Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Campaign misinformation has set back climate change debate

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Something I missed on Friday was brought to my attention thanks to the ever useful BCEN LW list (hat tip to the indefatigable Bill Henderson).

Getting economists to agree on anything is unusual. It takes hours to get them to agree on where to go for lunch, let alone climate change policy. And most politicians love the idea that all their economists should have a hand cut off to stop them qualifying every recommnedation with “… but on the other hand …”

So the near universal dismay at the tactics adopted by the NDP and the Conservatives on the issue of the carbon tax is worth remark.

Gordon Campbell started the ball rolling – and to emphasize its revenue neutrality he sent a $100 cheque to every “man woman and child in BC” to offset the impact of the new carbon tax on energy costs. Only later did he realise that he would have to give it back to municipalities too – and he has yet to give it back to BC Transit or Translink. But all that did is make everyone cynical. And of course we heard a lot from those who were convinced it would cost them a lot more than $100. And the timing was off, because of a sudden brief spike in oil prices which happened to coincide with the announcement.

Stephane Dion stole the Green’s policy – becuase they had published their platform long before anyone else – but also ran into credibility problems. Probably not his fault either – but we all have long memories of earlier Liberal Red Books, and the rather dismal failings of the Chretien and Martin governments that just seemed to be a paler shade of blue, not green (or red, come to that).

Nancy Olewiler, a professor of economics at Simon Fraser University, was one of 230 economists at Canadian universities who signed an open letter advocating putting a price on carbon. The economists favoured a carbon tax because it provides more certainty on the price of polluting and is less complicated and costly to implement than cap and trade.

Reducing emissions will inevitably cost money and part of that cost has to be passed on to consumers, to encourage the use of cleaner fuels and energy, Olewiler said.

“If a cap and trade system is to work effectively to reduce emissions, it would have the same impact as a carbon tax,” Olewiler said.

And if 230 economists all say it, I think governments had better listen. 350ppm is not an easy target to hit but it is a far more realistic one than Kyoto – and now much more urgent. Business as usual is not a sustainable option, and as with any fundamental change we cannot expect it to be entirely comfortable, although of course there have to be safety nets for the vulnerable. Unfortunately we seem to have used up all our fiscal headroom in making sure the enormously wealthy are taken care of first. Which is like reserving all the lifeboats for the first class passengers.

Written by Stephen Rees

October 20, 2008 at 11:21 am

Posted in greenhouse gas reduction

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  1. Putting a price on polluting the atmosphere with greenhouse gases is becoming more widely accepted internationally, but Canada will lag behind under the current policy makers in Ottawa. That is, until our economy is stung by carbon tarrifs imposed by importers of Canadian petroleum products, or we are bypassed by opportunities presented by a carbon market.

    My problem so far resides with revenue neutrality. While I understand and respect the notion that a carbon tax must be balanced in theory with equal reductions in income tax, I would rather see a portion of the tax go toward planting millions of trees to replace beetle-killed pines, and toward a major expansion in public transit.

    Perhaps there could be a parallel cap and trade system that taps revenue from poluting industries on a scale that slides upward with passing time, and directs a portion of it toward creating carbon sinks and expanding transportation and energy production from sustainable, clean sources.


    October 20, 2008 at 2:51 pm

  2. A thoughtful post. I was not at all prepared for the strength of rhetoric against a sensible and efficient carbon tax. Both by Harper with his masters in economics, and the ndp with their perhaps valid suggestion that a carbon tax straight up would hit lower income people harder, but their lack of imagination in suggesting a fiscally neutral elimination of regressive payroll taxes in the process.

    It’s pretty hard to see how a carbon tax will work it’s way back into the national debate now even though ideologically Harper could find a lot of respectable pro-market support from Mankiw et al. Andrew Coyne also laid out a clear path for the Tories in this impressive article – .

    We’ll probably see years of slow progress provincially and across more states, with a call finally for national harmonization to create a more simple regulatory and taxation regime. What do you think 10 or 15 years? What a depressing thought.

    On the other hand (heh), it wasn’t too many decades ago that cap and trade was seen by many environmentalists as an immoral payment for indulgence. It worked well enough to rapidly reduce sulpher dioxide emissions though, and the fact that the less efficient central command option isn’t even on the table anymore should bring some cheer. As carbon taxes prove to work well in the jurisdictions that have adopted them and the best models emerge out of the decentralized experimentation we now have we might see a pretty sudden shift in favor of them.


    October 20, 2008 at 3:33 pm

  3. Monday night PBS featured a debate on “How can we (the US) avoid a recession?”

    The speaker from silicon valley kept saying, “If we don’t do something about the environment, the recession is going to be irrelevant.” But no one was listening.

    Most of my neighbours here in Ontario are only interested in the environment when there is nothing else to talk about. This battle is going to be won by leadership, NOT concensus. If it is going to be won.

    Jennifer Bunting

    October 21, 2008 at 1:17 pm

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