“No jurisdiction in Canada has implemented the academically-ideal carbon tax that is revenue neutral, replaces regulations, is based on a properly deflated social cost of carbon, or eschews governmental dictates in energy markets.”
“The belief that governments will not adapt the ‘textbook’ carbon tax (which is revenue neutral, offsets regulations, and does not intervene in energy markets or technology selection) is not skepticism or cynicism—it’s historic fact.”
The Internet is abuzz over a report by the Parliamentary Budget Office (PBO) that shines some light on the potential impact of the federal carbon tax plan on Canada’s economy.
Specifically, the report shows that the carbon price the federal government is mandating all provinces to impose on businesses and residents in the years ahead could create substantial headwinds for the Canadian economy.
For example, under one set of assumptions in the PBO analysis, where the provincial governments simply rebate all carbon price revenue, provincial cooperation with the federal floor would reduce the size of the Canadian economy to the tune of 0.5 percent in 2020.…
“You can rank carbon regulations, carbon cap-and-trade, and carbon taxes however you wish. But at the end of the day we’re better off with no policy rather than bad policy.”
To continue from Part I yesterday, the carbon tax–on paper, on the white board, in the ivory tower–is better policy than cap-and-trade, which is better than ad hoc regulation. We could spend – and have spent – hundreds of hours explaining why cap-and-trade is a horrible idea, and why regulations are often blunt-objects that often cause huge unintended consequences, but that’s beyond this post.
And an ideal carbon tax can be shown to have only modest damage to the economy.
But where are carbon tax proponents, particularly conservatives, wrong about carbon taxes? The answer provides a much longer list.
First, carbon taxes are not strictly a tax on “bads” (i.e.…
“The day after enactment, environmentalists will start calling for raising the carbon tax, decoupling it from revenue neutrality to finance more wind and solar boondoggles. And they’ll still want additional regulations to drive emissions down faster. If conservatives resist this, they’ll get the same ‘denier’ routine they get now.”
I first started working on climate policy in 1997, first in California, then Canada, and then in Washington, D.C. Having spent seven years inside the Beltway, I’ve now returned to Canada, working for the Fraser Institute on natural resource policy.
In the states, I watched the U.S. edge nearer-and-nearer to very bad climate policy, that being a mixture of cap-and-trade and ad hoc regulation. The inside-the-beltway “consensus” was that we were inevitably headed for national greenhouse gas (GHG) control legislation.
Study after study warned that national mitigation policies would cause significant economic damage, be regionally discriminatory, be economically regressive, and reduce U.S.…