I hope NDP candidate Michael Byers had a recent change of heart about pricing fossil carbon emissions with a carbon tax considering what he wrote yesterday in this article, and I hope he wasn't believing one thing and helping to destroy it by saying another during the 'green shift' debate last year.
The point was brought to my attention today very clearly here and here.
Showing posts with label Carbon Tax. Show all posts
Showing posts with label Carbon Tax. Show all posts
Thursday, August 13, 2009
Monday, May 18, 2009
Another chorus
What a strange but welcome confluence of Op-Ed pieces in today's newspapers.
First, Tom Axworthy writing in the Toronto Star can be summarized by its opening lines:
Stéphane Dion announced at the recent Liberal convention in Vancouver that he would be staying in politics. This is a good thing because a future Liberal government will have great need of his intelligence, commitment and stubbornness in dealing with climate change.
Elgie, Boyd, and Waddell, writing in the Globe and Mail (How a B.C. carbon tax rose from Dion's ashes) gave six lessons from the BC and Federal election results after summarizing things:
Although widely regarded - by both environmentalists and economists - as an essential tool in growing green jobs and combating climate change, many Canadian politicians perceived carbon taxes as toxic after Stéphane Dion's defeat. The results of this week's B.C. election should help put that notion to rest.
Finally Paul Berton writing in the Ottawa Sun(!) The True Costs of Car Travel wrote what many experts know all too well:
Not only should we not reduce gasoline taxes, it is inevitable, though undoubtedly unpalatable politically, that they will rise in the future to better reflect reality and the true costs of car travel [road building and maintenance, health and pollution, accidents, traffic congestion, insurance, urban sprawl]
First, Tom Axworthy writing in the Toronto Star can be summarized by its opening lines:
Stéphane Dion announced at the recent Liberal convention in Vancouver that he would be staying in politics. This is a good thing because a future Liberal government will have great need of his intelligence, commitment and stubbornness in dealing with climate change.
Elgie, Boyd, and Waddell, writing in the Globe and Mail (How a B.C. carbon tax rose from Dion's ashes) gave six lessons from the BC and Federal election results after summarizing things:
Although widely regarded - by both environmentalists and economists - as an essential tool in growing green jobs and combating climate change, many Canadian politicians perceived carbon taxes as toxic after Stéphane Dion's defeat. The results of this week's B.C. election should help put that notion to rest.
Finally Paul Berton writing in the Ottawa Sun(!) The True Costs of Car Travel wrote what many experts know all too well:
Not only should we not reduce gasoline taxes, it is inevitable, though undoubtedly unpalatable politically, that they will rise in the future to better reflect reality and the true costs of car travel [road building and maintenance, health and pollution, accidents, traffic congestion, insurance, urban sprawl]
Wednesday, November 12, 2008
Greenhouses burning coal
Tyler Hamilton of theToronto Star had an excellent piece yesterday documenting how Ontario greenhouses are turning to burning coal because of higher oil prices. This piece documents critical examples that illustrate why high oil prices are no substitute for a carbon tax when it comes to an incentive to reduce greenhouse gas emissions.
Here is an excerpt:
Here is an excerpt:
The Toronto Star has learned that dozens of other greenhouse operators in Ontario ... have switched or are considering a transition to coal as a way to save on fuel costs.
The impact so far appears small, but the trend is gaining momentum. As it does, it could undermine the environmental benefits of an Ontario government plan to wean the province off coal-fired power generation by 2014.
"Coal is expanding in the province, despite a policy to phase out coal," says Roger Samson, executive director of REAP-Canada, an independent group that encourages sustainable farming practices. "The Ontario government has no plan on how to mitigate this."
...
It's estimated that greenhouses in Ontario cover 2,823 acres, and that the average greenhouse requires 9,500 gigajoules of energy per acre every year. This works out to 26.8 million gigajoules annually.
Convert that energy into electricity potential and it works out to 7.44 terawatt-hours a year – more than three times the 2004 electricity output of the Lakeview coal-fired generating station in Mississauga (which has since been closed down and demolished).
To those of you participating in the local food movement: don't forget to think about the possible implications of greenhouse-grown food.
Monday, October 27, 2008
0.7% of GDP development aid target = revenue from a $30/tonne carbon tax, numerically and morally
At the recent Carbon Pricing and Environmental Federalism conference in Kingston, Ontario, one thing that was brought up by a couple of speakers (one of them was Matthew Bramley of the Pembina Institute) was the idea that taxes on greenhouse gas emissions, "carbon taxes", are actually a "recovered subsidy", and that, as a consequence, one could argue that it was more fair for the federal government to collect this tax (as opposed to provincial governments).
Let me explain this a bit before getting to my idea. Greenhouse gases are causing climate change, and that will be bad for everybody. Right now, people get to emit greenhouse gases (from burning fossil fuels) for free. But it's really not free because people in the future that will be burdened by climate change will pay the price. In effect, those people are giving a subsidy to the people who pollute for free today.
