Monday, January 07, 2008

The Dreaded Carbon Tax

OTTAWA — The Canadian economy can transform itself into a clean-running green machine by 2050, slashing its emissions by more than half with very little economic pain, say the authors of a new report from the National Round Table on the Environment.

The federally-funded advisory panel is urging government leaders to quickly put a "strong" price on industrial emissions of greenhouse gases and air pollutants and says the sooner the better for both the economy and the environment.

The report urges Canadian politicians to focus the debate on either a carbon tax, a cap and trade system, or both.

I suspect that both the environmentalist, Stephane Dion, and the economist, Stephen Harper, already know that a carbon tax is the best way to cut emissions. They also probably already know that a carbon tax would meet with a lot of backlash.

But, you have to wonder – would this be unpopular anywhere outside of Alberta? And if Albertans are determined to vote for the same party for all eternity, do either Dion or Harper have a real incentive to listen to Albertans on this one?



  • When they say carbon tax, do they mean greenhouse gas tax? Why would the government tax carbon and not methane? Or is everyone pretending that livestock herds in Quebec and Ontario aren't part of the problem? And what about methane from the forestry industry?
    Instead of a carbon tax to try to reduce energy use, why not have provincial hydro companies charge market rate for power?

    By Blogger nuna d. above, at 5:40 PM  

  • They should mean greenhouse gas tax, but really carbon is the only major threat. NOt the methane that you speak of that when in the atmosphere breaks down.

    Carbon on the other hand has a much longer life and is the only gas that we have a complete and direct control over.

    In NS the major producer of Carbon in the atmosphere is the power company, if they were forced to clean up NS would be a poster child

    By Anonymous jeff, at 5:49 PM  

  • It would be quite a masterstroke for Harper to do this.

    As for charging 'market prices' for electricity, the provinces that do not charge market rates for electricity get very little of their power from coal.

    Alberta which does charge market rates continues to burn coal.

    Energy efficiency does not equal CO2 reductions in places where electricity that produces no CO2 provides the energy.

    By Blogger Kyle G. Olsen, at 5:51 PM  

  • Are you going to pay for the coal-fired power plants in China which produce the goods you consume?

    Or is this just another stupid idea to export all the manufacturing jobs out of Canada?

    Oh, that's right. The NDP will ask for more billion-dollar subsidies for the Auto industry.

    jeff: why do you claim that methane isn't a major threat, then provide a link that says that it is a major threat?

    By Blogger paul.obeda@, at 6:16 PM  

  • The United Nations, in a report called "Livestocks Long Shadow" identified livestock herds as the number one cause of greenhouse gases on the planet. Methane is more harmful than carbon. So how will Quebec dairy cows be taxed? And will forestry companies reeling from the high dollar want to pay a new tax?

    By Blogger nuna d. above, at 6:42 PM  

  • Alberta already has a carbon tax. Large final emitters are going to have to pay $15/tonne CO2e into a technology fund unless they offset their emissions somehow.

    By Anonymous Anonymous, at 6:48 PM  

  • Good question, CG,

    But I'm sure this could be sold if taxes were cut elsewhere. There could even be a left/right swap, you would think, to make everything revenue neutral

    By Blogger bigcitylib, at 7:47 PM  

  • nuna d., methane is CH4, i.e. a carbon atom bonded to four hydrogen atoms.

    Maybe I'm being naive, but I have always interpreted "carbon tax" and "carbon offsetting" to refer to any carbon-bearing gas, not just CO2.

    By Blogger saphorr, at 8:42 PM  

  • Yeah, it would obviously have to be offset with an tax cut or incentive program. That's kind of what Dion is getting at with his incredibly complex proposed system.

    And any sort of carbon market could be set up so that it's cost neutral.

    By Blogger calgarygrit, at 9:17 PM  

  • But, you have to wonder – would this be unpopular anywhere outside of Alberta?

    Once prices rise on energy, goods produced with the use of energy (i.e. everything), and services that make use of energy (i.e. everything), the carbon tax would likely be unpopular everywhere. We voters like having a free lunch: cut emissions but at no personal cost. Sadly, life isn't going to be that easy.

    And if Albertans are determined to vote for the same party for all eternity, do either Dion or Harper have a real incentive to listen to Albertans on this one?

    You should talk to Kim Campbell and Brian Mulroney about how Alberta would never abandon their party. If Diefenbaker was still around, you could ask him too. Actually, a guy named Stephen Harper tried in the early '90s to help snatch Alberta from its party as well. Maybe he could tell you how well that effort turned out.

    - Mustafa Hirji

    By Blogger Mustafa Hirji, at 9:46 PM  

  • On what basis do you claim that Alberta would be more opposed to a carbon tax than other provinces? (I actually thought the opposite was true).

    And if we put a "strong" price on industrial emissions, how would that result in "very little" economic pain?

    "Strong" price increases lead to "strong" economic pain, and it takes "very little" price increases to get "very little" economic pain.

    To be honest, I can't see us slashing anything by 2050. We allegedly had a major pro-environment government for 13 years and saw one of the largest increases in CO2 emissions in the western world (including the US). How are we going to do it with an allegedly apathy-environment government?

    By Blogger Robert Vollman, at 9:49 PM  

  • mustafa; Well, eventually yes, consumption prices would rise but if the carbon tax was offset with some other tax cut (which it would almost have to be to make it politically viable) then it shouldn't create a net rise in prices.

