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Thanks for the link!

That's a very strange assumption. Particularly since, if they wanted to, they could assume carbon tax revenue is used to finance reductions in the corporate income tax and make a reasonable argument that this would increase capital flows into Canada. Then again, I couldn't imagine the Pembina institute calling for corporate income tax cuts.

As well, a corporate income tax cut would also reduce this regionalism problem as Alberta pays a disproportionate amount of these taxes.

OMG!

One other point:
If I get this right, what we have here is what used to be called a "putty-clay" model of capital. New investment is infinitely malleable putty, and can be made into any capital good whatsoever. But once it has been installed, it hardens into clay, and cannot be switched to any other use.

A putty-clay model is much better than a putty-putty model, which assumes than you can convert an existing bulldozer into a truck, house, computer, university degree, or piece of software, just by waving a wand.

But it still has problems. It assumes you can convert the factory and workers that produce new bulldozers into a factory and workers that produces new trucks, new houses, new computers, new university students, or new software. Now, it's true you can, given enough time. But new capital is produced by existing capital (Including human capital). And that existing capital that produces new capital goods is itself putty.

And that capital is itself produced by higher order....(The Austrians are going to love this!)

Let's face it. In any big reallocation of resources like this, a lot of existing capital will sit idle. The effective (working) capital stock will be reduced. Even if we ignore the international dimension, I don't see how savings could be high enough to generate the investment needed to offset that idle capital. If they were high enough, the drop in consumption would be large, even if temporary (decades).

Also, it's in examples like this that Arnold Kling's (Austrian/Hayek) "re-calculation" story really comes into play. It's not going to be easy for the decentralised market to "solve for" the new equilibrium. CGE models essentially assume an economy that acts "as if" it were controlled by an omniscient central planner. They ignore this problem. I have faith in the market, but not that much faith!

Should read: "And that existing capital that produces new capital goods is itself clay."

Because this is printed in the NatPost, it loses wide spectrum credibility instantly because it will be bookended by hysterics claiming we can have unlimited amounts of CO2 or that if Canada creates x tonnes of CO2 per person we can achieve the cuts by sending home all refugee claimants.

That said, it's so awesome to work for a thinktank where you can propose models that work perfectly in a country which has no politics, no organisational boundaries, no international trade obligations and activities.

The comments above on tax cuts dealing with the effects on AB don't really fly either because our current age has made us innately sceptical of anything government proposes on tax base reorganisation and compensatory schemes (see Ontario HST, BC carbon tax, Stephane Dion). You can hand out as many rebate cheques as you like but the only time to propose this sort of thing is when tax revenue is already booming and there isn't a sense that there's a hole to be filled and a new tax was due any day now.

Sad. The whole GW issue really depresses me.

If you look at the Gov't numbers (here) it tells us where the lion's share of emissions are coming from: transportation, electricity generation, and industry.

To reduce emissions significantly, these are where the cuts have to be made, and there are only so many ways to make them; do less transporting/generating/industry, or new technology to do ever more with less and less energy. Since simply using less is basically not in the cards (short of a massive economic catastrophe). It's unlikely that it will be possible to maintain acceptable levels of economic growth while using ever decreasing amounts of energy, at least not without a truly massive restructuring of the world economy and how we live. Are people prepared to accept that? Are we prepared to abandon huge swaths of our capital stock of houses, buildings, cars, trucks, aircraft, houses, machines, roads, etc and completely re-organize how and where we live? I'm skeptical.

At this point, the best case scenario seems to be that we do as much as we are willing to do and that the effects of climate change aren't too catastrophic. I don't suggest buying land in Tuvalu or Florida unless you like scuba diving.

I really hope that I'm too pessimistic. Maybe there really is what amounts to an energy free lunch, or maybe we'll get lucky and some clever scientist will find a way to make nuclear fusion or warp drives work, but it seems to me like a hell of risk to bet the farm on juvenile science fiction fantasies coming to life.

Patrick: We've been using energy with increasing efficiency for what are likely hundreds of years. Post-war period in particular. There is no reason why innovation cannot be accelerated through appropriate policy.

