The NDP is making it hard for me to be sympathetic

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.

A new year's chorus calling for a revenue neutral carbon tax

I hear a chorus. Is something up? Some sort of conspiracy or liberal-conservative-economist-environmentalist coalition?

Or just an effort to put a good idea in front of Barack Obama?

Dec. 26, New York Times lead editorial: A call for a revenue neutral gas tax
Dec. 27, New York Times Op-Ed: Republicans Bob Inglis and (economist) Arthur Laffer call for a revenue neutral carbon tax, writing, "We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs)."
Dec. 27th Thomas Friedman calls on Obama to implement a gas tax: A gasoline tax “is not just win-win; it’s win, win, win, win, win,” says the Johns Hopkins author and foreign policy specialist Michael Mandelbaum. “A gasoline tax would do more for American prosperity and strength than any other measure Obama could propose.”
Dec. 29, 2008: NASA's James Hansen calls on Obama to implement a revenue neutral carbon tax at Guardian.co.uk
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.
Jan 1, 2009: Whoa, so does the Boston Globe in its New Year's wishes.
Jan 5, 2009: neo-conservative journal, The Weekly Standard cover story by Charles Krauthammer calling for a revenue-neutral gas tax.

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.

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:

1. 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?
2. What new regulatory and operational body are you going to construct to oversee the mandatory emissions market?
   
3. 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.)
   
4. 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?
   
5. 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?

Mr. Layton is picking a fight between a cap-and-trade proposal and a carbon tax proposal that is not going to help Canada deal with climate change. Splitting the non-Conservative Party vote is bad enough, let's not have an unproductive fight about climate change policy that will distract Canadian voters from the critical point that a Conservative Party government will not do anything substantial to fight climate change.

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?

Conservative campaign workers are easier to train

Yesterday I got my first taste, I think, of the Conservative Party ground campaign for the 2008 federal election. I had on my Tournant Vert button and was walking around downtown Kingston, Ontario. A fellow out of the blue turned to me and muttered some anti-environmentalist stuff ending with "... green shaft" before walking away.
Then it occured to me that the C's have an easy time training their volunteers. I can imagine it now. One guy with a bullhorn shouting, "Repeat after me, 'greeen shaaaft'".

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.

BigCityLib Strikes Back: High Gas Prices As A Natural Carbon Tax, Part Whatever

Big City Lib asks the question (I'm paraphrasing), "Does the recent drop in gasoline prices (over the last 3 weeks) make the Green Shift an easier sell?" in this blog post:
BigCityLib Strikes Back: High Gas Prices As A Natural Carbon Tax, Part Whatever

I think the answer might be very slightly yes. There is a concept from behavioural finance called "anchoring". When gas prices went up over the last few years, people felt that prices were too high because they were used to lower prices in the past, and did not take into consideration how the supply and demand for oil has changed in the past decade.
Now that prices have fallen somewhat, people may feel that gasoline is relatively cheap. Gas prices may not make the news headlines until a new high is reached. A tax on non-gasoline fossil fuels may be more palatable (in combination with the Green Shift's tax cuts)
Of course gas prices are not the full story, especially as the Green Shift proposal does not increase the federal tax on gasoline, consumer electricity and natural gas prices are regulated (and so don't follow global energy prices in the short term), and there hasn't been a winter heating season since the spike in oil prices in the spring and early summer.
Nevertheless, the economic focus of the average consumer might now be on whether or not there is a recession coming, and not so much the price of energy. For that reason the tax cuts and credits of the Green Shift might be appealing to some voters. This is just a suspicion of mine, not a claim of fact.

How old is the green tax shift idea?

I just noticed this entry on the Carbon Tax Center website:

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.

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.

Isn't "Green Shift" a generic term?

Apparently there is (or isn't?) some controversy over a possible trademark infringement involving the name "Green Shift". There is indeed a company called "Green Shift". In fact I have a box of their stuff in my basement (sugarcane fibre plates, cornstarch cups, potato starch utensils, and napkins) that we used at the Kingston Liberal Party barbeques last summer.

I have to say that I viewed Green Shift as a rather generic term so I'm surprised that this controversy over a trademark infringement has come up. I did some Googling and besides my favourite vendor of barbeque supplies, I came up with:

1) Green Shift is a project of ecoPerth with support from Transport Canada’s MOST program. Green Shift sets out to tackle household vehicle use in small town and rural situations.
2) GreenShift (greenshift.com) develops and commercializes technologies that facilitate the efficient use of natural resources. We do so today by developing and integrating new clean technologies into existing biofuel production facilities, by selling equipment based on our technologies, and by using our technologies to directly produce and sell biomass-derived oils and fuels.
3) The Green Shift Project: A proposal from the Silicon Valley Institute for Global Sustainability

4)Green Shift: Changing Attitudes in Architecture to the Natural World (Paperback)
by John Farmer (Author), Kenneth Richardson (Editor) "This book is an account of how buildings from the eighteenth century to the present time have reflected the momentous changes

5)Reducing carbon dioxide emissions from the production, operation and disposal of computers is to be the aim of a new government taskforce. The public-private "Green Shift" taskforce will be led by Manchester City Council.

6) Michigan students demand green shift from automakers

Published by ninarizzo, January 13th, 2008 Clean Cars , Climate Challenge , Events , Oil , Transportation , global warming

7) Cranfield expertise could drive forward green shift

Written by Sam Fountain

Wednesday, 05 March 2008

Expertise at Cranfield University could be driving forward the world’s move toward green cars, providing high-end testing capabilities which could attract industry investment to the region.

8) Green Shift: Economics of Going "Green"
April 19, 2005
Produced by Robbie Harris

Building environmentally friendly homes and buildings is the buzz among developers these days. This report investigates the meaning of building green, who is doing it, and whether it can be cost effective.


Well, you get the idea. There are lots more instances of the term "green shift" being used in various places so it seems like a generic term to me. I hope they don't spend many resources fighting over it.

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!