Carbon tax vs. Cap-and-Trade vs. Do Nothing

As we move into the summer BBQ circuit/silly season in the world of Canadian politics, I thought I ought to take a gander at the proposals the main parties are making to control global climate change resulting from greenhouse gas emissions, and particularly carbon dioxide. I say control because there is a snowball's chance in Hell that we can stop it now. All we can hope to do is limit it to non-disastrous levels, say making sure that the oceans don't rise enough to submerge every island state in the world.

Since in this country it takes a proposal from the Liberals to get the media interested in anything, I will start with the Liberal position on the issue. They have decided that their approach to the problem is going to be a carbon tax, a la British Columbia or some of Europe's right-wing governments. This is a tax that the Conservatives have unhelpfully dubbed a "tax on everything." Typically inaccurate, but punchy. This tax is essentially targeted at the demand end of supply-demand teeter-totter, aiming to disincent carbon-intensive activities. This tax will increase the costs of goods ranging from home heating oil to motor vehicles to plastic wrap, in essence anything produced through CO2 intensive means, or putting out a substantial amount of carbon dioxide when used. The Liberals further say that their plan will be revenue neutral, that is the government will reduce other taxes, principally the income tax, to make up for the hit from the carbon tax. My experience growing up during the Mike Harris years in Ontario makes me automatically suspicious any time I hear the wwords "revenue neutral". After all, the amalgamation of Toronto was supposed to be revenue neutral, but the city is still trying to climb out of the massive hole created by amalgamation and downloading of social services.

The Liberal plan will jack up the price of many essentials for working class families, such as transportation and food (since food will cost more to transport). These same families will get very little back from an income tax cut, because they pay relatively little income tax to begin with. The supposed relief from the income tax cut will not even reach the poorest people, who don't earn sufficient money to pay income tax in the first place, but will take a ding in their already meager budgets from the costs added by the carbon tax. I can't support this plan because it is regressive, and will hurt the poorest and most vulnerable members of society, while passing on yet more money to the bourgeoisie.

Next, there is the NDP plan. The NDP calls for the creation of a cap-and-trade system, in which hard targets will be imposed, and companies doing better than their carbon quota will be able to sell their excess to companies exceeding their quota. This is the plan used by the European Union as a whole, as well as a number of other states party to the Kyoto Protocol. The levels of CO2 allowed would be reduced year by year, bringing emissions down. This plan is focused on the supply end of the supply-demand teeter-totter, aiming to disincent the production of carbon intensive products by companies and the development of new green technology. Further, the plan sells a company their quota of carbon dioxide for the year, bringing in about $2.5 billion per year according to NDP estimates. This money would then be put into a fund to develop green energy sources, worker retraining (to adjust to changes in the economy in the transition to post-carbon) and public transit.

This plan strikes me as much better, because it puts the burden on industry and business first, rather than setting the whole weight of the burden on the consumer. It also acknowledges that government action beyond fiscal policy levers is going to be needed in order to cope with the problem. I am not crazy about emissions trading, but to simply go straight to cap and no-trade would simply never get enacted. There will still be an increased burden on the poor, but there won't be a transfer of wealth to the capitalist class, and there will be measures to help ameliorate that burden, like expanding public transit to provide an alternative to private vehicles. This plan also wouldn't impose an extra cost on home heating, which is important in a cold country like Canada.

And then we have the Conservative plan, which calls for intensity targets and that's it. Blech. There is nothing good to say about this way of addressing the problem. An intensity target of a 25% cut means nothing if activity increases by that same 25%, and it means worse than nothing if activity grows more than that. For example, the government might tell the oil patch that it has to reduce carbon-per-barrel of oil by 25%, but production is expanding by well more than 25%, which means that not only will emissions not decrease, they will actually increase. The Conservative do-nothing plan has been rightly denounced as a fraud by every environmentalist from Al Gore and David Suzuki on down. This plan is merely a smokescreen to make a government that doesn't believe the science of global climate change look like it is doing something.

Hopefully Canada can have a meaningful discussion on this subject, but the Conservatives seem dead set on doing everything they can to prevent that, starting with their idiotic attack ads on the Liberal's "tax on everything." The CPC can't have much respect for Canadians, and they have proven that they have no interest in governing in the public interest, simply in their own interest. Here's hoping Canadians see sense, the Liberals grow a spine, and we have an election when the House comes back in the fall.

Days Remaining in Bush Presidency: 217