    As for Reform II, I don't think it's really a worry of Harper's in the short term. And it really shouldn't be either.

    RV; I thought I'd seen some polls that showed Albertans most against a carbon tax...that was back when Iggy brought it up during LPC leadership so it is possible that it may have changed since then.

    By Blogger calgarygrit, at 10:24 PM  

  • CG, I am not sure why Albertans get the blame as the biggest lovers of C02 emission - a carbon tax would probably hit Ontario the hardest as well. The Ontario economy is driven by the auto industry - not only is that a high-emission industry (not to mention mining, smelting and other Ontario staples), but it is one that is sensitive to the price of gas (especially since most Ontario plants produce less fuel efficient American cars).

    I also can't see the Newfies or Saskatchewan loving this one either.

    By Blogger hosertohoosier, at 10:56 PM  

  • urging government leaders to quickly put a "strong" price on industrial emissions of greenhouse gases and air pollutants

    But what about GHG emissions from private citizens? Are industrial emmissions somehow more toxic? Or is coming down on big business just more politically palatable?

    I have this recurring image in my head of a family of three living in a 4000 square foot house, owning three vehicles (one an RV, another a pickup), vacationing in far-off lands a couple of times a year, and writing their MP about the importance of action on the environment.

    By Blogger rabbit, at 11:19 PM  

  • A Carbon tax would apply to C02 equivalents (C02, CH4, HFC23s any many many other acronyms).

    Why does Alberta oppose this so much?

    Well under a 20% cut by 2020/65% cut by 2050 (from 2006 levels) plan, Alberta would bear responsibility for 45% of needed cuts, and Ontario would bear about 20-25%. Quebec (where Kyoto support is very high) bears something in the single to low double digits.

    Anyways, have a summary of the not reported points of this report on my webpage for what its worth... some interesting numbers anyways:

    By Blogger Ivan, at 11:54 PM  

  • Carbon Tax is far too narrow as made clear by many comments here, an actual misnomer.

    Eviro-Tax is more correct and the functioning model is already in place and working well.

    When one buys paint or an auto battery a enviro-tax is collected.

    Products made in China would be a good place to start. Say $3.00 surcharge on every pair of non-breathing footware.

    $1000 on each non-TDI unclean diesel tractor sold.

    20 cents on each liter of home heating oil sold.

    Enviro-tax just as on same sized gas vehicles but discounted by $1500 for battery, compressed-air and hydrogen fueled vehicles.

    Start with an enviro-tax tag on every product from China and off shore first though. = TG

    By Blogger TonyGuitar, at 1:13 AM  

  • The *carbon*-enviro-tax on each trucked, stewed, hammered, sifted, crushed, slurried and pressed gallon of Tar Sand oil would likely stop expansion in it*s tracks. = TG

    By Blogger TonyGuitar, at 1:21 AM  

  • I think I definitely support the cap-and-trade system, as opposed to just the outright tax. It's worked well in Europe so far and a market-based solution seems more sensible.

    By Blogger Brandon E. Beasley, at 2:58 AM  

  • "Alberta Environment Minister Rob Renner said "we have been and continue to be opposed to any kind of implementation of a cross-the-board tax."

    Edmonton Journal, today. Title says Alberta cheers federal decision (not to have a carbon tax)

    By Blogger 900 ft Jesus, at 7:49 AM  

  • A carbon tax is a "market-based solution" insofar as it involves using price signals to reduce the presence of a negative externality, namely greenhouse gases. There's no reason why said tax couldn't be phased in gradually to limit the short-term pain.

    Start with an enviro-tax tag on every product from China and off shore first though. = TG

    What you're talking about is called a non-tariff barrier. It would be difficult to implement and, in any case, probably in contravention of international trade rules.

    By Blogger Josh Gould, at 11:31 AM  

  • One more time. Alberta already has a carbon tax.

    The opposition of the Alberta government to a federal tax likely has more to do with who gets the revenues from a carbon tax. Other provinces will probably have similar concerns. The easiest way to deal with this would probably be for the feds to return the revenue generated from a carbon tax back to the provinces in which they were generated. That should bring the provinces on board since they get to either cut their own taxes or spend it how they wish.

    I would prefer a straight revenue neutral income and corporate tax cut but my guess is that the provinces would oppose that since they don't get any credit out of it.

    Given the existence of a carbon tax in Alberta and Quebec, the Tories don't really have anything to lose by trying to impose a federal carbon tax.

    By Anonymous Anonymous, at 1:15 PM  

  • "The Canadian oilpatch can live with a federal carbon tax so long as it doesn't single out the country's largest greenhouse gas emitters and is part of an "economy-wide" effort to reduce global warming"

    Financial Post, FP6 Jan 8, 2006

    And in the actual words of the Canadian Association of Petroleum Producers:

    "Economy-wide is a critical part for us - that they don't single out one sector or part of the country"

    Seems like a green light from the oil patch to Harper to me.

    By Anonymous Anonymous, at 3:44 PM  

  • Where do the billions of dollars now collected go? There are already huge taxes on fossil fuels at the pump, the refineries, and at the point of production. It is not the fault of the oil and gas industry that these taxes go into the giant general revenue pot and do not go to mitigate the damage the O+G industry does.

    By Anonymous Imethisguy, at 5:22 PM  

  • By Blogger mmjiaxin, at 8:07 PM  

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