A study by National Research Council revealed that the current U.S. tax code affects greenhouse gas emissions minimally. Energy-sector tax expenditures that amount to about $48 billion have little impact on reducing greenhouse gas (GHG) emissions.

According to the report, “the committee analyzed tax provisions that account for 46 percent of all energy-related excise tax revenues as well as those accounting for 71 percent of the calculated revenue loss from the 10 largest energy-related tax expenditures in 2011. As estimated by the Treasury Department, the broad-based tax expenditures selected account for about one-third of the cost of all tax expenditures that year.”

Scientific American elaborates on the findings of the study and its implications: “The primary finding is that many of the tax expenditures and subsidies only deal indirectly with climate objectives. Most of the tax mechanisms have other goals: for example, promote production and consumption of certain fuels, like biofuels (aided by tariffs on biofuel imports). As the report notes, biofuels tax credits encourage consumption of liquid fuels because they lower prices, offsetting any potential GHG benefit from the biofuels.

Production tax credits for renewable electricity generation have been an effective tool in terms of increasing the overall mix of renewable resources; installed wind generation capacity is hover around 12 gigawatts in Texas alone, with significant capacity in other states (and more due online from offshore farms). But the report cautions that the overall emissions reductions have been small, and costly per unit of GHG reduction.”

The study says that “in order to meet ambitious climate-change objectives, a different approach that targets GHG emissions directly through taxes or tradable allowances will be both necessary and more efficient.” Scientific American states that “other studies have reached similar conclusions” and “one of the most reliable and economically efficient ways to reduce greenhouse gases is by assigning a price to carbon, either through a tax or an emissions trading scheme (which are really two means to the same end).”

Earl Blumenauer who is working on the carbon-tax legislation said the report by National Research Council shows that “we are not going to be able to nickel and dime our way out of the looking climate catastrophe,” and “we need bold, aggressive action to recognize the damage that greenhouse gas emissions do to our planet and finally put a price on carbon.”

It might not be easy to put a price on carbon as a carbon tax is being opposed by the Obama administration and the congressional Republicans. The study will, however, put the focus on finding more effective tax strategies to reduce damage to the environment.