The impact of global warming on human society is increasingly severe, so in order to slow down the impact, the world’s nations are starting to set up various economic incentive mechanisms for greenhouse gas reduction. By collecting and analyzing international information, this project resolves the characteristics of each country’s green economic policy, then assesses the feasibility of the fossil fuel tax mechanism for domestic implementation. From the simulation, it can be seen that as far as carbon reduction is concerned, if revenue from energy taxes are used for the development of carbon reduction methods, not only it is much better than indirect taxes and direct tax subsidies, the carbon reduction benefits are also the most outstanding. Since the EPA is not the main agency in charge of setting the fossil fuel taxes, the main purpose of this project is to assist the EPA in making relevant recommendations based on the carbon reduction effect of fossil fuel taxes. In addition, it proposes that if we want to use fossil fuel taxes to reach our reduction targets, the revenue from fossil fuel taxes needs to be appropriated for a proportion of the development of carbon reduction, in order to provide the direction and recommendations for the consideration of using fossil fuel taxes in the future. Aside from this, the project also analyzes the problem of competition between different tools of domestic greenhouse gas reduction and provides feasible solutions for the EPA when all the reduction tools are being used at the same time, in order to assist the Government in understanding the feasibility of the economic incentive mechanism for greenhouse gas reduction in the future.

economic incentive mechanism for greenhouse gas reduction、fossil fuel tax mechanism、tax porpuse