[Sust-mar] Cap & Trade vs Carbon Tax

Fri Oct 17 15:27:34 EDT 2008

I'd just like to add that Carbon Tax has the added benefit of reducing car
ridership and forcing people to: carpool, use public transit, and, sooner or
later, push for more public transit infrastructure, whereas Cap and Trade
would have little effect on this (other than, as Carbon Tax would, pushing
for the production of more fuel efficient cars).

-Nicholas Warren

On Tue, Oct 14, 2008 at 1:14 PM, Christopher Majka
<c.majka at ns.sympatico.ca>wrote:

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> Hi folks,
>
> I'd like to refer those interested in this subject to the excellent recent
> discussion on this matter on Quirks and Quarks available at:
>
> http://www.cbc.ca/quirks/archives/08-09/qq-2008-09-27.html
>
> It's an interview with Dr. Robert Page, TransAlta professor of
> Environmental Management and Sustainability at the University of Calgary's
> Institute for Sustainable Energy, Environment and Economy and Dr. Mark
> Jaccard, Professor at the School of Resource and Environmental Management at
> Simon Fraser University. Both were members of the National Round Table on
> the Environment and the Economy which advised the Canadian government on the
> policies that could lead to significant reductions in Canada's greenhouse
> gas emissions. Their discussion of the issue helped clarify it in my mind.
>
> If I can attempt a quick summary, the salient point that they made is that
> despite the difference between the carbon tax and cap and trade approaches,
> what is important is for us as a society to get started on a program (any
> program) that will bring about significant reductions in carbon emissions.
> Quibbling about the details of how we do this is less important than action.
> They both thought that in the future, carbon emissions programs would
> incorporate elements of both approaches.
>
> In terms of the differences in approaches:
>
> a) Carbon Tax: favored by economists since it sets definite (and
> increasing) prices on carbon that everyone (consumers & business) pay across
> the board. 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. [The Liberal and Green Party proposals.]
>
> 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
> quantity by which carbon emissions will actually fall, and how quickly this
> will happen, since carbon taxes are economic incentives.
>
> b) Cap and Trade: favored by environmentalists 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 excess emissions 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 money to purchase credits) and rewards
> pro-active and efficient companies and enterprises who have done well (they
> make extra profits by selling carbon credits). [The NDP proposal.]
>
> The advantages are that it is easier to sell to consumers (and hence the
> electorate) since they don't have to pay up front. Also, as the cap ratchets
> down from year to year, the incentive to become more efficient increases.
>
> 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
> "slacker" corporations simply pass along 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 decreased 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 has 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 two weeks ago 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 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 head start.
>
> Some may favour one approach or the other, however, it is simply playing
> non-productive partisan politics to demonize either, when it is clear that
> both would be effective.
>
> To underscore: both Page and Jaccard emphasize that both approaches are
> effective, they are vastly to be preferred over the Conservatives
> "aspirational" intensity-based targets which are a complete sham and are
> next to useless, and in the future carbon emissions programs will likely
> incorporate elements of both approaches.
>
> The message: lets stop divisive partisan quibbling, defeat the
> Conservatives, and get on with it! :->
>
> Cheers!
>
> Chris
>
> On 13-Oct-08, at 3:51 AM, Chris Bighead Milburn wrote:
>
>  I am DEEPLY disappointed to see only the "three major parties" represented
>> in this analysis.
>>
>> The Green Party has been way ahead of the curve in this realm for many,
>> many
>> years.  In fact, the present Liberal policies look a lot like GPC policies
>> from the 1990's.  And one could argue that the libs were introduced to
>> these
>> policies by the Greens.  And one could further argue that it is pressure
>> from the increasing Green vote which has made the libs come around to the
>> idea of a carbon tax (despite it being obviously unpopular with many
>> voters).  Not at all to say that the current Liberal policies are perfect
>> -
>> they are missing some important points.
>>
>> As a former NDP supporter, I am very disappointed with the NDP's singly
>> focused, Robin-Hood-philosophy-driven green platform which fails to
>> recognize that it is our individual habits of energy consumption, not JUST
>> corporations, that have caused the problems that exist today.  Jack Layton
>> continues to state over and over "Canadians are getting ripped off at the
>> pumps" as if cheap gas were a Canadian right, and a long-term reality.
>>  This
>> line of politicking is destructive to real progress in energy consumption
>> reduction.  An honest party would say "gas is expensive and will continue
>> to
>> increase in price, and we need to develop policies to deal with this as a
>> society".
>>
>> I think I would be preaching to the choir if I started to even mention the
>> "small flaws" in the Conservative approach to energy consumption
>> reduction!
>>
>> I'm very disappointed that Dr. Hughes did not include analysis of the
>> Green
>> Party policies on energy, which have long lead the field in Canadian
>> politics.  We can vote for parties with incomplete policies, or vote for
>> the
>> party with the best policy.  They may not get into power, but if lots of
>> votes go their way, maybe we'll again see a mainstream party stealing
>> their
>> policies.
>>
>> Sincerely,
>> Chris
>>
>> Chris Milburn
>> 43 Rigby Road
>> Sydney, N.S. B1P 4T4
>> 902-539-6852
>> email: chris.milburn at ns.sympatico.ca
>>
>>
>>
>>
>> -----Original Message-----
>> From: sust-mar-bounces at list.web.net [mailto:sust-mar-bounces at list.web.net
>> ]
>> On Behalf Of Larry Hughes
>> Sent: October 9, 2008 9:22 AM
>> To: Sustainable Maritimes
>> Subject: [Sust-mar] Pricing greenhouse gas emissions
>>
>> SUSTAINABLE MARITIMES (sust-mar)
>> Send your message to sust-mar at list.web.net
>> Text only, no attachments please.
>>
>> www.sustainablemaritimes.ca
>> ---------------------------------------
>>
>>
>>
>> A presentation to the Halifax Chamber of Commerce Energy Security
>> Committee, describing the three approaches to encouraging greenhouse gas
>> emission reduction proposed by each of Canada's major political parties. A
>> summary of "Contraction and Convergence" is also discussed.
>>
>> http://lh.ece.dal.ca/enen/2008/ERG200805.pdf
>>
>> Larry Hughes, PhD
>> Professor
>> Energy Research Group
>> Department of Electrical and Computer Engineering
>> Dalhousie University
>> Halifax, Nova Scotia, B3J 2X4
>> Canada
>>
>> v: 902.494.3950
>> f: 902.422.7535
>> e: larry.hughes at dal.ca
>> u: http://lh.ece.dal.ca
>>
>>
>
>
> Christopher Majka
> Halifax, Nova Scotia, Canada
> c.majka at ns.sympatico.ca
>
>
>
>
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-- 
-Nick (Nicholas)