Here's why:
1. A high price for oil encourages more production, notably Canada's oil sands projects, which have been a major contributor to Canada's greenhouse gas emissions growth in the last few years. A tax might increase the price for gas for the buyer, but the seller doesn't get paid more and therefore a carbon tax does not encourage more production.
2. The high price of oil has been driving increased usage of coal as an energy source, notably in places like China. Coal emits more greenhouse gases per unit of energy than oil (as well as other noxious things). A carbon tax would increase the cost of energy from coal, more than it would increase the cost of energy from oil. Therefore it would reduce the incentive to switch to burning coal - something that a higher oil price does not accomplish so easily.
3. If higher oil/gasoline prices had been the result of a carbon tax, money would have been going to our government instead of to places like Russia and the middle east
Sunday, June 1, 2008
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1 comment:
A comment that I posted on the Blog Far and Wide. This post claimed that high fuel prices were "already
having the desired effect".
I understand that the carbon tax will keep the Federal excise tax on gasoline unchanged. Taxes on other fuels, like coal, will be increased to reflect their carbon content. While drivers might not care (in the short run) about a few cents per litre in the price of gasoline, you can bet that the users of coal (mostly industrial users) will be looking very carefully at their financial statements and thinking, "Okay, we get some money back from an income tax break, how much can we keep by reducing our usage of coal?" Businesses look very carefully at their marginal costs and marginal revenue.
One more thing: one of the important effects of a tax on coal will be to stimulate research into using biomass for fuel, because the carbon tax will make biomass more attractive. Just last week a Canadian company called Performance Plants announced a collaboration with LaFarge, the cement maker which has a plant in Bath, Ontario, to do research on growing plants for use a biofuel to replace the coal that is currently burned to make cement. They can see the future. They can see that coal will be much more expensive to burn in the future, and rightly so.
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