Worked example 1
A logistics company, 'Swift Deliveries', operates a fleet of 50 vans. Each van consumes 3,000 litres of diesel annually. The government imposes a carbon tax of $60 per tonne of CO2. Given that 1 litre of diesel produces 2.68 kg of CO2, calculate the total annual carbon tax liability for Swift Deliveries.
Show solution outline
Step 1: Calculate total annual diesel consumption. Total Diesel = Number of vans × Diesel per van Total Diesel = 50 vans × 3,000 litres/van = 150,000 litres
Step 2: Calculate total annual CO2 emissions in kg. Total CO2 (kg) = Total Diesel × Emission factor Total CO2 (kg) = 150,000 litres × 2.68 kg/litre = 402,000 kg
Step 3: Convert total CO2 emissions to tonnes. Total CO2 (tonnes) = Total CO2 (kg) / 1000 Total CO2 (tonnes) = 402,000 kg / 1000 = 402 tonnes
Step 4: Calculate the total annual carbon tax. Total Tax = Total CO2 (tonnes) × Tax per tonne Total Tax = 402 tonnes × $60/tonne = $24,120
Final Answer: Swift Deliveries will face an annual carbon tax liability of $24,120. This cost provides a financial incentive for the company to invest in more fuel-efficient or electric vehicles.