Carbon tax better than cap-and-trade
Re Cap-and-trade best way for Canada to reduce emissions, Opinion April 28 Cap-and-trade is definitely not the best way to reduce emissions. It is set up by politicians after intense lobbying by the various affected industries. This lobbying occurs behind closed doors; a wonderful recipe for opacity. But a carbon tax is entirely transparent. By not directly engaging Canadians, cap-and-trade misses the largest chunk of carbon emissions — those emitted by us, the people of Canada. A car company may reduce its emissions, but that does not mean that it is being encouraged to produce more efficient vehicles. Homebuilders may find more efficient methods of construction without making their houses more energy efficient. By contrast, a carbon tax does both. Manufacturers are nudged to find more efficient ways to make their product. When faced with higher-priced energy, we the buyers demand products that use less hydrocarbon fuel or electricity.
Cap-and-trade compliance imposes costs on industry. However, there is no obvious way for industry to retrieve these costs when they export goods or services. Because the scheme is opaque, it would be difficult if not impossible for government to refund exporters without being accused of handing out subsidies.
I cannot see how this advances competitiveness, but I do see companies sending manufacturing offshore to jurisdictions not burdened by cap-and-trade policies.
A carbon tax can easily be modelled on the GST/HST. This “value-added tax” is refunded to the exporter as their goods leave Canada in a simple, transparent process. Moreover, if we apply a carbon tax to our domestic industry, we must apply it to imported goods and the fuel used to bring them to market — to ensure a “level playing field.”
A carbon tax gives Canada a substantial advantage in the low-carbon world simply because nearly 65 per cent of our power is hydro electricity. By contrast, the U.S. relies on coal for nearly 40 per cent of its electricity and on gas for more than 25 per cent. China has about 75 per cent coal-fired generation. Peter Bursztyn, Barrie, Ont.