Money collected from a tax on fossil fuels would recover some of this subsidy. Who should get the proceeds? Well everybody benefits from reduced greenhouse gases, and the federal government would seem to have a better claim to represent "everybody" than individual provincial governments. Therefore, from this point of view it makes more sense that the federal government deserves the money.
Now to my point. Why stop there? We know that people who will really pay the price for climate change are the poor who live (or could have lived) in certain developing countries in the future. Aren't they the ones who are morally entitled to the proceeds of our carbon tax (in whatever form it is implemented)?
If you agree with my point then consider this: a $30/tonne tax on CO2, as proposed by the third year of Stephane Dion's Green Shift plan, would generate about $11b in revenue. That's coincidentally about 0.7% of Canada's $1.6 trillion GDP. Perhaps we should be considering fully funding Lester Pearson's (and the U.N.'s) suggested international development aid target using a $30/tonne carbon tax, and concentrating that aid on development that will prepare future generations to deal with climate change. What a great way to try to settle our debts and respect intergenerational equity.
Let me explain this a bit before getting to my idea. Greenhouse gases are causing climate change, and that will be bad for everybody. Right now, people get to emit greenhouse gases (from burning fossil fuels) for free. But it's really not free because people in the future that will be burdened by climate change will pay the price. In effect, those people are giving a subsidy to the people who pollute for free today.
Money collected from a tax on fossil fuels would recover some of this subsidy. Who should get the proceeds? Well everybody benefits from reduced greenhouse gases, and the federal government would seem to have a better claim to represent "everybody" than individual provincial governments. Therefore, from this point of view it makes more sense that the federal government deserves the money.
Now to my point. Why stop there? We know that people who will really pay the price for climate change are the poor who live (or could have lived) in certain developing countries in the future. Aren't they the ones who are morally entitled to the proceeds of our carbon tax (in whatever form it is implemented)?
If you agree with my point then consider this: a $30/tonne tax on CO2, as proposed by the third year of Stephane Dion's Green Shift plan, would generate about $11b in revenue. That's coincidentally about 0.7% of Canada's $1.6 trillion GDP. Perhaps we should be considering fully funding Lester Pearson's (and the U.N.'s) suggested international development aid target using a $30/tonne carbon tax, and concentrating that aid on development that will prepare future generations to deal with climate change. What a great way to try to settle our debts and respect intergenerational equity.
Sunday, October 19, 2008
Carbon Pricing and Environmental Federalism
This weekend I attended the Carbon Pricing and Environmental Federalism conference in Kingston, Ontario. This meeting, organized by Queen's University's Institute of Intergovernmental Relations, brought together many of Canada's experts in the field of public policy on climate change.
Needless to say, Stephane Dion, the Green Shift and the recent election were not far from everybody's thoughts. The mood was a bit somber in this respect as exemplified by Prof. Kathryn Harrison of UBC, a political scientist, who said that with last week's vote, optimistically, action in Canada on climate change will be pushed back by at least ten years. Various people had unkind words for the NDP and the Conservatives for campaigning against the Green Shift with misinformation and scare tactics. More than one person told me that the best use of my time now, as an activist, would be to talk to kids, with the sad implication that changing the minds of older generations, as a whole, was a lost cause (although as a younger person and somewhat of a kid-at-heart, I am not willing to give up so quickly).
Economist Nancy Olewiler (an organizer of the letter signed by 250 economists during the election campaign supporting a carbon tax) of SFU, however, amid her own observations of the difficulties that the fight against climate change faces, did say that we should celebrate one thing: that the recent federal election in Canada was the first Canadian election where pricing policy (as opposed to voluntary initiative or incentives) for carbon emissions was a major issue.
Climate change will be challenging us for a long long time. How to reduce greenhouse gas emissions will be a political issue for a long long time. As long as we have a market economy, the price of emissions, however it is generated, will also be a political issue. And so I think that Canadians will be talking about Stephane Dion and the Green Shift for many years to come.
Stephane Dion put a clear policy forward for carbon pricing as a first step to combat climate change. It was supported by environmentalists and economists. It was roughly in line with the Green Party's proposal, and it was based an old idea going back in the political arena at least as far as a policy proposal by a US Republican party presidential candidate in 1979, John Anderson, and implemented in one form or another in many countries since then.
In my opinion we are indebted to Stephane Dion for bringing some intellectual honesty to Canadian politics. Perhaps his mistake was to be so honest as to call a tax a tax. One of the conclusions of this conference was that, politically, Canadians are not ready for that. Conference participants concluded that we should never again associate carbon emissions pricing with the word "tax", and simply disguise it with names such as, "cap and trade", "public benefit funds", "renewable portfolio standard", or "foreign oil security fee".
I believe that history will show that Mr. Dion should be accorded more respect than he has been receiving from certain (close) quarters in the last week. We need more people like him in Canadian politics.
