Posted by Tim Stobbs on September 11, 2009
This is just in. Apparently even the heavily flawed self interested bill from the US Congress, Waxman-Markey (aka: HR 2454), if implemented is actually a good thing for the US as a whole. This shocking conclusion is from a policy paper that found that once you include the social benefits of not flooding your coast line and other things under a conservative set of assumptions that in total the benefits outweigh the costs by a factor of nine to one or more.
Sorry if the scarcasim isn’t obvious in the above statement, but really isn’t this obvious to anyone who things about it for a while? It’s the classic an ounce of prevention is worth a pound of cure. Oh well, perahps in my lifetime I’ll see a government realize that isn’t a ‘right’ way to do any climate bill, but rather just pick one and adjust it as you go.
Have a good weekend everyone.
Posted by Tim Stobbs on July 17, 2009
During my recent discussions at work I’m starting to realize that in the world of environmental policy there is almost never a ‘pure’ cap and trade system. Almost always you end up with parts of it that look a lot like a carbon tax, but they never call it that.
It’s all about the spin factor. You can’t use the words ‘carbon tax’ or ‘intensity’ without people jumping down your throat in Canada so now the game is to spin off the words into other concepts that conviently avoid those words.
Take for example the term: technology fund. Often this is tossed around as an idea where companies can pay into it at a set price and then the government uses the money to fund low or none emitting projects. Sounds great right, but consider this the government is selling a carbon credit at a set price which is basically by definition a carbon tax. Just in this case a voluntary one that you don’t have to use if you can find offsets or other internal reductions for less money.
Other ideas include a price ceiling which means if the price of carbon exceeds a certain amount you get to buy credits at a set price. Which again is a carbon tax, but if you don’t limit the number of credits at that ceiling you have effectively allowed your cap and trade system to have no cap. So now depending on the numbers the system looks a lot like a intensity based system.
So in general don’t accept just about anything a government comes up with at face value on regulating carbon. The reality is there is always some element of spin to it, but it is just a matter of well it has been spun and what they want you to see. It’s sort of similar to the word ‘green’ in marketing, it often means nothing but it is often hard to tell that fact.
Posted by Tim Stobbs on May 15, 2009
Well right now there is a bit of political uncertainty on the entire concept of cap and trade. After the BC election the words ‘Carbon Tax’ no longer appear to leave such a bad taste in people’s mouth after the entire Dion’s Green Shift plan did in the last federal election.
To most people the matter of cap and trade verus carbon tax is rather confusing. After all they still are just a tax any which way you do it. The reality is both concepts are two sides of the same coin and the difference is mostly about public policy.
A carbon tax provides price certainty to the market. If you know a tonne of CO2 is worth $40 you will change your business to stop emitting those amounts with a cost less than $40 in hopes of saving some tax. The downfall of a straight tax is there is no means to hit a specific target. As such if you want a 20% reduction from 2006 levels by 2020 you don’t have any means to ensure you will get there other than raising the amount of the carbon tax and hoping it is high enough.
On the other side if you do a cap and trade you have no idea what the price is going to be. It’s like trying to predict a stock market value and you don’t even know the trading rules yet. Yet you can move the cap to ensure you hit a certain reduction limit.
One concept that isn’t getting a lot of play in the media is simply doing both. You do two cap and trade systems that interlink. One covers the big emitters directly and the other cap and trade covers the upstream producers of natural gas and oil. That way when you buy gas at the pump your carbon price would already been built in. To give some initial price certainty you put in a floor price on carbon say $15/tonne which acts as a carbon tax.
Why do it that way? Well because getting car and households to reduce their emissions has always been a problem with a cap and trade system. It’s a huge waste of money to make every person trade for every tonne of carbon they emit. So often they get excluded from the system which leaves out a large piece of the emissions.
In the end the solution won’t matter for most people they just want to know how much more tax am I going to pay. Under a cap and trade system the answer will be ‘more, but we can’t know how much.’ Now doesn’t income tax seem a lot simpler compared to this mess?
