Coal, oil, and gas are primarily used as fuels (e.g. gasoline, natural gas, kerosene, power plant coal, jet fuel), which release carbon dioxide (CO2) when burned, the main greenhouse gas emission of concern for Carbon Fee and Dividend. However, the chemical versatility of carbon also makes these raw materials a valuable feedstock. For example, about 15% of oil and a small (less than 5%) but growing amount of natural gas is used as a feedstock for other non-fuel uses (e.g. polymers, chemical feedstocks, asphalts, waxes, lubricants). Some of these materials may likely be incinerated after use, or break down naturally, either way ultimately resulting in CO2 emissions (e.g. isopropyl “rubbing” alcohol which evaporates and breaks down into CO2 after use, motor oils which are often incinerated after use). However, others are chemically stable and typically recycled or landfilled, meaning they won’t degrade into CO2 and will effectively “sequester” carbon in a solid form (e.g. plastic, solid components in asphalt). Since Carbon Fee and Dividend is exclusively intended to reduce greenhouse gas emissions, it is to be implemented to ensure the carbon fee IS applied to all carbon that results in CO2 emissions, yet IS NOT applied to carbon that is expected to remain stable in a non-emitting form. Consider the multiple end-states for carbon atoms that are derived from coal, oil, and gas, e.g.: Coal, oil, and gas are primarily used as fuels. When combusted, they release carbon dioxide, the primary greenhouse gas addressed by Carbon Fee and Dividend (Carbon Fee and Dividend). While combustion is the end-use of most fossil fuels, the chemical versatility of carbon makes these fuels valuable as raw materials as well. For example, a small percent of coal is used as a component in the production of steel, while about 15% of oil and a small (less than 5%) but growing amount of natural gas is used as a feedstock for other non-fuel uses (e.g. polymers, chemical feedstocks, asphalts, waxes, lubricants). Since Carbon Fee and Dividend is exclusively intended to reduce greenhouse gas emissions, Carbon Fee and Dividend is to be crafted in a fashion that avoids applying a fee to coal, oil, and gas which is not expected to release CO2 during or after its use. For example, plastics are a very-stable compound that will remain as plastic virtually forever, meaning it should not be impacted by the fee. Conversely, isopropyl (“rubbing”) alcohol, while not usually combusted, will typically evaporate after use and eventually break down into CO2, meaning it should be impacted by the fee. The end result for a product like plastic, for example, would be that there would be no carbon fee applied to the carbon content contained within the plastic itself. However, any carbon dioxide released as a result of the production (principally refining and transportation) of that plastic to the end user would incur the fee. With Carbon Fee and Dividend, the carbon fee is applied far upstream in the value chain to make collection administratively simple. However, this means that all end products, including non-combusted ones, would be subject to the fee. Since Carbon Fee and Dividend is exclusively intended to reduce greenhouse gas emissions, Carbon Fee and Dividend includes a provision to allow end-users of fossil fuels to apply for a rebate for products that are not expected to be combusted when used. This would likely be exercised mostly be refiners and chemical plants. This rebate is intended to offset the increase in raw material cost incurred by the imposition of the carbon fee, which would be commensurate to the carbon dioxide potential of the end product if it had been combusted.Feedstock Rebate Laser Talk
What about coal, oil, and gas that isn’t burned?
Feedstock Rebate
Extended Version
Fossil Fuels as Feedstock
Carbon Fee and Feedstocks
Feedstock Rebate of Fossil Fuels
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