Needless to say, Stephane Dion, the Green Shift and the recent election were not far from everybody's thoughts. The mood was a bit somber in this respect as exemplified by Prof. Kathryn Harrison of UBC, a political scientist, who said that with last week's vote, optimistically, action in Canada on climate change will be pushed back by at least ten years. Various people had unkind words for the NDP and the Conservatives for campaigning against the Green Shift with misinformation and scare tactics. More than one person told me that the best use of my time now, as an activist, would be to talk to kids, with the sad implication that changing the minds of older generations, as a whole, was a lost cause (although as a younger person and somewhat of a kid-at-heart, I am not willing to give up so quickly).
Economist Nancy Olewiler (an organizer of the letter signed by 250 economists during the election campaign supporting a carbon tax) of SFU, however, amid her own observations of the difficulties that the fight against climate change faces, did say that we should celebrate one thing: that the recent federal election in Canada was the first Canadian election where pricing policy (as opposed to voluntary initiative or incentives) for carbon emissions was a major issue.
Climate change will be challenging us for a long long time. How to reduce greenhouse gas emissions will be a political issue for a long long time. As long as we have a market economy, the price of emissions, however it is generated, will also be a political issue. And so I think that Canadians will be talking about Stephane Dion and the Green Shift for many years to come.
Stephane Dion put a clear policy forward for carbon pricing as a first step to combat climate change. It was supported by environmentalists and economists. It was roughly in line with the Green Party's proposal, and it was based an old idea going back in the political arena at least as far as a policy proposal by a US Republican party presidential candidate in 1979, John Anderson, and implemented in one form or another in many countries since then.
In my opinion we are indebted to Stephane Dion for bringing some intellectual honesty to Canadian politics. Perhaps his mistake was to be so honest as to call a tax a tax. One of the conclusions of this conference was that, politically, Canadians are not ready for that. Conference participants concluded that we should never again associate carbon emissions pricing with the word "tax", and simply disguise it with names such as, "cap and trade", "public benefit funds", "renewable portfolio standard", or "foreign oil security fee".
I believe that history will show that Mr. Dion should be accorded more respect than he has been receiving from certain (close) quarters in the last week. We need more people like him in Canadian politics.
Sunday, September 14, 2008
Why a mandatory cap and trade system would take time
Jack Layton claimed recently that his cap and trade proposal for limiting greenhouse gas emissions would not take a long time to set up. This claim is important to rebut because the reason Stephane Dion decided to change his mind and to go with both a carbon tax and cap and trade, is because a mandatory cap and trade system would take a long time (a few years) and lots of resources to set up.
First, let's show Mr. Layton's quote from the Globe and Mail:
“The forcing of big polluters to pay, taking that money and investing it in solutions which is the cap-and-trade system, has already happened. It's already going on in Canada on a voluntary basis.”
The crucial point is the difference between a voluntary cap-and-trade system and a mandatory one. In a mandatory system, here are some of the headaches you are going to have to deal with, and find answers that everybody across the country can agree to:
First, let's show Mr. Layton's quote from the Globe and Mail:
“The forcing of big polluters to pay, taking that money and investing it in solutions which is the cap-and-trade system, has already happened. It's already going on in Canada on a voluntary basis.”
The crucial point is the difference between a voluntary cap-and-trade system and a mandatory one. In a mandatory system, here are some of the headaches you are going to have to deal with, and find answers that everybody across the country can agree to:
- Who is in and who is out? Where are you going to set the boundary between large emitters and small emitters? Everybody is going to try to be exempted, either partially or wholly (lots of people/institutions will feel it's unfair to them). What's your plan to 'consult with the public'? Are you going to include non CO2 greenhouse gases? What are the standards you are going to apply to offset projects?
- What new regulatory and operational body are you going to construct to oversee the mandatory emissions market?
- How is the auction going to be conducted? How many emissions credits are you going to auction? If you try to limit the supply of credits and push down the total cap on emissions, the price for credits might go up. Is there no limit on the price for emissions credits? If there is a limit or safety valve, what is it? (notice that in this case the cap-and-trade system becomes a hybrid cap-and-trade/tax system without the hard limit on absolute emissions that Mr. Layton wants.)
- What do you do about early action? How, exactly, do you reward, or at least not penalize those who have already taken action to reduce emissions? How do you set baseline levels for offset projects in a way that people will agree is fair?
- Are you going to harmonize with the various US markets and/or the European emissions market? Are you going to allow CDM or JI projects to sell offsets? How long will negotiations with them take?
Saturday, September 13, 2008
MKJA report also shows GHG reductions
The MKJA report quoted in the Green Party press release yesterday also answers the question (in a political sort of way because the Conservative government was in possession of this 'secret' report) that many critics have posed about how much and when greenhouse gas emissions would be reduced under a Green Shift or Green Tax Shift.
Check out Table 3 of the report, entitled "Emissions Reductions Under GHG charges". The authors of a report have a model with which they can give a rough idea of when and how much emissions will be reduced under a certain level of carbon tax.
