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  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Carbon Caps and Capital – You Read It Here First

A TD-Pembina-Suzuki study released seven weeks ago projected that cutting Canada’s carbon emissions by 20% below 2006 levels, or even 25% below 1990 levels, would only modestly reduce overall Canadian GDP.

Last week, Jack Mintz critiqued this study for positing a fixed amount of capital investment in Canada. Under this highly dubious assumption, climate policy only shifts capital around between industries and provinces but cannot affect total investment.

On Monday, Stephen Gordon breathlessly reported Mintz’s finding that the TD-Pembina-Suzuki study assumed fixed capital. Yesterday, Colby Cosh at Macleans highlighted Gordon’s post as revealing this study to be a “climate-change hoax.”

But as a couple of astute commentators on the Macleans blog pointed out, Relentlessly Progressive Economics had already noted the study’s flawed assumption about capital. On November 5, a week after the study’s release and a month before Mintz’s op-ed, Andrew Jackson wrote, “Lower investment in the oil and gas sector is magically assumed to be balanced off by new investment elsewhere, since national investment always equals national savings.”

The same day, I wrote the following comment on Andrew’s post:

I did indeed wince at the assumption that investment lost in carbon-intensive industries will automatically be offset by precisely equivalent investment gains in other industries.

By positing a fixed amount of investment in Canada regardless of climate policy, the study ignores the threat that carbon-intensive industries will relocate to other countries that choose not to regulate emissions.

We should be discussing policy responses to carbon leakage, rather than assuming away this problem.

Enjoy and share:


Comment from Brandon L
Time: December 16, 2009, 3:45 pm

“carbon-intensive industries will relocate to other countries that choose not to regulate emissions[lower taxes & regulations in general].” In fact all industries will relocate & offshore more western jobs to countries that have lower regulations, & taxes.

Comment from Keith Newman
Time: December 16, 2009, 4:41 pm

The model assumes all factors of production redeploy and remain full employed – presto no unemployment of any resources, including labour! That’s what these models do by assumption.

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