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Brave B.C. talks true carbon tax

Patrick Brethour, Globe & Mail
VANCOUVER — Stephen Harper and Stéphane Dion won’t do it, and most Canadian politicians won’t even say it out loud.

But in British Columbia, Finance Minister Carole Taylor is merrily pursuing a carbon tax, eyeing a plan that could see the province levy substantial fees on economic choices that spew greenhouse gases, but that would slash other kinds of taxes, including income taxes.

That is the precise policy that market-minded environmentalists and environment-minded economists have long urged, since only pain in the pocketbook – not feel-good ad campaigns, not loophole-riddled regulations – can force the changes in consumer and business behaviour needed to curb climate change. The economic logic of a carbon tax is impeccable; the politics, however, have been unpalatable.

Except in B.C., where Ms. Taylor and the notionally conservative Liberals are suddenly pilfering the policy book of the Green Party. She’s a bit lonely arguing the case of short-term pain for long-term green gain. “So, there I am …” Ms. Taylor says with a laugh, before turning back to the less jovial matter of the provincial tax code.

…Ms. Taylor takes pains to stress that no decisions have yet been made. But the mere fact that the Finance Minister is even talking aloud about a carbon tax sends two clear messages. First, the province is serious about tackling climate change, even if other parts of its environmental record are decidedly less green. Second, the government is not afraid to say what everyone knows: Consumers, not just businesses, will have to bear the costs of reducing greenhouse gases.

The straight talk is a marked contrast to Quebec and its faux carbon tax that came into effect earlier this month.
(26 October 2007)
Related from The Canadian Press (via Globe & Mail): B.C. mulls economic impact of carbon tax.

The second inconvenient truth

Mark Jaccard, Vancouver Sun
We must tax greenhouse gases or they will keep rising; wishful thinking about voluntary cuts just won’t work

… while the climate scientists of the IPCC are justly recognized for their work, we overlook the equally valuable work of this organization’s social scientists — the economists, sociologists, political scientists, etc. who research how to reduce greenhouse gas emissions.

If we are to effectively respond to the climate risk, we need to study closely this group’s conclusions that there is a second inconvenient truth: We must tax greenhouse gases or they will keep rising.

During the time of the IPCC’s work, rising global temperatures have provided real-world evidence supporting the first inconvenient truth. During the same time, failed efforts to reduce greenhouse gas emissions have provided real-world evidence in support of the second inconvenient truth.

And Canada has provided the most conclusive evidence on the planet.

In 1988, then prime minister Brian Mulroney committed to emission reduction targets for 2000 and 2005. His speeches at the time contained language just as determined and confident as that currently used by Prime Minister Stephen Harper and Premier Gordon Campbell when they trumpet targets for 2020. But the apparently strong convictions of Mulroney, and after him Jean Chretien and Paul Martin, had little effect.

Since 1990, our federal government has launched six major policy initiatives — with great fanfare and promise — yet emissions keep climbing.

Experts of the IPCC are convinced they know why.

Our policies thus far have been dominated by wishful thinking, by government hoping that through information and subsidies it could motivate individuals and firms to voluntarily reduce their emissions en masse.

We have had product labels, information brochures, advertisements, awards, Rick Mercer commercials, and lots of speeches. We have had some subsidies, too.

But we have had no compulsion. There have been no financial or regulatory repercussions for any Canadian firm or individual if they maintained or even increased their greenhouse gas emissions. Purchase a propane or natural gas backyard patio heater today and there is virtually no charge on your emissions. Not surprisingly, this and other polluting devices are selling like hotcakes. And so emissions rise.

To the IPCC, it is obvious that emissions will not fall until there is a cost. This cost can be implemented either through a greenhouse gas tax or an economy-wide cap on emissions. In the latter case, the cost of paying for tradable permits that sum to the total cap is equivalent to the tax.

In other words, in both systems we pay for emissions. But be wary. Economists have shown long ago that the tax would be better for the economy than a cap.

…Just this month, 69 economists from the University of British Columbia, Simon Fraser University, University of Victoria and the University of Northern B.C. signed an open letter to B.C.’s finance minister, Carole Taylor, calling for a carbon tax in British Columbia (the letter and list of signatories is posted at
(24 October 2007)
Dr. Jaccard teaches at Simon Fraser University in British Columbia.

B.C. government eyes carbon tax in next budget (The Province)

Articles on the BC carbon tax recommended by contributor Bill Henderson, who writes:
I think the Jaccard point about us doing nothing but talk for two decades is best.

