Carbon tax beats cap-and-trade
Re Provinces can lead the way on global warming, April 7 The Ontario government’s decision to endorse cap and trade confirms my worst fears. It is a victory of Bay St. over Main St.
Clearly, we need a system of carbon pricing if we’re serious about making the polluters pay. Cap-and-trade offers many benefits for corporations, lawyers and consultants, but there is no evidence it has been successful at reducing greenhouse gas emissions, whereas there is clear evidence that the carbon tax in B.C. has already resulted in a 10-per-cent reduction in greenhouse gases.
Cap-and-trade is an excuse for inaction that appeals only to those sectors of the corporate community that profit from pollution. It is losing its appeal to insurance companies and enlightened business leaders who have to pay the price of inaction on climate. It has no appeal to the rising number of environmentally conscious Canadians who want to see our government regain respect in the world community. Even those who invented the cap-and-trade system prefer a carbon tax for curbing GHGs.
Cap-and-trade works in theory but not in practice — the United Nations says it has worked badly or not at all. It is complex and difficult to co-ordinate across different jurisdictions; it requires constant tinkering, constant political will and a large bureaucracy. It creates synthetic, government-backed assets that are vulnerable to manipulation and speculation. In short, it is a highly indirect, economically inefficient and expensive way of curbing GHGs.
We need a carbon tax. It could be spun as a fee and dividend system to gain political support, if done with two caveats: a portion of revenues should be invested in a climate change fund to finance mitigation and adaptation; and rather than giving each citizen an equal share of revenues, we must take special steps to lessen the impact of a carbon fee on low-income households and on rural and remote communities via tax credits or lump sum payments that are indexed to match increasing carbon levies.
Opting for cap-and-trade will clearly be putting Bay St. ahead of Main St. David Langille, Toronto