North American and most developing world countries charge tiny excise taxes on gasoline and similar compared to the northern European countries. Their citizens live well, the cities are people friendly.

http://media.economist.com/images/na/2009w35/Petrol.jpg

westslope: But overall energy consumption and emissions has continued to increase. When we find efficiencies one place, we just find another place to put the energy to work. In any case the magnitude of the 'efficiency' that would be required to reduce emissions in absolute terms by 50% of even todays levels while maintaining economic growth worldwide seems very unrealistic to me.

Sure, northern Europeans cities are better. Are we going to reconfigure our cities? Are we going to abandon the suburban asteroid belts around Toronto, Calgary, Edmonton, etc and move everyone to the city centers? I very much doubt it. Have you seen the suburban sprawl around Calgary or Edmonton, for example? It can't be sustained in a low carbon world. It isn't dense enough to support public transit in any reasonable way. We recently went through a period where gas was VERY expensive relative to historical norms and it made very little difference. Demand is very very inelastic. Even in London UK, with all their commuting fees and expensive petrol, the roads are still gridlocked. And we're just considering the cars themselves. The roads and other infrastructure also require huge amounts of fossil fuels to maintain.

Are we going to abandon and rebuild all the world's coal power generation facilities? Where are we going to get the money to do that? And what will replace them? Nuclear? That's even worse when you factor in the fossil fuels required to mine, process and transport the uranium, and to build and maintain the plants. Solar? So we paper the entire planet with solar panels? Wind? I've seen the giant wind turbines in southern AB - they're a blight. Loud and enormous and ugly. And what effect will they have the atmosphere? On wildlife?

No, I'm not at all sanguine about the prospects for really tacking climate change without serious pain, especially when we can't even have an honest adult discussion about just how urgent it is to do something, and how hard it's really going to be.

Of course their might be an unforeseen technological break through in energy. Maybe. We hope. And I might win a million bucks at the roulette table tonight. Or not.

Patrick: solar and wind are not so bad as that. We'd only need a tiny portion of the earth's surface harness with solar to replace all fossil fuel requirements, and a lot of that can be placed on otherwise wasted space, such as building roofs or even parking lots (they're working on ultra-strong glass to create solar panels that can be driven on). And the loud windmills you see in Alberta are probably quite old. I've seen a number of installations here in Ontario, some very large, and they were essentially silent. I stood within a few hundred meters of an array on a breezy day and couldn't hear anything at all.

Sad that that Pembina study was essentially a waste of time. One wonders whether they were deliberately trying to mislead people.

Andrew F: I agree that solar and some wind are probably where we are going, I'm just sceptical that we can continue to do things more or less the way we do now AND drastically reconfigure our primary energy sources. I'd be delighted to be wrong.

Off on a slightly tangential rant (sorry, but I can't resist): passive solar is such a low hanging fruit that doesn't get picked. Why?

Stick the windows on the south side of the house, and the garage on the north. (Unlike my place!) It can't cost any more to do that. Why do builders, and home buyers, always think that the house should "face" the street?

Their economists can't get something simple like this right and yet we assume their climate models are perfect? There are, contrary to what Suzuki, Gore and the Pembina Institute tell you, many very credible scientists who do not believe the work of the IPCC (who brow beat non believers into submission with academic threats of funding loss). They tell you they know exactly what the climate will become, how it is going to happen and who is responsible but climatologists can't give a proper weather forecast for a week from now? As Dr David Evans, as former Climate Alarmist pointed out, the fear mongers have gone from ambient temperature measurements to support their cause to ocean temperatures. Trouble is that the data from the newly (2003) ocean bouys (Argo system) show cooling.
This is really about social engineering and shifting money to third world countries in the biggest pogie scheme of all time. To quote the former Liberal Environment Minister Christine Stewart: "No matter if the science is all phoney [sic], there are collateral enviromental benefits....Climate change [provides] the greatest chance to bring about justice and equality in the world."
Don't believe me READ the signs at Copenhagen!