Alberta royalty grab stuns oil industry

David Ebner and Katherine O’Neill, Globe and Mail
Stelmach unveils new regime that will mean a potential windfall of $1.4-billion for the provincial treasury beginning in 2010

CALGARY AND EDMONTON – Alberta Premier Ed Stelmach infuriated the province’s oil industry Thursday with surprisingly aggressive plans to take more money from the energy business, but the increases are less than a government-commissioned panel recommended last month.

The government said that under the new regime, money collected from the energy business could be 20 per cent higher in 2010 than forecast, potentially bringing an additional $1.4-billion to the treasury. That figure is nearly half a billion dollars less than the expert review panel wanted.

Starting in 2009, royalty rates will be increased across the board – for example, in the oil sands, rates will start rising when the price of oil is higher than $55 a barrel, with a new maximum of 40 per cent of a company’s net revenue, up from a fixed rate of 25 per cent.

“As future generations look back at today, I believe they will see we were fair and reasonable, not greedy or short-sighted,” the rookie Premier said after the Progressive Conservative government released details of how it will redraw the royalty rules for oil, natural gas and oil sands in the debt-free province.
(26 October 2007)

Is Alberta out of step with the world?

Madelaine Drohan, Globe and Mail
OTTAWA – You would think from the anguished cries of the oil companies that the Alberta government’s decision to increase royalties was a bolt from the blue.

Far from it.

In the past five years, as the price of oil has risen from about $20 (U.S.) a barrel to its current level of about $85, a succession of governments around the world has moved to claim a greater share of energy wealth for their citizens.

Some have been eye-catching grabs, such as the one made by Hugo Chavez of Venezuela, whose government took majority control of all major oil projects earlier this year. Others, lacking a showy front man like Mr. Chavez, have quietly boosted the public share.

The long list of countries stretches from Britain to China and includes Russia, Angola and Ecuador. State legislators in Alaska are currently debating a tax increase on oil company profits that Governor Sarah Palin calls “Alaska’s Clear and Equitable Share.” The government of Nigeria is thinking of revisiting the contracts it signed with international oil companies.

This is clearly a global trend. Did the companies operating in the Alberta oil sands really think they would be spared?
(25 October 2007)

Rabaska: une étude démolit l’argument écologique

Louis-Gilles Francoeur, Le Devoir (Montreal, Quebec)
Passer du mazout au gaz est un mythe dans un marché libre

La substitution du mazout par le gaz naturel ne fonctionne tout simplement pas dans un marché libre comme celui du Québec, sauf momentanément et marginalement avec l’appui d’un programme de subventions, indique une étude inédite sur la question.

Cette étude, qui met en pièces la justification publique avancée par le gouvernement Charest pour préparer le terrain à l’autorisation du projet Rabaska, vient d’être remise par son auteur, Patrick Déry, un consultant en énergie du Saguenay, aux deux organismes qui l’ont commandée pour voir clair dans le dossier du gaz naturel, soit le Conseil régional de l’environnement de la région ainsi que le Groupe de recherches écologiques de La Baie (GREB).

Le programme de substitution annoncé récemment par le ministre des Ressources naturelles et de la Faune, Claude Béchard, a été notamment applaudi par deux groupes environnementaux, soit Équiterre et Greenpeace, parce qu’il pourrait aider le Québec à atteindre ses objectifs de réduction des émissions de gaz à effet de serre. Les promoteurs de Rabaska disent la même chose depuis un an et le BAPE a abondé dans leur sens.

Or, affirme le chercheur, qui a analysé l’évolution historique de l’usage des combustibles fossiles à l’échelle planétaire, aux États-Unis, en Allemagne et au Québec, «les programmes de substitution dans des marchés libres et non réglementés par l’État ont provoqué partout des hausses de la consommation globale de mazout et de gaz et non pas le remplacement du mazout par le gaz. En somme, les deux combustibles stimulent par leur abondance le marché et la demande, qui absorbe tout ce qui est disponible avec le résultat qu’on augmente tout simplement les émissions globales de GES».
(24 October 2007)
The newspaper article refers to a study on energy substitution by Energy Bulletin contributor Patrick Déry, who also wrote the ground-breaking study Peak phosphorus

Déry’s new study Substitution énergétique: Mythe ou réalité? (PDF) was published earlier this month. Déry’s writes: “the conclusion is that the free market cannot make a real energy substitution (absolute and not relative) without creating a crisis (shortage, recession…). -BA .