Saturday, February 28, 2009

Some Distance Emerges

...between Harper and Iggy on Carbon Trading:

Ignatieff called for a common cap-and-trade system to be negotiated with the United States that would set a hard cap on emissions and define specific reduction targets.

Since the idea of a national carbon tax is dead, the only game in town is C&T. And the only halfway effective version of C&T calls for the setting of hard (rather than soft or intensity-based) caps. This statement a) places Iggy a bit left of Harper, who is still hemming and hawing over hard and soft caps and, b) moves him towards a popular, progressive American President.

Not an earth shattering bit of political positioning. Significant nevertheless.


Jim said...

BCL: Obama's budget contains a CARBON TAX that is intended to raise $645 BILLION which will be used to cut low and middle income taxes and invest in renewable energy. (link)

Sound familiar?

You don't think that changes the equation AT ALL?

The Boston Globe and Miami Herald are calling the "pollution credits" he wants to sell a carbon tax, the NY Times a pollution surcharge but same deal - polluters are going to be paying roughly the same price per ton of carbon through these "carbon credits" directly to government as they would have paid directly to government per ton of pollution under Dion's Green Shift. The pollution credits the government will sell are in combination with a cap and trade system but that's what Dion was proposing too. And all the money being raised from the "pollution credits" (carbon tax) is going back to income tax cuts and renewable energy.

Why are we giving up on this?

There's talk now that the Americans could impose a carbon tariff on countries that don't take similar measures.

Isn't it just common sense to follow Obama's lead? I'm pretty sure Obama gives us all the cover we need.

In fact I wouldn't be surprised if Harper doesn't mirror Obama on this, after all he's gone against all his past statements on just about every other issue so why not this one?

Note: As full disclosure I posted this at Steve V's too.

bigcitylib said...

From reading your link, it seems to me you can call his cap&trade system a carbon tax, and it is an indirect tax in effect, but the mechanism is quite different, so its a bit misleading.

Under C&T the polluters pay for credits to the goverment, and pass their costs onto the consumer. A carbon tax takes it directly from the consumer. Don't ask ME why people prefer the former mechanism over the latter, but they seem to.

Jim said...

BCL: Actually if you can still find the Green Shift document anywhere it spells out clearly that there would have been NO carbon tax at the consumer level. It was proposing taxing carbon at the wholesale level at $10 a ton in the 1st year, $20 a ton the second year, and so on. The Green Shift doc then made estimates as to how much of the cost would then be passed down to the consumer.

Gordon Campbell has applied a consumer based carbon tax directly at the gas pump in addition to taxing carbon at the wholesale level, but the Green Shift did not propose that - it would have operated no differently than selling those credits for $10 a ton in the first year and so on as Obama is proposing.

So it seems to me that Obama has basically proposed the Green Shift but renamed the carbon tax to something that sounds nicer since he's using all his carbon revenue to fund the same things as we were planning to do.

I say we do the same. We've got a hell of a lot better cover than we ever did before.

crf said...

You can have both a carbon tax and cap and trade. They are not incompatible.

For instance, gasoline taxes now are a bit like carbon taxes (nobody calls them that though).

For instance, cap and trade might make sense for larger point-source emitters of ghg. Targeted carbon taxes might make sense for smaller sources of emissions.


If you would like to read about the ideas around carbon tariffs, to prevent unfair competition of goods imported into countries having a carbon tax from countries not having a tax, you should read an essay touching on this topic from Jeffrey Frankel. He argues that tariffs are ethical, but that they are best developed in a multilateral treaty under the auspices of a trade organisation, like the wto.

Fred said...

Taxes, taxes, & taxes by one name or another. A perfect campaign strategy for progressive folks everywhere.

go Iggy go, Lizzie May will support you and Layton will bend over backwards to demand more.

Should be an easy sell in the next election.

Dan McKenzie said...

I'm thinking that Jim isn't right in describing Obama's cap-and-trade system as a carbon tax. There is a distinct difference between the two. Although it is pretty much unheard of for a cap-and-trade system to create new revenue.

I'd have to see the actual plan which I guess is in the text of the budget.

Dan McKenzie said...

Upon further look, there will be an auction of permit credits, but not a carbon tax. They may ultimately have similar results and effects on business, but they are starkly different policy instruments.

That being said I'm not sure an auction like this, of this size has ever been held, and it may be very difficult to predict accurately the kind of revenues it will create.

Again, I'm pretty sure this is NOT a carbon tax. But like BCL said, why people prefer C&T over the latter is unclear. But I think it is mostly about optics. Note the Republican members of Congress trying to call this a carbon tax already.

lyrical said...

I found the Green Shift document on Scribd here. I was pleasantly surprised to read what St├ęphane Dion had to say on Page Five (his photo page;)

Maria said...

The polluters pay for credits to the goverment, and pass their costs onto the consumer. A carbon tax takes it directly from the consumer.

Maria[men's suits]