Murray, please don't use the weather-vs-climate fallacy. It makes you look simple. They are not the same thing, which is just about the first thing a meteorology text would tell you. Forecasting trends in climate is like predicting the stock market will rise at 10% p.a. over the next three years, whereas weather prediction is like predicting the change in the market tomorrow. Very few people can credibly do the latter.

I'd like to know if the quote from the report could be trimmed a little more to focus on the core of the problem. In particular...

The new, flexible portion of this [capital] is free to migrate to whichever sectors and regions in the country that offer the highest returns. No net foreign capital is assumed to be available, i.e. all investment must be funded in the long run from Canadian sources.

... is a very accessible summary. It doesn't have any economic terms that might scare off the less economic-theory-aware, but still seems to capture the core of the difficulties with the assumption.

I understand the difference between climate and weather. Obviously, you missed the simple point. Suzuki and Pembina have made huge errors in their ecomnomic modelling so how can you assume that the same doesn't apply to their climate work? David Suzuki has claimed simple beach erosion is rising ocean levels, even his NASA buddies have confused geothermal heat flux at plate boundaries with Global Warming (their own article calls it regional)causing Al Gore to falsely claim we are melting the Western Anarctic Ice Shelf. There are so many variables that go into climate modelling, sun,clouds,ENSO, geothermal heat flux et al. Yet Suzuki, Gore and the climate alarmists have reduced it to man made CO2. Their work is driven by economics not science. They refuse debates, they work to stifle alternative positions and they push to cut off funding to opposing views. Their science is skewed, their attitude is worse and their economic forecasts are out to lunch. Its about that simple.

Andrew F: " Forecasting trends in climate is like predicting the stock market will rise at 10% p.a. over the next three years, "

I'd say it's easier than forecasting the stock market - the Navier-Stokes equation doesn't have or need a term for people's feelings.

MurrayP is a good example of the dangers of lousy analysis and/or dishonest spin. It's not rational to believe that decades of data and peer reviewed science is an elaborate hoax to funnel money to whoever, but there are lots who clearly hold this view. I think this has a lot to do with people being bombarded with lots of clearly dishonest and self serving analyses. With both sides pulling out all the stops with the rhetorical tricks and traps and either outright lies (the deniers) or self-serving dishonesty (the free-lunch greens) it's not surprising that people are tuning out and concluding it must all a scam.

MurrayP: "Suzuki and Pembina have made huge errors in their ecomnomic modelling so how can you assume that the same doesn't apply to their climate work"

This is faulty reasoning. Their climate work (if they do any) should be evaluated on it's own merits.

ugh. "... its own merits"

Well Patrick if I am a dangerous example of lousy analysis then debating people like me would be a very easy and decisive win wouldn't it. But no your type uses ad homenim attacks instead of facts. Al Gore won't debate, Suzuki won't debate, why? Intersting that data going back to the 1800's was destroyed because of a storage issue when people tried to get at it under the freedom of information act. I can tell you that anyone would most likely be fired (and rightfully so) for such action in virtually any business or academic reasearch facility that relied on only their "massaged" version of that data to support their theory. IPCC "peer reviewed data" is like asking racists if racism is right.

You misunderstood my meaning. I think the dishonesty, spin, lies, etc ON BOTH SIDES causes people to believe totally nutty things.

I do think you're views are, to be frank, wrong and a little nuts and dangerous in so far as it's a roadblock to dealing with GW, but I don't think YOU are dangerous - at least I have no reason to believe that.

But I'm clearly not going to change your mind no matter what I say, and unless you're a climatologist with some pretty impressive credentials and data you are not going to change my views so I suggest we stop hijacking this thread and agree to disagree.

Then perhaps you should read some material from scientists who do not ascrible to "man made" Global Warming. By the way I am a scientist and have written several articles showing the flaws in the arguments of "man made" Global Warming as they pertain to geothermal heat flux in the lithospheric craddle of the WAIS versus ambient "man made" temperature change in the Western Antarctic. The climatologists use a top down method which fails to examine the root causes of the situation ;it is simplistic and seriously flawed. But enough of me. How about a former man made Global Warmer who has changed sides?