Of course all of this is less important than the fact that this report shows that the economic impact of the proposed carbon tax, either by the Liberals or the Greens, would be to reduce GDP by only about one-tenth of one percent in the first five years or so, but then actually increase the GDP 15 years down the road. The Conservatives knew that this information was in the report by MKJA that they did not make public, and yet they persisted in claiming in the first week of the election campaign that the Green Shift would "plunge Canada into a recession" and threaten national unity. If you can't be honest with yourself, how can you be trusted to run somebody else's (the country's) affairs?
Check out Table 3 of the report, entitled "Emissions Reductions Under GHG charges". The authors of a report have a model with which they can give a rough idea of when and how much emissions will be reduced under a certain level of carbon tax.
Of course all of this is less important than the fact that this report shows that the economic impact of the proposed carbon tax, either by the Liberals or the Greens, would be to reduce GDP by only about one-tenth of one percent in the first five years or so, but then actually increase the GDP 15 years down the road. The Conservatives knew that this information was in the report by MKJA that they did not make public, and yet they persisted in claiming in the first week of the election campaign that the Green Shift would "plunge Canada into a recession" and threaten national unity. If you can't be honest with yourself, how can you be trusted to run somebody else's (the country's) affairs?
Tuesday, August 19, 2008
Good news for the Green Shift from the Canadian Taxpayer's Federation
The Canadian Taxpayer's Federation (CTF) released yesterday a "Green Shift impact analysis for Ontario Businesses". They said that new costs of $1.5 billion per year would be paid by 111 power plants and that tax cuts of $811 million would be shared by 365,649 Ontario businesses.
Why is this good news for the Green Shift?
If you look a little more carefully than they did at their own figures, you'll see that about three quarters of the extra tax paid is accounted for by the four coal burning power plants of Ontario Pwer Generation, owned by the people of Ontario.
But the McGuinty government's plan is to phase out these coal plants! A lot of the slack will be taken up by conservation and renewable energy. The Green Shift contains business tax breaks for using green technologies (accelerated depreciation) and a 25% refundable science, research and experimental development credit.
Furthermore, Ontario Power Generation's take of the federal income tax cut would be insignificant (OPG's annual report for 2007 shows income before taxes of $477M and $576M for 2007 and 2006 respectively) compared to all the businesses operating in the province.
So, very roughly but not so much more rough than the Canadian Taxpayer Federation analysis I would say, after the coal plants are shut down (or stop burning coal - there are plans to use biomass to fuel them) the carbon tax paid by the companies than own Ontario power plants would be about $380M while the business tax cuts would still be about $800M (and this economic stimulus does not include the stimulus from developing the green energy sector).
It is interesting to note that while publically owned Ontario Power Generation's plants occupy positions 1,2,4,5,6 on CTF's top greenhouse gas producers list, position 3 is occupied by a plant owned by TransAlta Corp., an Alberta company; position 7 is occupied by Exxon Mobil, the US based corporation; and in position 8, ATCO, is an Alberta company. So some of the private businesses the CTF is shedding tears for aren't even Ontario based businesses.
Why is this good news for the Green Shift?
If you look a little more carefully than they did at their own figures, you'll see that about three quarters of the extra tax paid is accounted for by the four coal burning power plants of Ontario Pwer Generation, owned by the people of Ontario.
But the McGuinty government's plan is to phase out these coal plants! A lot of the slack will be taken up by conservation and renewable energy. The Green Shift contains business tax breaks for using green technologies (accelerated depreciation) and a 25% refundable science, research and experimental development credit.
Furthermore, Ontario Power Generation's take of the federal income tax cut would be insignificant (OPG's annual report for 2007 shows income before taxes of $477M and $576M for 2007 and 2006 respectively) compared to all the businesses operating in the province.
So, very roughly but not so much more rough than the Canadian Taxpayer Federation analysis I would say, after the coal plants are shut down (or stop burning coal - there are plans to use biomass to fuel them) the carbon tax paid by the companies than own Ontario power plants would be about $380M while the business tax cuts would still be about $800M (and this economic stimulus does not include the stimulus from developing the green energy sector).
It is interesting to note that while publically owned Ontario Power Generation's plants occupy positions 1,2,4,5,6 on CTF's top greenhouse gas producers list, position 3 is occupied by a plant owned by TransAlta Corp., an Alberta company; position 7 is occupied by Exxon Mobil, the US based corporation; and in position 8, ATCO, is an Alberta company. So some of the private businesses the CTF is shedding tears for aren't even Ontario based businesses.
Sunday, August 3, 2008
You want to avoid having Climate Cops?
There was an article in this past weekend's National Post entitled, "Children enlisted as 'Climate Cops', U. K. utility ad campaign raises Orwellian fears". I won't comment here on whether or not the reaction to a U.K. utility's climate change and energy conservation campaign has been blown out of proportion. But I will say this to readers of the National Post (especially to those who are principled conservatives): if you don't want the government telling you how to live, if you don't want your friends and neighbours looking over your shoulder and checking your energy consumption habits, if you don't want the problems of climate change and fossil fuel dependence being turned over to the 'Climate Police', then support the implementation of a carbon tax. For conservatives who like less government, the best way to deal with climate change is to tilt the playing field, and eliminate the current, unfair advantage that burning fossil fuels enjoys, that of being able to pollute for free. People will then be 'free to choose' (C'mon C's! Put a smile on Milton Friedman's face. Join your economists who support a carbon tax!) how to respond to this tilt - change driving habits, use less hot water, conserve electricity, heat with wood, insulate, or whatever.
