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]

Stephane Dion's Private Member's Motion

I had a chance to drop in on Stéphane Dion last week in Ottawa after giving an oral presentation to the legislative committee that's working on the Ontario Green Energy Act.
Stéphane is forging ahead and introducing a private member's motion on May 6 as follows:

That in the opinion of the House, the government should increase its support of Canada's renewable energy sector, allow our country to participate in the worldwide effort to develop renewable energy sources and enlist Canada as a full member of the International Renewable Energy Association (IRENA).

The last Conservative budget was very disappointing in this respect because it did not increase the total funding pot for the federal EcoEnergy for Renewable Power Program. The current funding pot is all spoken for, so that no new renewable energy developments will be stimulated by this program. It's a lost opportunity that, by contrast, the new U.S. administration is taking up enthusiastically.

Bravo to Stéphane Dion for continuing to push for action on energy security, sustainable economic development, and global heating.

U.S. Neo-Con calls for revenue-neutral gasoline tax

I can't resist bringing attention to this article appearing next week in the neo-conservative journal, "The Weekly Standard". Columnist Charles Krauthammer calls for a "net-zero gas tax", in a rather detailed piece subtitled, "a once-in-a-generation chance". It's ironic, but utterly unsurprising to me, how neo-conservatives (albeit thinking neo-cons) are favouring a policy so close to what Stephen Harper and his supporters tried so hard to trash (Stéphane Dion's Green Shift) this past summer in Canada and during the Canadian election campaign.

When conservatives, liberals, economists, and environmentalists are all pushing for the same thing, you gotta believe there's some validity to it.

Update Dec. 29, 2008: James Hansen calls on Obama to implement a revenue neutral carbon tax at Guardian.co.uk
Update Jan 1, 2009: Financial Times of London uses its first issue of the new year to call on Obama to implement a revenue-neutral carbon tax.
Update Jan 1, 2009: Whoa, so does the Boston Globe in its New Year's wishes.
And even this from an AP story today:

Charles Whittington, chairman of the American Trucking Associations, which supports a fuel tax increase as long as the money goes to highway projects, said Congress may decide to disguise a fuel tax hike as a surcharge to combat climate change.

Transportation is responsible for about a third of all U.S. carbon emissions created by burning fossil fuels. Traffic congestion wastes an estimated 2.9 billion gallons of fuel a year. Less congestion would reduce greenhouse gases and dependence on foreign oil.

"Instead of calling it a gas tax, call it a carbon tax," Whittington said. "As long as we label it as something else we may have the momentum and acceptance to move forward."

Wow - this coming from truckers, the same people who, in Canada, opposed the Green Shift, even with some special provisions for the industry.

Ten weeks later...

Ten weeks ago we read this during the election campaign:

The Conservative official, who refused to speak on the record during a conference call with journalists, accused Liberal leader Stephane Dion of "fear-mongering around the economy for his political gain."

The opposition leaders are "cheering for a recession," the Conservative official charged.

and this

Conservative Leader Stephen Harper accused his Liberal opponent of cheering for a recession as he notched up his appeal for a majority government to run the economy his way.

I've already blogged about how listening to the signals the financial markets are giving is not fear-mongering. Stéphane Dion was willing to listen. Now, long after the signals started flashing red, we have this admission

Stephen Harper has delivered his bleakest forecast yet for the Canadian economy, warning yesterday the future is increasingly hard to read and conceding the possibility of a depression.

"The truth is, I've never seen such uncertainty in terms of looking forward to the future," the Prime Minister told CTV News in Halifax.

"I'm very worried about the Canadian economy."

Get ready for a sweetheart Conservative budget next month!

A smart comment about Stéphane Dion in the Globe and Mail

Here is a smart comment by one "d s from Canada" in the Globe and Mail.

Let me also add that Stéphane Dion is the go to guy who can make sure some good policies are worked out and ready to go when Canada's new coalition government begins.

Who should lead the coalition?

I don't pretend to know what's going on. I just read the news, cautiously. So when I read these lines from the CBC from a report by Keith Boag on the details of the coalition agreement:

"The real obstacle to this deal going through is still within the Liberal party," Boag said, adding the deal is being negotiated by Dion, who believes he has the right to be prime minister.