Dr David Evans
Dr Evans ( a former believer in Global Warming )worked for the Australian greenhouse Office from 1999-2005 building the carbon accounting model that Australia uses to track carbon in its biosphere under the Kyoto treaty. He is a mathematician and engineer with six University degrees including a PhD from Stanford. He shows, in the article below, the flawed extrapolations the climate alarmists are using to create false projections of temperatures and states that “The ocean data that the alarmists are relying on to establish their warming trends is all pre-Argo, from XBTs. Now that we are measuring ocean temperatures properly, the warming trend has disappeared. And by coincidence, it disappeared just when we started measuring it properly! Notice how the Minister's graph above shows rising ocean heat content for 2004 through 2006, but the Argo data shows a cooling trend? There is a problem here.” Also look at figure 5 that shows how the IPCC (UN) have erroneously used a two point extrapolation to project temperature increases and this flawed data is being used in Copenhagen.

http://www.globalresearch.ca/index.php?context=va&aid=14504

I am done have a nice day. Bye the way, if the IPCC is wrong then how can the economics be right or justified?

Murray, regardless of the merits of your other arguments, your use of the weather=climate fallacy is invalid. Please don't use that argument. It makes you sound simple or disingenuous (trying to dupe other less clever people).

"By the way I am a scientist and have written several articles showing the flaws in the arguments of "man made" Global Warming as they pertain to geothermal heat flux in the lithospheric craddle of the WAIS versus ambient "man made" temperature change in the Western Antarctic"

Can you provide a reference to the article?


Speaking of passive solar technology, the curious may wish to explore the architecture of Frank Lloyd Wright and his head-strong student Paolo Soleri. Soleri and his foundation have built a proto-type city of the future one hour north of Phoenix, Arizona called Arcosanti.

A renaissance man, Paoli Soleri is a student of Jesuit geologist Theilard de Jardin. His neo-marxist orientation may partially explain the slow progress of the prototype.

CORRECTION Wishing there was an edit function......

Pierre Teilhard de Chardin (.... not the nonsense I wrote above)
http://en.wikipedia.org/wiki/Teilhard_de_Chardin


Paolo Soleri
http://en.wikipedia.org/wiki/Paolo_Soleri


Arcostanti
http://en.wikipedia.org/wiki/Arcosanti

As I said earlier ad hominem attacks.
1) the difference between weather and climate Andrew is time. They are NOT different only the length of measurement changes. From NASA:"The difference between weather and climate is a measure of time." Google it! My simple point is that the complexity of weather is nothing compared to the complexity of climate so please stop trying to reinvent the definition from your science 10 textbook to prove an invalid point that makes you look well "disengenuous".
2)Patrick I have tried, unsucessfully, to cut and paste one of the private articles I have written. I have not written them for "peer review" by the Klan (IPCC). Nor do I intend to have you and your ilk fill my inbox with your nonsense. I will,however, provide you with two simple(you guys like that word) links.
One is the NASA article. Notice the edge of the bright red (very dramitic for a .31 degrees F per decade increase) against the Transarctic mountains. The other article is about the West Anarctic Rift System (WARS) that sits directly beneath the Western Antarctic Ice Shelf (WAIS) and is bounded by the same Transantarctic Mountains. I'll keep it simple for you Patrick. The WARS is one of the largest active rift margins in the world. Subgalcial volcanism, lateral and vertical movement of the basement. I'm sure a bright guy like you can put the implications of that together. Intersting that there is a virtual 1:1 correlation between the NASA map and the WARS. I guess that is just a coincidence right! There is far more to the story but I'm sure you can find a way to spin doctor your way out of that.

http://www.nasa.gov/topics/earth/features/warming_antarctica.html

http://pubs.usgs.gov/of/2007/1047/ea/of2007-1047ea113.pdf


DID YOU READ DR EVANS link? Probably not because why let facts sway you, right?

