As the world commits to sustainability, governments impose strict rules, regulations, and taxes on greenhouse gas emissions to curtail them. One of them is a carbon tax. In simple words, a carbon tax is a price the government sets and imposes on emitters for every ton of greenhouse gas they emit.
Accordingly, companies worldwide are switching to adopting sustainable technologies, adhering to eco-friendly practices, and making green choices to reduce their emissions and save the tax. However, what does it mean for manufacturers? If you are a manufacturer researching carbon tax, this blog provides a comprehensive overview.
What is a Carbon Tax?
A carbon tax is a tax on carbon emissions. The government usually applies it to activities involving burning fossil fuels. So, higher emissions lead to a higher tax!
However, the way of applying taxes varies considerably. In some cases, they could be passed on to the consumers in the form of a sales tax. While the company does not pay anything from its pocket, the increased tax makes its products more expensive, hampering sales over a period. In other cases, the company may pay the money in the form of an operations tax.
So, whether directly or indirectly, in the end, the company pays a price if it doesn’t make the effort to reduce its carbon emissions!
How Does a Carbon Tax Work?
The government sets a price per ton of carbon in the form of a tax on electricity, natural gas, or oil. The carbon tax will vary for different fuels as every fuel varies in carbon content. Taxes on various fuels depend on the British Thermal Unit (BTU) heat units. It will not be based on volume or weight.
Now, who gets taxed? This tax is levied across various stages of consumption and production. Some examples include producers like coal mines and oil wellheads, distributors like oil marketing companies and utility providers, suppliers like oil refineries and shipping service providers transporting coal, and consumers who will pay more through higher electricity bills.
Carbon Taxes in India
In India, currently, the carbon tax is R. 400 per ton of coal. Coal is one of India’s top five commodity imports by value. Although there was an increase in the local output, primarily of low-quality coal with higher ash content, the government couldn’t curtail imports and remained the world’s second-largest importer. That made India’s thermal coal import value increase by 10% in 2023.
How are Indian Manufacturers Reducing their Carbon Tax?
Instead of curbing carbon tax, let’s say carbon footprint. When you reduce the latter, your tax will automatically drop. Doing so is a collective and long-term effort. Many Indian manufacturers are making a collaborative and comprehensive effort to reduce carbon emissions and prompt greener manufacturing. Here are some initiatives many Indian manufacturers are taking to curtail their carbon emissions.
- Energy-Efficient Machines: Manufacturers are switching to smarter equipment helping them save more energy. Regular tracking, analytics, informed decision-making and immediate actions are driving this change.
- Sustainable Procuring: Companies are buying sustainable materials, including those non-toxic and biodegradable, and integrating recyclable resources into various manufacturing processes. While helping reduce trash, these materials prove less harmful to the environment.
- Embracing the Circular Economy: This one aims to eliminate all types of junk, including inefficient resource or asset use. India is one of the leading companies in this regard. The country increased waste processing from 18% in 2014 to 70% in 2021!
- Closed-Loop Manufacturing Systems: Such a system involves recapturing, recycling, and reusing waste materials to produce new products. It helps minimize waste and optimize resource efficiency, resulting in considerable carbon emission reduction.
Committed to Sustainability and Reducing Carbon Emission!
At Vidya Wires, we manufacture wiring products responsibly. Our efforts include using sustainable materials procured through reliable suppliers aligned with our sustainability vision. Additionally, we constantly improve our manufacturing operations, integrating technology across every stage to reduce waste and carbon emissions. Our sustainability experts closely monitor our production processes and keep up with updates to ensure our efforts stay competent and tuned to the global situation. Partner with us if you also resonate with global sustainability endeavors and procure eco-friendly and durable wiring products.