But it's unclear whether the party wants him to continue, and the leadership candidates were meeting Sunday evening to discuss the matter, Boag said.

I tend to assume that the reporter is just smelling around for some conflict to report on, as they are wont to do.

But, just in case, I wish to declare that I, as one individual among the many who make up the Liberal party, support Stéphane Dion as our interim leader and the leader of a possible coalition government. The Liberal party's membership should be the ones who choose their next leader.

Fighting the Conservatives Together

There is talk today about opposition parties perhaps being willing to form a coalition government. This is in response to the Conservatives' lack of definite policies to address the global economic crisis and use of the crisis as a screen to seek political advantage. They want to save $30 million by cutting public funding for political parties - a move that would, in the short term, greatly favour the Conservative party, but do nothing to address the economy. The government may fall on a confidence vote in the next few days and the possibility of a coalition amongst the current opposition parties would be a very strong bargaining chip.

Today I received an email from Steven MacKinnon, Michael Ignatieff's national campaign director. The email draws attention to the Conservatives' move to cut public funding and then asks for donations to Mr. Ignatieff's leadership campaign because, "Michael Ignatieff can only succeed with your support."

That rubs me the wrong way. It rubs me the wrong way because it's taking a direct and imminent threat to the Liberal Party and the Canadian political system, and using it to appeal for funds to a particular leadership candidate's campaign. Even though we have a Liberal Party leadership race under way, in the House of Commons we, the Liberal Party, should still be fighting the Conservatives together. If we do not fight them as one team, we won't win. If the NDP, Bloc Quebcois and the Liberal Party can get together to form a coalition, surely the Liberal caucus could work tous ensemble.

Fight the Conservatives as a united party. Support Stéphane Dion in the House. Fight the leadership race elsewhere.

Selling on the lows, part 2

This is a continuation of my last post on Conservative finance minister Jim Flaherty's plan to sell government assets now, after a historic crash in asset prices, to balance the federal government budget during the coming global recession.

It looks like Prime Minister Stephen Harper has had to backtrack, according to this report from The Canadian Press on ctv.ca:

Prime Minister Stephen Harper insisted Friday there will be no fire sale after his finance minister, Jim Flaherty, said the government is considering an asset sale to raise cash and try and stave off a budget deficit. "The government of Canada will never engage in a fire sale of assets," Harper said prior to heading off to Washington for an emergency summit of global leaders on the economy.

But I think wasn't hard for the CP reporter to find people with credentials to agree that the Conservatives have a bad idea:

"It's hard to believe this is an ideal environment to sell any asset," said Bank of Montreal economist Douglas Porter. "And it raises the bigger issue of just how hard should the federal government press to keep its books balanced. My view is if it comes down to selling the family silver at a discount rate just to make the books balance, that doesn't make sense."

Scott Brison, the new opposition finance critic just appointed by Stephane Dion, is a pretty sensible and knowledgeable fellow:

Brison said Canadians should be especially concerned because Flaherty was finance minister in Ontario when the provincial Conservative government of former premier Mike Harris sold the electronic toll Highway 407 north of Toronto for $3.1 billion in 1999. Three years later, a private investment bank valued the property at four times the sale price. "After three years of bad tax policy, and big spending, Flaherty has put the country in deficit. Now he wants to sell the house to pay for the groceries," said Brison.

There are still groups with tunnel vision, though. The CP reporter was able to count on the Canadian Taxpayer's Federation (CTF) for this quote:

Adam Taylor of the Canadian Taxpayers Federation said the government should do whatever it needs to -- including selling assets -- to balance the budget. "The government owns things that have no strategic value to Canadians and they could be sold," he said. "Property values haven't completely bottomed out and when the government owns thousands upon thousands of acres, there's a legitimate argument for selling a lot of it."