"People who know that they are morally superior to the rest of mankind are often tempted to ignore the moral norms on which Western civilization depends. One of the most important of these rules is telling the truth. The Ninth Commandment states ‘Thou shalt not bear false witness….’ Environmentalism, however, is a form of religious belief which fosters a sense of moral superiority in the believer, but which places no importance on telling the truth. As the former Canadian Environment
Minister Christine Stewart put it:
No matter if the science is all phony [sic], there are collateral environmental
benefits…. Climate change [provides] the greatest chance to bring about justice and equality in the world.1"
Ray Evans

Why do all threads about the economics of climate change policy end up this way?

Yeah, they do. I apologies for my part. I should have kept my mouth shut.

MurrayP: Bibliographic citation would suffice. I can find the material.

Stephen, this time I didn't start the clime change debate, ha-ha. I think its the main argument surrounding if it isn't real, then why are we talking about economic policy? Even to that, maybe just write a post about Arthur Pigou, maybe that won't end up with a climate change debate? It's worth a try, ha-ha.

MurrayP is my hero on this argument, at least someone follows science, and argues against what politicians say :)

Nick, the reason houses face the street is just how it has traditionally been made, people like their privacy in the backyard and rather not have people coming in from the back. It could also be the issue that people want to be seen in the front of a house so if someone tries to attack them, the neighbors would see. Personally, I rather have the house about an acre from the road. But the passive solar attempt would be nice if people value their energy bill, or if they prefer the aesthetic look and thus don't mind the higher cost.

I do love that the first requirement for an argument is that one must have the proper credentials. Apparently my understanding of logical fallacies is incorrect and that an appeal to authority is actually a virtue and not a failure in logic. Who knew!

This resembles the worst obscurantist streaks of the old Church - persecuting translators of the bible and burning non-Latin bibles. The instant reflexive resort to ad hominems and logical fallacies says no good thing about peoples arguments.

Memo to journalists: Disregard the Suzuki-Pembina report on the costs of climate change policy

So, what report or plan should journalists regard instead? Is there something comparable, but more correct?

One other question. OK, suppose the $12-$15 billion of lost investment in Alberta is not made up in the ROC (so BAU), and hence the 1.4% decline in Canada's GDP that they forecast for 2020 is incorrect. What is the revised level?

Is it rather 2%, 5%, 10%? Isn't this an important question to answer before discarding the entire study?

"Why do all threads about the economics of climate change policy end up this way?" -Stephen Gordon

1.) For some, the end of the world is nigh.

2.) Climate change policies could impact income distribution. The implied policies fly in the face of colonial-era entitlement to cheap resources.

3.) Economy policy options generally offer improvements, not the final solutions wished for by many lay folk. The act of polluting is perceived as a sin in many quarters.

How am I doing?

quite well I'd say.

Mark Thoma's views are pretty much my views, and he's less shrill :)

http://economistsview.typepad.com/economistsview/2009/12/financing-the-fight-against-climate-change.html

One other question. OK, suppose the $12-$15 billion of lost investment in Alberta is not made up in the ROC (so BAU), and hence the 1.4% decline in Canada's GDP that they forecast for 2020 is incorrect. What is the revised level?

Is it rather 2%, 5%, 10%? Isn't this an important question to answer before discarding the entire study?

It is an important question to answer, and the study should have provided one. The fact that it doesn't is the reason why it should be dismissed out of hand.

A few more observations. I find Mintz's column in the NP stating the obvious, at the expense of appearing as a piece of demagoguery.

Some basic commentary. If a carbon tax /cap and trade is imposed (now likely part of a North American plan, if any) I presume a company would be faced with a business case decision. Make the investment and pay the tax directly (if that is an option), purchase offsets from a third party, or invest directly in low carbon offsets (say solar or windmills).

