next message in archive
next message in thread
previous message in archive
previous message in thread
Index of Subjects
Index of Subjects This is a multi-part message in MIME format. ------=_NextPart_000_0004_01C9248A.37854F20 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit Thanks Chris. This really clarifies things for me. JoanW _____ From: naturens-owner@chebucto.ns.ca [mailto:naturens-owner@chebucto.ns.ca] On Behalf Of Christopher Majka Sent: Thursday, October 02, 2008 12:09 PM To: naturens@chebucto.ns.ca Subject: [NatureNS] The Environment: Carbon Tax versus Cap & Trade Hi folks, I'm far from being an expert on this, however, I think it is important to keep two things in mind: 1) Unchecked, the continuing emission of greenhouse gases will have enormous, potentially catastrophic, consequences for our civilization. The results of the Intergovernmental Panel on Climate Change make this clear. [ http://www.ipcc.ch/ ] 2) Hence, we need to take some action. There are, as I understand it, two main approaches: a) Carbon Taxes: economists tend to like this approach since it sets a definite (and increasing) price on carbon that everyone (consumers, & business) pay across the boards. It's a clear economic mechanism that puts a price on pollution. As governments ratchet up the tax, the incentives become ever stronger to cut down on carbon emissions. Both the Liberals (with their Green Shift) and the Greens (with a nearly identical plan) propose this. The difficulties are two-fold: i) it's tough to sell this politically (consumers have visceral reactions to the idea of "taxes" even if they get them back with a decrease of income tax); and ii) there is no definite indication as to by how much carbon emissions will actually fall, and how quickly this will happen, since carbon taxes are just economic incentives. b) Cape and Trade: environmentalists tend to like this approach since it sets a definite (and decreasing) cap on carbon emissions. It doesn't impact consumers directly but instead targets industrial and other large carbon emitters. A cap is set and any excess emission beyond the cap must be compensated for by purchasing carbon credits from enterprises that have made savings in their carbon emissions (or are doing better than the norm). This punishes the slackers (they have to spend extra funds to purchase credits) and rewards pro-active and efficient companies and enterprises who have done well (they make extra profits by selling carbon credits). It is easier to sell this to consumers (and hence the electorate) since they don't have to pay anything up front. Also, as the cap ratchets down from year to year, the incentive to become more efficient increases. The NDP has proposed a Cap and Trade system. The difficulty (from the standpoint of economists) is that prices under cap and trade are not set. Enterprises auction or trade carbon credits via a market mechanism and they can sell/trade for as much or as little as the market will bear. It can be argued that there will be trickle-down costs to consumers as the slacker corporations simply pass along their higher costs (for purchasing carbon credits) to their customers. However, the same reasoning indicates that costs for commodities from the pro-active businesses should be less since their costs are correspondingly less from having an extra income stream from selling carbon credits. Some also criticize cap and trade saying that it could be complicated to set up. The Kyoto Protocol (which appears to have Canada abandoned) had a cap and trade mechanism built into it. The European Union Emission Trading Scheme (EU ETS) is now largest multi-national, greenhouse gas emissions trading scheme in the world and was created in conjunction with the Kyoto Protocol. [ http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme ] Also, in the United States, 26 states, tired of the US Federal Government's inaction, have themselves formed three networks to work collaboratively to reduce the impacts of climate change. a) The Northeast Regional Greenhouse Gas Initiative (RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) [ http://www.rggi.org/home ] have already started a cap and trade system (the first auctions were last week in which all available allowances were auctioned of at a cost of $3.07/ton). They are being closely watched by; b) Midwest Greenhouse Gas Reduction Accord (MGGRA: Iowa, Illinois, Kansas, Michigan, Minnesota, Wisconsin and (in Canada) Manitoba); [ http://www.midwesternaccord.org ] and c) The Western Climate Initiative (WCI: Arizona, California, Montana, New Mexico, Oregon, Utah, Washington, and (in Canada) British Columbia, Manitoba, Quebec, and Ontario. [ http://www.westernclimateinitiative.org ] Who are both interested in in setting up regional cap and trade networks. Hence, in a Canadian, North American, and global context, the cap and trade approach has a significant head start and is rapidly being adopted in many jurisdictions. Cheers, Chris On 2-Oct-08, at 9:21 AM, Paul S. Boyer wrote: Another article on Norway's carbon tax points out that since the inception of this tax, Norway's carbon footprint has increased 14%. Yet another article says that it has decreased 14%, but only 2% of the decrease is attributable to the tax [http://ideas.repec.org/p/ssb/dispap/337.html]. Meanwhile, other countries without a carbon tax have had their footprint decrease (notably the USA). The Wall Street Journal reported on Tuesday that the carbon footprint in Norway has increased 15% since the tax was instituted [http://blogs.wsj.com/environmentalcapital/2008/09/30/emissions-impossible-n orway-taxes-carbon-emissions-rise/]. According to the article, Norwegians are buying more, bigger, and more expensive cars, and are driving more. They like the lifestyle. (I think joie de vivre in Norwegian is glede for liv.) They are doing fine, with much petroleum production, and one of the highest wealth-levels in the world. Their new tax probably has essentially no practical or measurable effect on world climatic conditions whatsoever, and the policy is not transferable to other countries whose situations may be quite different. However, although the tax is reportedly highly unpopular among some (see "Carbon tax tops Norway grievances" at http://www.scandoil.com/moxie-bm2/financial/politics_/carbon-tax-tops-list-o f-norway.shtml), it must make others satisfied, perhaps emotionally - and anyway, they are enjoying life in spite of it. Good for them! Politicians generally like new taxes. Whether taxes eve