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The Progressive Economics Forum

The Green Party Climate Plan

Elizabeth May and the Green Party can take credit for putting forward a serious climate change plan, based on a $50 per tonne carbon tax, with some revenues from this directed to a reduction of other taxes. http://www.greenparty.ca/en/releases/06.06.2007?origin=redirect

Today, they placed in the public realm a study by Marc Jaccard suggesting minimal economic disruption from such a strategy- which I will read with interest to see how closely it meshes with May’s plan. http://www.greenparty.ca/carbontax

I agree with much of May’s agenda, which includes a heavy emphasis on regulation for greater energy efficiency including caps on large industrial emitters as well as major public investments in energy efficiency programs, alternative energy, public transit etc. However, I find no specification at all in the Green Party plan of how much of the revenue from a carbon tax and auctioning of emission permits for large final emitters would go to income and payroll tax reductions, and how much to the various public subsidies to greater energy efficiency which she proposes (and which Jaccard has been much more skeptical of.)

Also, I find it hard to think that there would be minimal economic disruption from her policy of phasing-out nuclear, coal and even natural gas power plants – about 75% of power generation capacity in Ontario – in favour of renewables. Ramping up to 25% or so of power needs from renewables would be an ambitious but worthy medium-term target, and even this would certainly increase power costs quite significantly. (Moreover, May’s plan highlights shifting autos from gasoline power to plug in hybrid vehicles – which will presumably increase power needs significantly.)

A $50 carbon tax would clearly raise costs significantly for a range of energy intensive industries if it is to raise significant revenues, and May is vague at best on her proposed cap and trade system for large final emitters.

Presumably because the cost of a (needed) transition to a much more energy-efficient economy is discounted, May’s plan fails to include a Just Transition program to assist displaced workers. (This will, by the way, be noticed by coal miners and power workers in Nova Scotia where she is runnig for a seat.) Also, her plan has almost nothing to say about how to translate the quest for greater energy efficiency into a badly-needed industrial renewal program. For example, we should twin major investments in public transit and renewable power with domestic procurement policies so that the new jobs are created here in Canada to offset job losses in the carbon-based energy sectors.

In short, May’s plan falls short of what the labour mevement has been calling for – serious action to deal with climate change, taking into full account the associated need for Just Transition and green industrial policies.

Enjoy and share:

Comments

Comment from Marc Lee
Time: June 21, 2007, 10:02 am

Interesting points, Andrew on some of the plan’s shortcomings and strengths. I thought it was a pretty weak effort, especially coming from a party that is essentially one that only has moral suasion (it still may be seatless after the next election).

So I’m more cynical, especially about the carbon tax:

http://www.progressive-economics.ca/2007/06/06/the-greens-carbon-tax-plan-another-gimmick/

I don’t think it will have much of an impact, at least on a key target, drivers. And perhaps this is why Jaccard finds that there will be minimal economic disruption. But is not the point that we need to stage some (controlled) economic disruption if we are to really tackle climate change?

You seem to be suggesting that there would be more meaningful impacts for industry. This is worth exploring more.

Interestingly, it was Jaccard who panned the Tory climate change plan in a recent CD Howe study.

Comment from Paul T.
Time: June 21, 2007, 1:20 pm

Just a note, The David Suzuki foundation is looking for an economist, and I am hoping that they would consider somebody that would have an inclination and tendency to read this comment on the PEF. If you are an economist and reading this link and are looking for a challenge, then get yourself over to their web page and apply.

I think David and friends better hurry, as after reading the Green’s report, they may be out there beating the bush as well.

Here is a link.

http://www.davidsuzuki.org/About_us/Employment/director_economics.asp

Comment from Chris Babiarz
Time: August 1, 2007, 9:38 am

As much as I agree with the Green Party’s intension, I think a federal carbon tax and a provincial carbon tax in most province is too politically confrontation for it’s own good. The oil industry and the western Canadian regions dependent on it will initiate another right-wing rebellion like they did in response to the National Energy Program. Tory pundits have already been talking about NEPII. A Carbon tax might threotrically be an efficient market driven mechanism to develop a more sustainable economy and environment but the political alienation and confrontation it will create in Canada I think will be counter-productive to progress.

I favour a more social democratic approach advocated by the NDP. Invest in energy efficient infrastructure like offering more subsidies and public awareness of geothermal heat pumps for building, like Denmark has been doing for the last 30 years. Invest in renewable energy. Offshore and onshore windmills can provide more electricity than anyone can ever dream off and the technology is improving and coming down in cost. It is still a costly initial invest yet it would stay in the local economy and provide almost free and environmentally safe energy.

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