Now, we've seen capital flight out of Alberta in natural gas exploration and development - due to the high costs and inflationary pressures brought about by unfettered investment in the oil sands. So, it would seem obvious that if the second or third options are chosen, the investment in all likelihood would be where labour costs and overall development costs would be lower - ie outside of Alberta. And I doubt significantly whether the N.A. Cap and Trade treaty would allow investment in China and India, given the protectionist sentiments in the US, even if the management of say Suncor would even entertain that risk.

Now, if the cap and trade boundaries are limited to North America, Ontario and the ROC should get its share of investment of the total N.A. market. Mintz and others have not demonstrated that the $12-$15 billion used in the model, or whatever, is too high or too low, notwithstanding the previous arguments.

Secondly, any additional tax/costs will only crowd out marginal projects - I presume the $12-$15 B decrease is the difference between say a $200 B investment under BAU and a $185 B one by 2020 (roughly 6-7% total), and who pays the difference, I presume, would most likely be the shareholders of the companies - though there would be some downward pressure on wages if the level of development was tempered somewhat - doubtful if only one $15 B project falls off the books in the next ten years.

Disappointing and incomplete critique, from my perspective.

You - and the study's authors - are forgetting the fourth option in that business decision: not investing anything and walking away.

It is an important question to answer, and the study should have provided one. The fact that it doesn't is the reason why it should be dismissed out of hand.

Back in the day when I was running financial models on oil and gas plays, I'd run sensitivity analysis. If the investment decision was not affected by the assumptions of one variable, its accuracy was deemed immaterial. Especially if I was forecasting out 10,20,30+ yrs.

From a distance, it looks like this assumption might fit that category.

You've got it backwards. In the short run, it's reasonable to assume that productive capacity is more or less fixed. That assumption gets less and less plausible as the projection horizon gets longer.

"Now, we've seen capital flight out of Alberta in natural gas exploration and development - due to the high costs and inflationary pressures brought about by unfettered investment in the oil sands"

There's more to it than that. The price tanked, party on the belief that shale gas is abundant. We'll see how that works out (I have my doubts). But the AB gov't also changed the royalty structure, and the changes had a very negative impact on natural gas E&D.

In a cap & trade or carbon tax world, I think conventional natural gas actually fare favorably compared to the tar sands. In simple terms, you drill the well, maybe frac it, then collect what comes up. Even tight gas that needs lots of holes and lots of exotic fracturing is much less energy intensive that tar sands. There's no need to run huge earth moving equipment 24/7, no need to steam clean dirt, no need to put the steam cleaned dirt back where you got it, etc . There are some methods of exploiting the tar sands that doesn't involve digging, but they still require huge amounts of energy (they basically pump steam into the ground to make the tar flow). And once you get the oil (bitumen actually), there aren't many refineries in the world that can do anything with it because it's of such low quality and so heavy.

So I would speculate that cap & trade might shift activity back to conventional natural gas and away from tar sands.

You - and the study's authors - are forgetting the fourth option in that business decision: not investing anything and walking away.

Yeah, provided there is a better return elsewhere, and the revised economics don't exceed the corporate rate of return, and/or NPV or whatever criteria they use. I would include these in the marginal category. If it's a pincipled decision (not economic) then they should sell off the asset to someone who doesn't share that philosophy - its revised sticker price adjusted accordingly.

You've got it backwards. In the short run, it's reasonable to assume that productive capacity is more or less fixed. That assumption gets less and less plausible as the projection horizon gets longer.

True, largely why the boom and bust occured in Alberta of late - too much demand of skilled workers/professionals - leading to inflation and cannibalization of key personnel. Cooling off demand/activity will be beneficial in the short term, as well as long if you believe there is some merit in diversity.

So I would speculate that cap & trade might shift activity back to conventional natural gas and away from tar sands.

true, a result of many factors - but capital cost is a significant one. I can tell you though a few yrs ago, I was managing a medium sized gas development in NE BC. Shallow gas. And when the boom hit with a number of companies all simultaneously starting oil sands projects, the competition for skilled professional people and skilled pipeline/facilities contractors heated up significantly. Not only did this result in significant inflation, but you often got stuck with a cost plus contract - so if the people you hired were green, inevitably they didn't know what they were doing. Schedules weren't met, and as a result, in the next year's economics, if your forecast price for natural gas didn't increase from say $3 /mmcf to $5 in the short term, your project was killed. So, a couple of years ago when O&G companies were suggesting that they needed $7 / mmcf , a good portion of that requirement would have been due to higher labour costs. Deeper foothills exploration probably played a large part as well.

