…environmental economics and the implications of environmental policy

Trading is better than Carbon Taxes…for those with a vested interest that is

with 2 comments

Andrew’s comments from the last post dovetail nicely with my thoughts on this report in the Financial Post (here). Essentially, the article argues that emission trading is more effective than carbon taxes. Trouble is, this preference comes from constituents who are lining up to defend their stakes in the great carbon trading game:

“This is an industry that did not exist four or five years ago — an industry that has very rapidly emerged (with) products that you take for granted in other businesses are just being developed now.”

One of the NRTEE’s recommendations included the observation that an upstream trading regime would be more effective than a downstream trading regime (see the NRTEE report and Chris and Nic’s technical report available by request from NRTEE). Essentially, if you move the regime up closer to production and importation you get a wider transmission of the carbon price across the economy, a desirable outcome since costs tend to be more evenly distributed. With a broad based upstream system there is no need for a complementary tax as in the case of the current downstream large emitter system, where only 50% of Canada’s emissions see a price signal. Problem is, Canada would need to ultimately transition the current “proposed” downstream system to an upstream system sometime near 2020. But this would alter existing rights, and notably all those free allocations, trading fees and allied services making money off the downstream system (same^2 for offsets).

And thus the transition challenge — constituents. Like it or not trading is creating vested interests that will protect the status quo and lobby accordingly. This will make change hard, especially in time.

And now the fun…you have to love an article and a quote in the National Post, that bastion of conservative thinking, that basically says that individual decision makers need to be told what to do:

“You can tax me on gas, but I still consume gas and there’s nobody to tell me how much I should consume,”

I love it. Only in Canada, Eh.

Written by Dave Sawyer

January 10th, 2008 at 4:11 am

2 Responses to 'Trading is better than Carbon Taxes…for those with a vested interest that is'

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  1. I noticed you were talking about carbon trading, and I thought you might be interested in a new documentary that has just been released that examines the impact of carbon trading around the world.

    The Carbon Connection –looks at two communities affected by one new global market – the trade in carbon dioxide. In Scotland a town has been polluted by oil and chemical companies since the 1940s. In Brazil local people’s water and land is being swallowed up by destructive monoculture eucalyptus tree plantations. Both communities now share a new threat. As part of the deal to reduce greenhouse gases that cause dangerous climate change, major polluters can now buy carbon credits that allow them to pay someone else to reduce emissions instead of cutting their own pollution.

    What this means for those living next to the oil industry in Scotland is the continuation of pollution caused by their toxic neighbours. Meanwhile in Brazil the schemes that generate carbon credits gives an injection of cash for more planting of the damaging eucalyptus tree. The two communities are now connected by bearing the brunt of the new trade in carbon credits. The Carbon Connection follows the story of two groups of people from each community who learned to use video cameras and made their own films about living with the impacts of the carbon market. From mental health issues in Scotland to the loss of medicinal plants in Brazil, the communities discover the connections they have with each other and the film follows them on this journey.

    40 minutes | PAL/NTSC | English/Spanish/Portuguese subtitles

    More information at http://www.carbontradewatch.org/carbonconnection/


    21 Jan 08 at 5:06 pm

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    29 Jul 14 at 10:59 pm

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