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