1) Why are they talking about how easy it is to reduce emissions to 80% of 2006 levels by 2020, when WWW has just told us we must reduce emissions to 63% of 1990 levels by 2020? See
http://www.popsci.com/science/article/2009-10/wwf-report-we-have-until-2014-stop-global-warming
It's as if all alarmist demands are equally valid.

2) Why don't climate alarmists ever refer to themselves as alarmists? Don't they want to sound an alarm? What's to be ashamed of?

3) Skeptics don't know what they are doing when they confuse weather with climate. The alarmists, however, have perfected this. See
http://www.numberwatch.co.uk/warmlist.htm

4) I know the alarmists are right because I've read many of their papers and I've checked the data and I've checked the programs that have been run on that data and it all looks right. I've also read dozens of papers by the leading skeptics, and they are all terribly flawed. Of course, I could understand all this stuff because I am an expert in all the relevant areas. I won't tell you my name, but I write (under various names) for all the major newspapers, and I comment on just about every web site. I really get around.

Stephen, has it occured at all to you that the Mintz criticism, coming as it did on Dec 10th in the NP, the exact same day the critique from the partisan Canada West Foundation released its report, and a very partisan column by Deborah Yedlin in the Calgary Herald, was politically motivated? Many of the Canada West findings were repeated by Mintz from the U of Calgary.

Canada West: http://www.cwf.ca/V2/cnt/release_200912100553.php

Deborah Yedlin: http://www.calgaryherald.com/business/denying+West+climate+pain/2324232/story.html

Yedlin's had these bon mots of warning:

Call it guilt by association, but one has to wonder what impact this might have on TD's energy practice in Calgary, not to mention on the Pembina Institute's consulting practice that makes a fair bit of coin working for the energy sector.

As Canada West's analysis clearly shows, the Pembina/ Suzuki study is anything but constructive. When all the layers are stripped bare, Gibbins notes it essentially advocates for policy that will effectively engineer significant regional distortions in the Canadian economy.

We've been down that road before-- as TD's CEO Ed Clark (one of the authors of the National Energy Program) knows all too well.

(Funny how Yedlin never reminds her readers that her hubby is a major industry analyst at a major investment bank in Calgary. You'll find her often appearing with key CAPP personel and as a guest of Gibbins in such things as debates, putting forward the "oil patch" arguments)

Now, when critiques warn of the risk of stirring up regional tensions, through doing that very thing themselves (repeated here), isn't this really a political argument?

Shouldn't this blog properly have the tag: politics?

That's way too Byzantine for me. I looked at the assumptions driving the main result, and that's what I wrote about.

Sorry, I didn't realize you were part of the NP commenters. Only just found out when I googled Ross McKitrick of U of Guelph for his more balanced review of Nov 3rd, before all of the latest activity, starting Dec 10th.

The cost estimates were done by Mark Jaccard's team in Burnaby, B.C. The technical report is a serious piece of work that tries to put some numbers onto far-reaching energy policy shocks. Although I have reservations about their modeling work and their cost estimates, they deserve credit for trying. It is astonishing and unacceptable that there has been nothing on this subject from Ottawa. Why do we even have a Department of Finance anymore? There should have been detailed cost estimates long before now. Instead we are sleepwalking into some of the most disruptive and costly energy policy misadventures since the National Energy Plan of the 1970s without the Conservatives having published a single estimate of the economic consequences.

http://www.financialpost.com/related/topics/story...

If you think this is Byzantine, you've obviously been lucky to avoid or ignore Alberta politics. The technique in other areas is often referred to as "spin, and echo chamber". It's just the "NEP" argument, packaged differently.

