bio-fuel provisions and production tax credits for wind, do very little to reduce greenhouse gas emissions.

Heather Zichal, the deputy assistant of President Obama said that the President is not pursuing a carbon tax, stating that “as a whole, the President is very focused on implementing commonsense policies that are going to reduce our greenhouse gas emissions. The president has not proposed, and doesn’t intend to propose, a carbon tax, but that’s not to say across the administration we don’t have a number of important tools we are prepared to deploy.”

The study proposed that the most efficient method to reduce greenhouse gas emissions is to introduce a carbon tax, but both the Obama administration and congressional Republicans are opposed.