Here is my letter to the editor that was published in the Kingston Whig-Standard on June 12, 2008. It is in response to a letter that can be found here
Reponse to Letter to the Editor of the Whig-Standard, "NDP has best policy to cut greenhouse gases", June 7, 2008.
In criticizing the Liberal or Green Party's green/carbon tax shifts, Jamie Masse and the NDP are picking a fight that is not going to help move Canada and the Canadian economy forward to meet the challenges of the 21st century. A carbon tax shift (rebates and lower income taxes financed by increased taxes on pollution and greenhouse gas emissions) can co-exist with a cap and trade system (which is used for managing greenhouse gas emissions from large emitters). For example, British Columbia has a carbon tax that starts on July 1, and has also joined the Western Regional Climate Action Initiative, a group that aims to establish an international carbon trading mechanism. Quebec, which just announced its intention to work with Ontario to set up a
cap-and-trade market, brought in a carbon tax on motor fuel.
Mr. Masse and the NDP seem to imply that businesses that pay a carbon tax could pass on the cost to the consumer, whereas that could not happen if they had pay for the credits that are auctioned off in a cap and trade scheme. That's clearly false. Either way a business will have a cost and some of that cost may be passed on to their customers. The "shift" part of
the green tax shift recognizes this and cuts or rebates income tax for both businesses and individuals, particularly low income individuals.
Vilifying "big, corporate polluters" and trying to put the cost of cutting greenhouse gases entirely on them, does not help to support a culture of energy conservation and efficiency. Any solution to the problem of our dependence on fossil fuels must involve efforts by every business and every individual to use energy in a sustainable manner. The participants in cap and trade schemes are so-called "Large Final Emitters" that account for only 50% of Canada's emissions. What about the other 50% of emissions that come from small emitters? As for making the 'big bad corporate polluters' pay, I would simply note that the biggest single greenhouse gas emitter in Canada
is the Nanticoke generating station, owned by us, the good people of Ontario.
Why should a carbon tax shift be considered in addition to a cap and trade scheme, or before a cap and trade scheme? One reason is that cap and trade schemes take time to set up. The 1990 U.S. Clean Air Act authorized emissions trading to control sulphur dioxide, but trading did not commence until five years later, in 1995. In 2002 the European parliament voted to endorse a cap and trade scheme for greenhouse gases but not until 2005 was the E.U. carbon market launched. A carbon tax shift, on the other hand, can be implemented much more quickly using the existing revenue infrastructure. The clock is ticking on climate change and that is why we should start moving now, beginning with a carbon tax shift. We can also start the preparatory work needed for a cap and trade scheme that would begin operating some time in the future.
Finally, the way Mr. Masse and the NDP look at things is that we need an environmental policy that respects "the needs of a fragile economy". The truth is probably closer to our needing to restructure our economy, with the environment foremost in mind, in preparation for the challenges of the 21st century. We must "energy-proof" our economy so that can withstand volatile fossil fuel prices. We must change how we live today, in order to preserve our natural environment and create a sustainable economy for future generations. A good step would be to remove the perverse incentives that we have now (pollution for free), to put a price on pollution, waste, and greenhouse gas emissions, to rebate taxes to low income Canadians, and to reduce taxes on income, investment, and innovation. A cap and trade scheme for greenhouse gas emissions also has its place, and I'm sure the NDP would be very welcome to work together with the Liberal and Green parties in this endeavour.
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6 comments:
I'm not a fan of carbon trading or carbon taxes. But if we are going to "price" carbon, I think the latter is preferable. C&T is open to so much political and financial manipulation that it should be avoided.
That said, the Canadian economy is quite capable of moving "forward to meet the challenges of the 21st century" without government messing about with carbon taxes and tax shifts.
If there is money to be made, Canadian businesses will look at it. Unfortunately, the record of government at picking winners is not particularly good (e.g., Nortel, GM, Bricklin, Sysco).
It is probably best that government stay out of the industrial develop business altogether - reason enough to avoid implementing "tax shifts" if that is one of its underlying rationales.
Here's a link for you Ted:
High Fuel Costs Could Spur a New Rationalism
Hello Steve and welcome to my blog. Thanks for leaving your comment.
I agree that the government should stay out of picking commercial winners and losers. I think that, for example, while it would be okay to fund research into carbon sequestration or bio-energy, the government should not be basing a greenhouse gas strategy on being able to sequester a certain amount of carbon, or replace coal usage with bio-mass at a certain price.
I think that shifting the tax burden onto fossil fuel usage (and away from income) will simply level the playing field (putting a price on CO2 emissions instead of it being free). Then the government can step back and let the private sector go after any commercial opportunities - and believe me they are there waiting in the wings.
It seems that where we differ is that you believe that the carbon tax shift (because it's new) is the government interfering in the economy, and I believe that reducing taxes on income and increasing them on fossil fuel CO2 emissions is actually a reduction in government interference.
Hello again Steve,
Thanks very much for the link. In the article the author, Charles Wheelan, mentions that a carbon tax should have been imposed ten years ago.
My reaction, and I think you and your fellow Conservatives might agree is that it annoys me a lot that a good chunk of the extra money being spent on gasoline is going to places like Russia and the middle east. There is some evidence that part of that money is being recycled to the Taliban in Afghanistan and other un-friendly organizations.
If we had been raising government revenue in the last 10 years from fossil fuel taxes instead of income, (and here I would have to include the United States, whom the author of your link was addressing)perhaps we would be less reliant on fossil fuels and less vulnerable to the deleterious effects of all those petrodollars floating around.
Here's a suggestion for Canadians: Support your troops in Afghanistan by making a sacrifice and giving up a bit of comfort or convenience in order to conserve energy or become more energy efficient. I'm guessing Conservatives could support that. Now, if the C's could only support nudging the country in that same direction with a green tax shift!
The Cap & Trade devil is really in the details.
The question is "who decides"? The answer is bureaucrats with political ties. It will take a small army of people to audit existing emissions, and then audit the submissions companies make to increase the amount of carbon credits they can trade.
And these need to be engineers, not accountants. And engineers disagree sometimes. So there needs to be an appeal process. And political appointees can decide which auditing engineer gets assigned to which company. And political appointees will be assigned to the appeal process.
It will end up either as a form of influence peddling (hire the right politically connected consultant for a large sum and your credits flow) or will turn a well intentioned green idea into a sea of red tape.
A phased in, revenue neutral carbon tax can be administered on a per kWh basis and is efficient, non-partisan in its implementation, and will drive sensible investment in reducing carbon emissions.
http://energyviews.blogspot.com/2008/01/revenue-neutral-carbon-tax-good-idea.html
Unfortunately the reason Cap & Trade has momentum in the US is that the people writing the laws understand what a goldmine this is for political power.
Hello Smart Juice,
A quick reply for now: just to be careful, a carbon tax would not be "administered on a per kWh basis". As you probably know, the CO2 emissions per kWh vary greatly from place to place. In Quebec, where electricity is generated almost totally by Hydro, the emissions are nearly zero per kWh. In Alberta, most of the electricity is generated by coal and other fossil fuels so emissions are about 0.8-0.9 kg per kWh.
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