I've read through that a few times, and all I can say is: Huh?

"National Energy Program"

Oh God, please no! The very mention of NEP triggers mass oppositional defiance disorder in Alberta. I hope Health Canada stockpiles ritalin.

Don Martin falls in line and does his part to stir up the "us vs them" pot in the Dec 15th Calgary Herald:

It doesn't pay to needlessly rile up Albertans. They do not wave the separation threat easily or often. But if the feds impose economically punitive caps on oilsands production to block expansion, well, eastern bastards will be freezing in the dark while the Republic of Alberta prospers.

To vilify a safe and reliable energy source that emits just 0.10 per cent of global gas emissions for cheap political gains is not worth the risk of dividing a country.

http://www.calgaryherald.com/columnists/Martin+Canadian+delegation+worst+enemy+itself/2341900/story.html

Re ritalin - I just give them a dose of my reality check video
http://www.youtube.com/user/DotDunster#p/a/u/0/Op6XLJCXagk

Ah jeez. Is that your point? That I'm part of some media conspiracy?

You can't be. I never saw you at any of the meetings.

"eastern bastards will be freezing in the dark while the Republic of Alberta prospers"

Juvenile. Next they'll be threatening to hold their breath.

Stephen - not sure what jvfm is insinuating, but he makes one good point - the generic strategy to get Albertans to oppose something is to call it the next NEP. Regardless of the issue, they immediately turn off their brains and reach for their pitchforks and lynch ropes.

The Alberta-loses-everyone-else-wins scenario is built into the assumptions of the CGE modeling exercise. What is far more likely is that we'll all pay the price. And it's important to be honest about it.

Funny, if you chop up every part of the world into 1000 pieces proportional to their CO2 emissions, they all account for just 0.10% of global emissions and can thus safely continue to as usual. Right, Don?

Re natural gas prices, and cost structure, as I was saying:

http://watch.bnn.ca/commodities/december-2009/commodities-december-17-2009/#clip247527

Stephen, sorry to pester you further, but a q arising from Jack Mintz's rebuttal in the NP of yesterday.

He wrote:

To assume that aggregate capital is fixed in the Canadian economy over the next decade is far-fetched. John is correct that if other countries pursue similar policies as Canada, the world cost of capital will likely fall, including Canada’s. But that is not what is modeled by the TD-sponsored study. It looks at harsher policies compared to the U.S., China and other large economies, thus resulting in a capital outflow from Canada.

http://network.nationalpost.com/np/blogs/fpcomment/archive/2009/12/16/canada-should-lead-climate-fight.aspx

Now, on page 4 of the TD study, it states:

The analysis shows that the carbon charge and complementary polices chosen are not sufficient alone to meet the targets. Their effect under two scenarios was tested: one where the OECD countries impose policies as stringent as Canada (OECD acts together – “OAT”), and one where Canada goes significantly further than its OECD trading partners (Canada goes further – “CGF”). To make up the difference between the target and domestic emissions reductions, purchases of international emissions permits are necessary in both scenarios.

So, it seems to me that Mintz is taking issue with the unreasonable assumption that the total capital invested in Canada ($510.1 B, table 13, pg 11) remains constant under both OAT and CGF. Ok, I can agree with that, and I assume that was your point as well. So throw out the more unlikely CGF case.

But the more likely scenario OAT (one where the OECD countries impose policies as stringent as Canada - OECD acts together) it would seem to me still stands. Or is it your position that the OAT case is also tainted? And isn't this the more likely scenario, assuming Copenhagen is successful?

More likely than CGF, perhaps, but there's still no reason to impose it a priori. At best, if all OECD countries had the same structure, then there wouldn't be any inter-country reallocations of capital. But there's still a way to go before you can assert that global (and hence national) capital stocks would remain constant.

If Canada is relatively harder hit - and I don't think there's any doubt about this point - than even that story has to be set aside.

k, thanks. Sorry if my comments were interpreted as implying anything about motives on your part. Not intended, but I can see how they might have been interpreted as such.

Cheers

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