The Main Stream Media [MSM] these days is full of discussions about carbon pricing. We have the provincial election in full swing in British Columbia in which the Liberal Carbon Tax is on trial, US president Obama and the US Congress moving away from the Bush denial era to the adoption of some form of climate change policy (exactly what policy remains to be seen), and countries everywhere preparing and positioning for the upcoming international climate change conference in Copenhagen.
Most of this discussion centers around the difference between a Carbon Tax vs a Cap & Trade system. Mostly it’s an argument as to which is the best system for reducing emissions It’s clear that very many people don’t understand the difference between the two, the pros and cons, the impact each would have on emissions and the impact each would have on consumer pricing.
In the 2008 federal election, for example, most people’s understanding of the two systems was built around the Conservative’s BS misinformation campaign about the “Tax on Everything”, the NDP’s BS misinformation that Cap & Trade punishes industry and not the average Joe and the Liberal’s mishandling of the whole thing.
The difference between the two systems is simple, as is the similarity.
The Difference:
A Carbon Tax is a mile wide and an inch deep, applies (or should) to everything and everyone in the economy and provides certainty of pricing with no certainty of emission reductions. It only works if the tax rate is set high enough to modify behavior and the best proposals for this are within a Tax Shift scenario. (See previous Liberal and ongoing Green platforms.) The downside is that it’s fairly easy for opponents to criticize a new tax because of the word “tax” and also because the public don’t trust government to actually return the money on other taxes.
A Cap & Trade system is an inch wide and a mile foot deep, applies only to specific industries and/or companies, and provides known emission reductions with totally unpredictable pricing. (It is a market, after all.) It only works if the number of available credits on the market is set correctly so that emissions actually carry a significant cost and if there is enough of a reduction rate in total available credits so that emissions come down at the intended pace. On the downside, the setting of emission credits and application of them to certain industries is ripe for political manipulation.
The Similarities:
The similarities are that ideally the price would end up the same for the same emissions reductions, that all carbon pricing will be passed on to the consumer in the end (whether politicians admit this or not), and that neither is adequate all on it’s own as a climate change response.
So which is best?
I’ve written about this several times before, here, here, here, here, here, and here and I think I’ve been abundantly clear in my position. These are merely two tools in the toolbelt, as it were, and we have dilly-dallied long enough that we no longer have the luxury of time to choose among these tools!!!
We don’t need any more Carbon Tax vs Cap & Trade discussion. It’s too late for that. We need both.
Anyone who argues otherwise either does not grasp the seriousness of the problem, or for some reason has an agenda where other priorities are higher. I, for one, do not fall into either category. How about you?
{ 2 comments… read them below or add one }
No, I don’t fall into either category either. But then I’m not the leader of a party trying to grasp power at any cost.
That’s true and nor am I. But I joined the Green Party for many reasons not the least of which was that the party was, at least in my mind, telling the truth rather than just what people wanted to hear to get votes. We complain about politicians who say whatever they need to get elected and then do whatever they want afterward, but for some reason we don’t translate that into electing the politicians who are telling us the bitter truth in the first place.