Climate change talk is cheap, and Canadians are bargain hunters

Some numbers to consider:

• Percentage of Canadians who tell pollsters that "Climate change is mankind's defining crisis, and demands a commensurate response":  65.
• In the 2008 federal election, percentage of votes cast for political parties that acknowledged that any meaningful climate change policy would affect consumer prices: 33.
• In the 2008 federal election, percentage of votes cast for the Axis of Climate Change Dimwits: 56.
• Number of parties represented in the House of Commons that will now publicly discuss the effects of climate change policy on consumer prices: 0.

Comments

[Frances Woolley]

The debate over carbon taxes is a debate about ways of life, and what comprises a good life.

Carbon taxes promote everything that I think is good: cycling, walking, livable urban communities, the government revenue that pays my salary, local farms and businesses (that's debatable actually, but anyways).

Carbon taxes work against everything that I don't like: SUVs, city folks driving pick-up trucks, commuting, big houses in the suburbs, obesity, pollution, goods being trucked and shipped all over the world. (I'm a bit more conflicted about the effect of carbon taxes on fancy overseas holidays, imported avocados and kids playing hockey).

And I trust that governments won't waste carbon tax revenue.

But for most people, a car is freedom on four wheels.

Why give up your freedom when what really matters is what happens to carbon emissions in the booming Asian economies?

Until carbon tax advocates are honest about what's at stake, change won't happen.

[Patrick]

I agree with Frances, except I don't think honesty will help. Most people think climate is weather. They don't even understand the basic problem. In any case, if you ask people to forgo consumption today to address a nebulous risk of something bad happening tomorrow, or 20 years from now, or after they're dead, my bet is that they're going to say 'no'.

At this point I have no hope that anything substantial will be done on climate change until catastrophic effects are clearly underway, and that basically means rapid sea level rise. Even if it happens slowly by human standards (say over 200 years), I doubt anything will be done.

[C]

Hi Stephen (And Nick),

Nice blog! You can thank MR for linking me here, or perhaps the appropriate word is "blame". Either way, you've earned inclusion on my RSS feed =)

While it's true that Cap and Trade/Carbon Tax are equivalent on paper, there are some important public choice differences. Cap and Trade is a lot easier to repeal if one day, say as a result of some new geoengineering scheme or ClimateGate^10, we decide that we are A-OK with carbon emissions. Also, Cap and Trade is only equivalent to a tax if permits are auctioned off. The pressures to dispense credits as political favours may prove irrestible, as it has in Denmark and south of the border. Finally, a Carbon Tax is much easier to fine-tune as we learn more about the Climate Sensitivity function, the economic costs of abatement, and the economic costs of warming. All of these factors go are necessary to determine the optimal level of carbon emissions we should permit, and to put it mildly,we've still got a lot to learn about those parameter values.

Cheers,

C

[Frances Woolley]

Patrick, yes, honesty with voters probably won't help. Honest thinking when designing policy might.

There's a parallel between getting people out of cars to stop global warming externalities and getting people out of cars to stop dangerous driving externalities (my Dad's favourite joke: "I want to die in my sleep like Grandpa, not screaming and terrified like his passengers").

But in the later situation, the question that immediately comes up is "o.k., how can we get social supports in place so that granpa (or granma) can have a good quality of life without driving?"

Perhaps it might help to approach global warming externalities the same way.

C, you must have been reading the posts on milk quotas? Nick noted that parallel earlier.

[Andrew F]

It really is incredibly depressing. I'm holding out vague hope that Iggy will implement a carbon tax by another name (cap and trade with auctioned permits with prices allowed to float in a small range), if not an out-and-out carbon tax. I'm confident that a carbon tax would not be terribly controversial after the fact when people get big tax cuts, and any attempt to reverse a carbon tax will mean big hikes in those tax rates. Reminds me of the current HST debate. So much sound and fury right now, but after July 1, it will all blow over. None of the opposition parties will be able to promise to reverse it, basically neutralizing the issue. Furthermore, most people won't even notice, except in Ontario, where it will cause an uptick in fuel prices.

[Frances Woolley]

In a globalized economy it's a disaster to try to tax carbon-producing industries unilaterally, because if we do the cement companies etc. will just relocate south of the border. Emissions go up because now the cement ends up being trucked north. Cap-and-trade protects existing firms, but makes it hard for new firms to enter.

The only way to avoid the emissions-just-being-exported problem is to impose taxes or consumption restrictions on consumers. Cap-and-trade doesn't work at the consumer level because the transaction costs of trading are too high. Which takes you back to carbon taxes. Steve, you're probably said this already in old posts I haven't read.

[Stephen Gordon]

I don't recall doing so, but that's certainly how my thinking has gone. We already apply the GST to imports so as to not penalise Canadian producers. I don't see why we couldn't extend that principle to carbon taxes.

[Andrew F]

Apparently the WTO restrictions are sticky around 'carbon tariffs'. There was an economic analysis done of which industries would be most affected if Canada acted alone, with the US, or with the entire world. Apparently most industries would do just fine if Canada acted unilaterally, because of the offsetting tax cuts and impracticality of imports (services, perishable goods, etc.). And there was little difference between the North American cooperation and world cooperation scenarios.

Realistically though, Canada won't be acting unilaterally. The rest of the industrialized world either has or will have some carbon regulation. And for those few industries where energy consumption is a primary driver of competitiveness (like steel, cement, etc.) we can impose some targeted tariffs.

[westslope]

Somebody should try to sell carbon taxes as a cheap short-cut to enhanced US security.