If Mr. Taylor really meant what he said (do whatever it needs to...to balance the budget), he'd advise the government to also consider the possibility of raising taxes (or rescinding promised tax cuts). But that's the last thing the CTF would ever say, so they can't be that serious about balancing the budget, especially since they've been applauding the various tax cuts that helped get us to our current fiscal position.
There are, moreover, a lot of economists who are questioning the rationale for balancing the budget right now (and I agree with them). In a severe recession, balancing the budget may come only at the price of a lot of pain for economically vulnerable Canadians, and reduce the number of options the government has to manage the economy and plan for its eventual recovery.
I see that Mr. Taylor is a market-timer who thinks he knows that, after a sale sometime in 2009 or 2010, property prices will continue to fall. If that's so obvious, I'd challenge the CTF to open a trading account, put its money where its mouth is, and sell some S&P Case-Schiller home price index futures on Jan 1, 2009. Hey guys, bet the house because maybe you'll be right!
Finally, the whole idea of balancing the budget by selling assets is based on their being valued on the government books at old, below-market prices. Any revenue you get from their sale is purely accounting revenue - not real added value for Canadian taxpayers.

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.

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.

Listening to the markets is not fear-mongering

The Conservatives have been accusing Stephane Dion of "fear-mongering around the economy for his own gain". I used to work in the financial markets and one of the fundamental things you have to know there is that market prices contain information. Nobody has to "fear-monger". Prices in the stock and bond markets make it clear that there is a serious risk of global recession.

Almost everybody is used to following the stock markets, but almost nobody follows something called the interbank offered rate (e.g. LIBOR, the rate set in London). This is the rate that banks use as a benchmark to charge each other for loans. LIBOR is also a reference rate for businesses and consumers borrowing money and is a critical number in the international money markets. What is unprecedented is that difference between ('risky') LIBOR and the interest rate on ('riskless') US treasury securities has exploded and halted a lot of financing of business activity around the world. The stock market drop is nothing compared to what is going on in LIBOR. Do not think that this stock market decline is the same as any other you've seen in your lifetime.

Canada is not the master of its own fate as to the question of whether or not there is a recession. All of that depends mostly on the U.S. economy. Our choice on October 14th is whether or not to acknowledge the possibility of a serious recession, how ready we want to be for it and for protecting our most vulnerable fellow Canadians.

Conservatives have been saying that there is no serious financial crisis amongst Canadian banks. That may be true. But even if the world's financial problems do not impact the Canadian financial system, the slowdown in the world's (especially the U.S.'s) economies will impact (or already have impacted) Canada's economy - and that means job losses. We should be getting ready to take care of each other.

Doing nothing is the risky option. Not admitting the real possibility of a painful recession makes it worse. The choice between a Conservative government and a Liberal government is even clearer.

If Chantal Hebert says so too...

I thought Stephane did well in tonight's French language debates, but I can't trust my own objectivity. In the discussion segment during the subsequent CBC/Radio-Canada news broadcast, Chantal Hebert also said that Dion did well, so, it must be true :-)

Cross Country Checkup went well

Stephane Dion's appearance on Cross Country Checkup went very well I thought. It had an intimate 'fire-side' feel, and the discussion didn't seem rushed. The questions were pointed but Dion could take the time to explain his policies and show how much he cares about Canadians and their future. I can't explain it, but the radio show seemed to go much better than any television interview I've seen.

New Home Retrofit Program Proposal

I'd like to applaud the announcement today of a home retrofit and green mortgages program by Stephane Dion.

As the director of a sustainable energy association, I hear over and over again that a major hurdle to doing home energy retrofits is paying an upfront cost and waiting for the payback in the future, even if the net cost of the retrofit is expected to be negative. Now this is not necessarily irrational because any construction project has risks associated with it. The risk-adjusted cost of a retrofit project may not be negative.

Grants and green mortgages will help very much in making projects move forward, unlocking value in our economy (that's what I mean by costs of certain building energy retrofit projects being negative), helping to develop businesses, and creating jobs.

One thing I would caution about this proposal is that I think we also need to have more trained and experienced tradespeople to do these energy retrofits and installations. Anecdotally, (and people who know the labour markets will be able to make this statement more solid), there is a serious shortage out there of good tradespeople, and it might not be a bad idea to put some resources into nurturing more of them.

Why Dion's election campaign carbon offset makes Canada richer, fairer, and greener

There has been some criticism coming from Conservatives about the Liberal Party's purchasing of credits to offset the greenhouse gas emissions of Stephane Dion's election travel. Basically the criticism is that the purpose of this purchase is simply to appear environmentally friendly, while the jet that the Liberal Party procured for this election is older and less efficient than the jets obtained by the NDP and the Conservatives (it's the only jet the Liberals could get).