Wednesday, July 16, 2008
Ugh! Here come negative carbon taxes - gas subsidies from the automakers
I see that automobile companies are giving out gas cards worth roughly $1000 (got a flyer from Chrysler Canada in my mailbox recently saying they were giving out cards with $750 to $1,500 in gas depending on the model you buy) in an attempt to sell their big cars. Let's do an order of magnitude calculation and see what level of subsidy that amounts to. Let's assume that this vehicle gets 10 litres/100 km and is driven for 200,000 km over its lifetime. Then, over its life, it would use 20,000 litres of fuel. A gas card worth $1000 means a subsidy of 5 cents per litre of fuel over the life of the vehicle, order of magnitude.
Hmmm... the car companies, who are the best people in the world at selling cars, think that 5 cents per litre, equivalent to a negative carbon tax of about $20/tonne, will allow them to sell their gas guzzlers, that otherwise would rust on their lots. So, couldn't a positive carbon tax of that amount (roughly what's happening in BC) do an equivalent amount of good by causing people to buy fuel-efficient vehicles?
Okay, that was a pretty simplistic and rather rhetorical statement, but the point I want to make is that consumers do respond to price signals, and businesses even more so. It is quite incorrect to claim, as some do, that a carbon tax won't do anything to reduce greenhouse gas emissions.
Hmmm... the car companies, who are the best people in the world at selling cars, think that 5 cents per litre, equivalent to a negative carbon tax of about $20/tonne, will allow them to sell their gas guzzlers, that otherwise would rust on their lots. So, couldn't a positive carbon tax of that amount (roughly what's happening in BC) do an equivalent amount of good by causing people to buy fuel-efficient vehicles?
Okay, that was a pretty simplistic and rather rhetorical statement, but the point I want to make is that consumers do respond to price signals, and businesses even more so. It is quite incorrect to claim, as some do, that a carbon tax won't do anything to reduce greenhouse gas emissions.
Monday, July 14, 2008
How old is the green tax shift idea?
I just noticed this entry on the Carbon Tax Center website:
Older folks (like me) might remember John Anderson as the Republican congressman from Illinois who was an independent candidate for U.S. president in the 1980 election. What a gutsy guy! Gasoline was about $1 a gallon back then so he was calling for a 50% increase in the price of gasoline.
The Green Tax Shift idea has been around for a while.
In August 1979, Rep. John Anderson (IL) called for a 50-cent-per gallon energy conservation tax on motor vehicle fuels to reduce consumption and dependence on foreign oil. He proposed using the revenues from the tax to reduce payroll taxes by 50 percent, increase Social Security benefits, compensate those who were not on a payroll and thus not subject to the payroll tax, exempt farmers and allow tax credits for businesses "unfairly penalized."
Older folks (like me) might remember John Anderson as the Republican congressman from Illinois who was an independent candidate for U.S. president in the 1980 election. What a gutsy guy! Gasoline was about $1 a gallon back then so he was calling for a 50% increase in the price of gasoline.
The Green Tax Shift idea has been around for a while.
Thursday, July 3, 2008
Canadian examples of why, with high oil prices, we still need a carbon tax
A letter to the editor by one Bruce McCallum from Hunt River, PEI, in the Globe and Mail today contains two good examples of how higher oil and gas prices can cause increased emissions and pollution by shifting use to cheaper, dirtier fuels. He writes,
"the district heating plant in Charlottetown recently switched from relatively clean, but increasingly costly light oil, used for peak heating in the winter, to much dirtier, higher-carbon bunker oil, costing roughly half as much."
"Greenhouse owners from across Canada frequently contact me ... frequently mention that they are also considering switching to coal. Coal is cheap and plentiful, but it is the dirtiest, highest-carbon fuel available."
There is no federal tax on the burning of coal presently. It's enjoying a free ride at the expense of cleaner sources of energy.
Mr. McCallum's conclusion is also worth quoting, "Without carbon taxes to level the energy playing field and steer people toward green energy alternatives and efficiency, Canada's GHG emissions will to continue to rise."
"the district heating plant in Charlottetown recently switched from relatively clean, but increasingly costly light oil, used for peak heating in the winter, to much dirtier, higher-carbon bunker oil, costing roughly half as much."
"Greenhouse owners from across Canada frequently contact me ... frequently mention that they are also considering switching to coal. Coal is cheap and plentiful, but it is the dirtiest, highest-carbon fuel available."
There is no federal tax on the burning of coal presently. It's enjoying a free ride at the expense of cleaner sources of energy.
Mr. McCallum's conclusion is also worth quoting, "Without carbon taxes to level the energy playing field and steer people toward green energy alternatives and efficiency, Canada's GHG emissions will to continue to rise."
