Wednesday, June 20, 2007

Apocalypse Called Off

Remember all the Conservatives howling about a carbon tax devastating the economy. It would appear the looming apocalypse has been called off:
Steep carbon tax could actually stimulate economy: report

It was denounced by Environment Minister John Baird as "the mother of all taxes," but a new report for the federal government says a $50-per-tonne carbon tax to reduce greenhouse gas pollution would do little harm to the Canadian economy.

In an analysis of carbon taxes ranging from $10 per tonne up to $250 per tonne, the report, obtained by May through an Access to Information request, concluded that the $50-per-tonne carbon tax could even have a positive effect on the economy by 2015.

The study was produced by the consulting firm of Mark Jaccard, an economics professor from Simon Fraser University, who has been recognized by senior government officials as one of Canada's top climate policy experts. In a phone interview, Jaccard noted the study concluded a $50 carbon tax might not be high enough to honour Canada's international obligations under the Kyoto protocol on climate change. But the tax would start pushing the economy away from fossil fuels that cause greenhouse gas pollution without doing any major damage to growth, he added.

"If we're serious about reducing greenhouse gases, we have to have a carbon tax or its equivalent," said Jaccard. "So in fact, Elizabeth May is the only politician who's being honest to Canadians right now."


Jaccard said a tax never really translates into a loss of a region's gross domestic product - the size of the economy - since the revenues are re-invested elsewhere.

Is Mr. Jaccard right? What others are saying about Mark Jaccard:
Minister of the Environment John Baird:

"Hearing these facts, substantiated by some of our country's mostwell-respected economic experts...The economic costs are not acceptable. I look to Don Drummond, one of the most well-respected economists in the country; Christopher Green from McGill; Marc Jaccard from Simon Fraser; Carl Sonnen from Infometrica and Jean-Thomas Bernard from Laval. There is a considerable amount of concern over the contents of the bill."

Minister of Natural Resources Gary Lunn:

"Those are the facts. They are confirmed by independent economists such as Don Drummond, Mark Jaccard and others. Those members do not like the truth.

I stress that this is not the Conservative analysis. This analysis was done by some of the most respected economists in the country. They are saying what would happen."

Minister of the Environment Parliamentary Sec Mark Warawa:

"Professor Mark Jaccard of Simon Fraser University has been to the committee. I guess I'll quote him, and this is in relationship to the Kyoto target."

Conservative MP Jean-Pierre Blackburn:

"We wanted independent economists to analyze the situation. I would like to share with you the names of those who participated in the analysis. Mark Jaccard is a professor at Simon Fraser University's School of Resource and Environmental Management"

Minister of the Environment John Baird:

"As such, we have had some of our government's leading economists look at the bill. We went further and had their work reviewed and validated by some of Canada's best economists outside of governments. They include Jean-Thomas Bernard, a professor in the Department of Economics at Laval University; Mr. Mark Jaccard, a professor in the School of Resource and Environmental Management at Simon Fraser University...The conclusions of our economists and outside of government experts are quite striking."

Like Mr. Baird, and the rest of the Conservative environmental team, "I look to the experts" for guidance.

7 comments:

James said...

Dion's plan is to put a price on carbon of roughly $30/tonne of GHG equivalent.

Perhaps with this new report, Dion might be inclined to raise that price to roughly $50/tonne. However, the reason Dion has put the price at around $30/tonne is because that is around the price of carbon equivalent on the market (Chicago or European market I can't remember) at the moment.

Have you read the Carbon Budget document yet?

Steve V said...

Hi james

Doesn't Dion start at $20, moving to $30 at 2011? It would be interesting if the Liberals used reports such as these to justify an increase. I'm not sure if I'm reading Jaccard correctly, but this is just a straight tax, as opposed to a carbon fund, which would seem to have less of an economic impact, since companies could draw on it.

ottlib said...

Whew!!

I was getting worried there for awhile. Especially when Mr. Harper actually said nice things about Mr. Graham. After all, I believe some of the more obscure passages of the Book of Revelations indicates that Mr. Harper saying something nice about a Liberal is one of the signs of the end of days.

I have made my opinions clear on this topic before so I will not beat a dead horse. However, I will say that there is no reason why Canada cannot attempt to strike a balance between the needs of its economy and its Kyoto Protocol commitments.

ottlib said...

steve:

It would seem to me that a $30/tonne carbon budget would be more effective than a straight $50/tonne carbon tax.

As the report states such a tax would actually lead to an uptick in economic growth by 2015. However, I would expect that Mr. Dion's plan would bring about those benefits a little earlier as it introduces a double incentive for companies to invest in green technologies. The incentive of ending the need to pay into the carbon budget and the incentive to get what they pay in back asap.

So really Mr. Dion's plan could have the effect of having companies reduce their ghg emissions at a much cheaper cost than a straight carbon tax.

Perhaps, Mr. Dion and the Liberals should be selling their carbon budget idea in those terms. Most Canadian industries know that some kind of cost will eventually be associated with their ghg emissions so perhaps the Liberals should be selling their plan as the cheaper and more effective method for doing so.

Just a thought.

Steve V said...

"After all, I believe some of the more obscure passages of the Book of Revelations indicates that Mr. Harper saying something nice about a Liberal is one of the signs of the end of days."

Might be time for some attack ads to get back to equilibrum.

Steve V said...

ottlib

That is what I am thinking too. If these relatively miniscule costs are attached to a straight tax, then surely the impact is less with a budget, that re-invests.

In_The_Centre said...

Doffing the cap
Jun 14th 2007
From The Economist print edition

Tradable emissions permits are a popular, but inferior, way to tackle global warming

http://www.economist.com/finance/displaystory.cfm?story_id=9337630

"A third advantage of carbon taxes is that they raise revenue. Governments can use this cash to reduce other inefficient taxes, thereby cutting the economic costs of carbon abatement. Or they can use the money to compensate those, such as the poor, who are hit disproportionately hard by higher fuel costs."

Ive always been a fan of green tax shifting.