Carbon Tax Calculator Formula

Understand the math behind the carbon tax calculator. Each variable explained with a worked example.

Use the Carbon Tax Calculator

Formulas Used

Current Annual Tax

annual_tax = current_liability

Current Monthly Tax

monthly_tax = current_liability / 12

Projected Annual Tax

future_annual = emissions_tons * future_rate

Projected Tax Rate

future_rate_out = future_rate

Variables

VariableDescriptionDefault
emissions_tonsAnnual CO2 Emissions(metric tons)1000
tax_rateCarbon Tax Rate(USD/ton)50
annual_increaseAnnual Tax Rate Increase(%)5
projection_yearsProjection Period(years)5
current_liabilityDerived value= emissions_tons * tax_ratecalculated
future_rateDerived value= tax_rate * pow(1 + annual_increase / 100, projection_years)calculated

How It Works

How to Calculate Carbon Tax Liability

A carbon tax places a direct price on greenhouse gas emissions, charging emitters per ton of CO2.

Formula

Annual Tax = Emissions (tons) * Tax Rate ($/ton)

Future Rate = Current Rate * (1 + Annual Increase)^Years

Current Carbon Tax Rates

  • Sweden: ~$130/ton
  • EU ETS: ~$55-80/ton
  • Canada: ~$50/ton (rising to $170 by 2030)
  • US (proposed): $25-50/ton

    • Worked Example

    A company emitting 1,000 tons CO2/year faces a $50/ton tax increasing 5% annually over 5 years.

    emissions_tons = 1000tax_rate = 50annual_increase = 5projection_years = 5
    1. 01Current annual tax: 1,000 * $50 = $50,000
    2. 02Monthly tax: $50,000 / 12 = $4,167
    3. 03Future rate: $50 * (1.05)^5 = $63.81/ton
    4. 04Projected annual: 1,000 * $63.81 = $63,814

    Ready to run the numbers?

    Open Carbon Tax Calculator