Wednesday, June 25, 2008
India worried about carbon tariffs from the European Union
This article from yesterday's Economic Times of India entitled, "Exports to Europe may trip on carbon barrier", shows why Canada should be prepared to have carbon taxes. The article begins with:
"Indian goods being exported to the European Union may face higher barriers if the 27-member grouping goes ahead with a proposal to place a carbon tax on goods imported from advanced developing countries."
Of course, all is not cut and dry. The article notes that a bilateral agreement between the EU and India contains a national treatment clause which says that, "bilateral trade partners have to treat goods from partner countries in the same way as goods originating from the home country." The problem, I think, is that, because the EU's cap and trade system awards credits for free, and does not auction them off, it could be argued that goods orginating in the EU do not pay all of the carbon burned in the fossil fuel energy that goes into their manufacture. In addition, some EU countries have their own carbon tax, but some do not.
If Canada had a carbon tax, then exports to the EU would not be faced with a carbon tariff.
The take-home message is that carbon tariffs are coming. You can pay them to a foreign government or you can pay them to your own government (which, in the Green Shift plan, is going to return it to the people in direct tax breaks). Let's get ready.
"Indian goods being exported to the European Union may face higher barriers if the 27-member grouping goes ahead with a proposal to place a carbon tax on goods imported from advanced developing countries."
Of course, all is not cut and dry. The article notes that a bilateral agreement between the EU and India contains a national treatment clause which says that, "bilateral trade partners have to treat goods from partner countries in the same way as goods originating from the home country." The problem, I think, is that, because the EU's cap and trade system awards credits for free, and does not auction them off, it could be argued that goods orginating in the EU do not pay all of the carbon burned in the fossil fuel energy that goes into their manufacture. In addition, some EU countries have their own carbon tax, but some do not.
If Canada had a carbon tax, then exports to the EU would not be faced with a carbon tariff.
The take-home message is that carbon tariffs are coming. You can pay them to a foreign government or you can pay them to your own government (which, in the Green Shift plan, is going to return it to the people in direct tax breaks). Let's get ready.
Thursday, June 19, 2008
The Green Shift: Why it's the right time for this policy
Respected Globe and Mail columnist, Jeffery Simpson, wrote a column earlier this week entitled, "Carbon tax: the right policy, the wrong time" which claimed that, while a revenue-neutral carbon tax is a good policy in the long run, now is a bad time to implement it because the rapid rise in oil prices has, "create[d] genuine hardship for a lot of people". Simpson's article, I think, elucidates what Warren Kinsella said in a blog post which ended with: "I'm not saying no to a carbon tax. I'm saying no to a carbon tax now."
I don't doubt that many Canadians are experiencing some hardship now with the recent rise in oil prices. But that is a reason for providing some tax relief now with tax cuts and refundable tax credits. Look at Dion's Green Shift from another point of view: it's a plan to help Canadians with the higher price of oil by cutting income taxes.
How is this tax relief going to funded? Fortunately, not by borrowing from the future. We're already passing on much of the burden of dealing with environmental degradation to future generations. It will not be funded by cutting social programs. It will not be funded by increased taxes on gasoline because the existing federal excise tax on gasoline is already equivalent to a roughly $40/tonne CO2 tax. But it will be funded in a way that will gently put the brakes on our production of greenhouse gases.
People have been focusing too much on gasoline, and not enough about the fact that much of the Green Shift's tax relief will be funded by users of coal. Higher oil prices might make people think about using less gas, but they have also caused people to burn more coal, a dirtier energy source than oil. This is just one reason why higher oil prices are not a good substitute for a carbon tax.
Warren Kinsella, say yes to tax relief funded by a tax on fossil fuel CO2 emissions now!
I don't doubt that many Canadians are experiencing some hardship now with the recent rise in oil prices. But that is a reason for providing some tax relief now with tax cuts and refundable tax credits. Look at Dion's Green Shift from another point of view: it's a plan to help Canadians with the higher price of oil by cutting income taxes.
How is this tax relief going to funded? Fortunately, not by borrowing from the future. We're already passing on much of the burden of dealing with environmental degradation to future generations. It will not be funded by cutting social programs. It will not be funded by increased taxes on gasoline because the existing federal excise tax on gasoline is already equivalent to a roughly $40/tonne CO2 tax. But it will be funded in a way that will gently put the brakes on our production of greenhouse gases.
People have been focusing too much on gasoline, and not enough about the fact that much of the Green Shift's tax relief will be funded by users of coal. Higher oil prices might make people think about using less gas, but they have also caused people to burn more coal, a dirtier energy source than oil. This is just one reason why higher oil prices are not a good substitute for a carbon tax.
Warren Kinsella, say yes to tax relief funded by a tax on fossil fuel CO2 emissions now!
Wednesday, June 18, 2008
Lifting the ban on offshore oil drilling in the US: another reason why the high price of oil isn't a great way to reduce greenhouse gas emissions
In the news today is a report that George Bush, supported by Republican presidential candidate John McCain, is urging the US congress to the repeal the ban on new off-shore drilling for oil. John McCain previously opposed offshore drilling, but now he and others have been changing their minds and supporting some off-shore drilling.