The criticism is invalid and here are the reasons:

First of all, Dion committed the cash-strapped Liberal Party to offsetting his campaign travel as far back as February-March 2007. The point is that this commitment was made before decisions were made about campaign travel. Therefore, it gave an extra incentive for the cost-conscious Liberal Party to make his campaign travel as efficient as possible.

Second, the projects that generate voluntary offsets should satisfy a property called "additionality". This means that the money from the sale of offsets (or the anticipated sale of offsets during project planning) should make a difference in whether the project goes ahead or not. The offset vendor used by the Liberal Party, Carbonzero, says that all of its projects are additional. (By the way if you are interested in their voluntary offset methodology document, which contains a very good definition of additionality, look here.)

So the money from the Liberal Party's offsets really made greenhouse gas emissions go down somewhere else. That is how voluntary offsets are supposed to work. According to a Carbon Zero news release, "The offsets purchased by the Liberal Party of Canada will be directed by Carbonzero to a Quebec project which replaces inefficient gas boilers in heating systems with new units employing heating controls and new energy efficient piping systems...the project includes new solar heating collectors and retrofits the buildings to allow heat recovery from domestic wastewater, and switches heat generation systems from natural gas to electricity."
I'm also told that the offset project involves retrofitting non-profit housing - these are people who would have a hard time putting money upfront to make energy retrofits. Money spent on retrofits would otherwise be taken out of money spent on providing non-profit housing. So we can see why this project satisfies "additionality".

Look at what is happening with the money from Stephane Dion's campaign travel offsets:

• Stephane Dion is reducing Canada's greenhouse gas emissions and fossil fuel consumption. Good for the environment, making Canada greener.
  
• Stephane Dion is making it cheaper for low-income people to live in non-profit housing. Good for social justice, making Canada fairer.
• Stephane Dion is supporting businesses and workers that do energy retrofits, and supporting Canadian manufacturers that build green technology (e.g. see Enerworks, Renewability Energy, ECO GFX, Quantum Renewable, Ecoalternative Energy) Good for the economy, making Canada richer.

Making Canada greener, fairer, and richer: these are the promises that Stephane Dion has been making for a long time, and I think that he has kept his promise in deciding to purchase voluntary greenhouse gas offsets for his campaign travel.

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!

Sharing the duty of securing Kandahar

Letter to the Editor, Kingston Whig-Standard

Michael Den Tandt (Growing opposition to Afghan war gives Harper a weapon, The Kingston Whig-Standard, July 6, 2007) criticizes Stéphane Dion’s calling for Canada to rotate out of our combat role in Kandahar in February 2009, and to arrange now for other NATO forces to move into that role. It is clear that Canadian soldiers are working an especially dangerous part of Afghanistan and it is standard practice to rotate units in and out of such a front-line area. But Mr. Den Tandt seems to think that such a rotation would be a, “moral victory for [the insurgents], a public relations bonanza, and ample reason for them to continue with the tactics that are serving them so well.” On the contrary, preparing an orderly rotation of duties between NATO allies and sharing the burden of securing Kandahar could help protect our troops by showing the Taliban insurgents that targeting Canadian soldiers won’t work. They would instead be dealing with the formidable staying power of the entire NATO alliance.

Letter to the Editor concerning Stephane Dion

Re: “Dion’s the leader, but who’s in charge?”, by Jane Taber, The Globe and Mail, Monday April 23, 2007

I’d like to offer a view of Stéphane Dion’s management skills from a different vantage point. I once had the privilege of being welcomed into a policy session with Mr. Dion and his advisors. The meeting reminded me very much of a senior professor in charge of his research group, or a business executive running a boardroom meeting. Setting the agenda, assigning tasks, reminding people of past experiences, pushing people to make improvements and maintain high standards, reconciling disagreements, and fixing deadlines: these are what I saw Mr. Dion do. I believe that Stéphane Dion is in charge when it comes to the most important thing for Canadians: what a Dion government would do for Canada.