Carbon tax: Good public policy or can we do better?
BC’s carbon tax hasn’t made much difference
Photo: Bruce A. Stewart
By Bruce A Stewart
Australia’s implementing a carbon tax. BC already has one. So does Québec.
BC’s experience with its carbon tax is that as a vehicle to change consumption patterns, it’s been a bust.
As a vehicle to annoy citizens, on the other hand, it’s done well, indeed.
Then there’s cap-and-trade, still being studied by the civil service in a number of provinces and in Ottawa.
Europe’s implemented this throughout the European Union. BC, Manitoba, Ontario and Québec are partners in the Western Climate Initiative with the American states of California, Oregon, Washington, New Mexico, Montana and Utah: it’s looking into implementing cap-and-trade, too.
Even Alberta has a small, restricted, carbon monitoring and payment scheme in operation.
The assumption underlying all of these is that taxing or limiting carbon emissions is something that requires a governmental framework.
Coupled to it is a little bit of tax shifting, as in BC, where income tax comes down a bit every time the carbon tax goes up.
Or, as with cap-and-trade, the banking system (which acts as the intermediary) gets to play the derivatives and futures market game with carbon valuation just as it does with any other financial instrument.
If the goal is to change behaviour, neither of these have a great track record.
Still, there are two reasons to consider some sort of “carbon program.” Just not these ones.
The best reason to consider a “resource usage” or “consumption” tax on goods produced would be to equalize offshore with onshore production.
No more escaping to a part of the world that doesn’t care about Canadian environmental standards: on their way into Canada, the tax would be applied.
Probably that’s a bit frightening for a lot of people.
The best way to handle setting limits on emissions — if you want to do that — is with a cap-and-dividend system. Not a cap-and-trade.
Cap-and-trade means buying a permit to emit, if you put out more than your allotment, from someone else who won’t use up their capacity to emit. Bankers act to coordinate buyers and sellers. They make fees and trade derivatives to profit on price moves based on expected demand for permits.
Cap-and-dividend means each year every citizen gets a dividend worth their share of a jurisdiction’s emissions.
Businesses that emit need to buy permits. The money goes to individuals, who spend it any way they like. No banker bonuses involved.
Policy makers and bankers don’t like cap-and-dividend. They think you and I having the money is a waste.
If we do need to tax carbon — and I’m not saying we do or don’t — putting cash in each person’s pocket seems the best way.
Maybe over the festive dinner table this weekend it’ll give you something different to talk about.
Have a good Easter or Passover.
Bruce Stewart is a consultant, educator and philosopher with a passion for public affairs currently located in Toronto. He is well known across the Internet for his blogs on management (Getting Value from IT) and social affairs (Just a Jump to the Left, then a Step to the Right) and for his daily stream of commentary on Facebook, Twitter and Google+. You can reach him at bastewart.toronto@gmail.com.
Category: Energy, Environment
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