I'm not going to debate the merits of off-shore drilling here, but it's fair to say that the ban was in place to curtail an environmentally risky way to search for oil.
What I will say is that this is a further illustration of why a high price of oil is no substitute for a carbon tax. High prices for oil mean more money paid to suppliers of oil, and more incentive to produce oil in environmentally or socially risky ways. In the US that means more incentives to drill in the environmentally sensitive Arctic National Wildlife Refuge, or off-shore. Here in Canada we are well aware of the environmental and social stresses caused by the boom in the oil-sands industry.
A carbon tax is different from a high oil price because with a tax, although the buyer pays more money, the seller receives less money. A tax would not increase the incentive to produce more and more oil and to thereby take more social and environmental risks.
Finally, a carbon tax produces revenues for our government, and not for unfriendly foreign governments. None of that tax money would go to the Taliban or to Al-Qaeda. I can't say the same for all the money that North Americans spend on crude oil.
I'm not going to debate the merits of off-shore drilling here, but it's fair to say that the ban was in place to curtail an environmentally risky way to search for oil.
What I will say is that this is a further illustration of why a high price of oil is no substitute for a carbon tax. High prices for oil mean more money paid to suppliers of oil, and more incentive to produce oil in environmentally or socially risky ways. In the US that means more incentives to drill in the environmentally sensitive Arctic National Wildlife Refuge, or off-shore. Here in Canada we are well aware of the environmental and social stresses caused by the boom in the oil-sands industry.
A carbon tax is different from a high oil price because with a tax, although the buyer pays more money, the seller receives less money. A tax would not increase the incentive to produce more and more oil and to thereby take more social and environmental risks.
Finally, a carbon tax produces revenues for our government, and not for unfriendly foreign governments. None of that tax money would go to the Taliban or to Al-Qaeda. I can't say the same for all the money that North Americans spend on crude oil.
Wednesday, June 11, 2008
Green/Carbon tax shifts or Cap and Trade systems are not Tyrannical!
Neil Reynolds wrote in today's Globe and Mail Report on Business (superheading "environment") about the costs of greenhouse gas mitigation ("Obama's Climate Change Solution: Tyranny"). Basically he was presenting and spinning some work put out by the George C. Marshall Institute which he claims is a "science policy think tank". Reynolds is where most of the "climate change deniers" have retreated to right now: saying that it's going to be too expensive to do much about greenhouse gas emissions. Only he's putting a new little twist, saying that it's going to be too costly in terms of freedom and democracy for governments to do anything but let technology and the market try to solve the problem.
Whoa!!
1) The well-known climate-change denier and tobacco and oil industry lobbyist, Frederick Seitz, helped found the George C. Marshall Institute. The Marshall Institute's work was, apparently, even too much for Exxon, who cut their funding last month, and explained that "In 2008 we will discontinue contributions to several public policy research groups whose position on climate change could divert attention from the important discussion on how the world will secure the energy required for economic growth in an environmentally responsible manner."
2) Reynold's doesn't seem to understand that technology plus a market economy that had a crucial price - the price of pollution (zero) - wrong, got us to our present dire situation. Two ways to try to solve the problem are the carbon tax, which puts a proper price on pollution and lets the market take over, and a cap and trade system, which is also a market solution to a pollution problem. These are the farthest you could get from tyrannical solutions to the greenhouse gas problem.
Tyranny, in my view, is leaving the price of pollution at zero. The subjects of our tyranny are those that will live, could have lived, or could have lived more productively in the future.
Whoa!!
1) The well-known climate-change denier and tobacco and oil industry lobbyist, Frederick Seitz, helped found the George C. Marshall Institute. The Marshall Institute's work was, apparently, even too much for Exxon, who cut their funding last month, and explained that "In 2008 we will discontinue contributions to several public policy research groups whose position on climate change could divert attention from the important discussion on how the world will secure the energy required for economic growth in an environmentally responsible manner."
2) Reynold's doesn't seem to understand that technology plus a market economy that had a crucial price - the price of pollution (zero) - wrong, got us to our present dire situation. Two ways to try to solve the problem are the carbon tax, which puts a proper price on pollution and lets the market take over, and a cap and trade system, which is also a market solution to a pollution problem. These are the farthest you could get from tyrannical solutions to the greenhouse gas problem.
Tyranny, in my view, is leaving the price of pollution at zero. The subjects of our tyranny are those that will live, could have lived, or could have lived more productively in the future.
Sunday, June 1, 2008
Putting a price on carbon is not central planning
Terence Corcoran, editor of the Financial post has written an op-ed (May 31, 2008) entitled "The carbon experiment" with this concluding paragraph which I quote in its entirety:
So carbon tax programs are an experiment — although one that has already been tried. It imposes central planning on an economy based on carbon emissions rather than economic growth and welfare. It didn’t work for the economy, it won’t work for carbon.
I'd like to address that 'central planning' claim in the this post, and deal with the 'experiment' claim in a later post.
I find it ironic that the specter of central planning should be invoked to deter us from adopting a carbon tax. Centrally planned economies (remember communism?) tended to have official prices that did not reflect reality. The resulting inefficiency, waste, and suppression of freedom were deficiencies of that system of government. Most of the world has learned now that prices in a market are a useful tool for gathering and conveying information, and that free markets work better when prices reflect reality.
Now what does all of this have to do with carbon taxes? The point is that adding a tax to the cost of fossil fuels better reflects their real cost - a cost that includes the pollution from burning them. A higher price for coal tells everybody that it's worth spending a little more to develop renewable energy. A higher price for jet fuel tells a business to cut some of its least important airplane trips. The market prices do the work instead of a central authority deciding for people.
Now, I'm pretty sure that Terence Corcoran is not a left-winger, and so I'd suggest that he figure out how to counter Greg Mankiw, an economist who worked in George W. Bush's administration, who is in favour of a carbon tax, and who wrote this Wall Street Journal article that appeared on Oct. 20, 2006 entitled, "Raise the Gas Tax".
So carbon tax programs are an experiment — although one that has already been tried. It imposes central planning on an economy based on carbon emissions rather than economic growth and welfare. It didn’t work for the economy, it won’t work for carbon.
I'd like to address that 'central planning' claim in the this post, and deal with the 'experiment' claim in a later post.
I find it ironic that the specter of central planning should be invoked to deter us from adopting a carbon tax. Centrally planned economies (remember communism?) tended to have official prices that did not reflect reality. The resulting inefficiency, waste, and suppression of freedom were deficiencies of that system of government. Most of the world has learned now that prices in a market are a useful tool for gathering and conveying information, and that free markets work better when prices reflect reality.
Now what does all of this have to do with carbon taxes? The point is that adding a tax to the cost of fossil fuels better reflects their real cost - a cost that includes the pollution from burning them. A higher price for coal tells everybody that it's worth spending a little more to develop renewable energy. A higher price for jet fuel tells a business to cut some of its least important airplane trips. The market prices do the work instead of a central authority deciding for people.
Now, I'm pretty sure that Terence Corcoran is not a left-winger, and so I'd suggest that he figure out how to counter Greg Mankiw, an economist who worked in George W. Bush's administration, who is in favour of a carbon tax, and who wrote this Wall Street Journal article that appeared on Oct. 20, 2006 entitled, "Raise the Gas Tax".
Wednesday, May 28, 2008
NDP's cap and trade plan: details?
I tried to find out details about the NDP's cap and trade plan from www.ndp.ca today, but all that site did was refer to Bill C-377. I read though Bill C-377 and all it seems to require is setting emissions targets, including long, medium and short term (5 year) targets (good in my opinion), and gives the government the authority to regulate emissions. But that's all. What about the details? Am I missing a document that somebody can point me to?
www.ndp.ca says that the "projected" price for credits when they are auctioned off will be more than $35/tonne. I'd be interested in how they get that figure. How certain can you be of it? If you are planning to spend the auction proceeds on new government 'green' programs, what's your budget?
Will the different provinces be upset and want to interfere (a very big political headache) because the auction process will be sending hundreds of millions of dollars from Alberta (where almost all electricity is generated from coal and other fossil fuels plus they have the oil sands projects) to, say, Quebec (where almost all electricity is generated from Hydro)?
www.ndp.ca says that the "projected" price for credits when they are auctioned off will be more than $35/tonne. I'd be interested in how they get that figure. How certain can you be of it? If you are planning to spend the auction proceeds on new government 'green' programs, what's your budget?
Will the different provinces be upset and want to interfere (a very big political headache) because the auction process will be sending hundreds of millions of dollars from Alberta (where almost all electricity is generated from coal and other fossil fuels plus they have the oil sands projects) to, say, Quebec (where almost all electricity is generated from Hydro)?
Thursday, June 7, 2007
The Quebec "Carbon" Tax
Letter to the Editor, Montreal Gazette,
The government of Quebec’s decision (Quebec to bring in Canada’s first carbon tax on fuel, Kevin Dougherty, Montreal Gazette, June 7, 2007) to tax carbon at the producer level (e.g. 0.8 cents/l for gasoline) starting October 1, and to ask the energy companies to absorb the tax, is a misguided policy that will actually hurt
I think it’s agreed that, in order to solve the global warming problem, one way or another there must be a price put on carbon. A carbon tax is one way to do that but a stumbling block is that there is substantial political opposition to imposing a carbon tax. The new “carbon” tax, if not passed on to consumers, is really a tax on energy producers’ profit margins, not carbon. Giving people the wrong idea about what a carbon tax is will foster political opposition to future efforts to truly put a price on carbon.
What about the fact that the expected $200 million a year in revenue from this tax was to finance greenhouse gas emissions reductions projects? That’s an irrelevant question because the government is about to cut income taxes. So if those green projects are worthwhile, there is money to fund them.
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