Simpson on Climate Change

Jeffrey Simpson has a good column in today’s Globe on the new Conservative climate-change plan. He makes the same point that I did about the impossibility of meeting Kyoto’s first-round targets and the importance taking our second-round targets seriously.

He also points out how thin all of these climate-change “plans” have been. To me, a “plan” is a set of measures designed to achieve certain targets, not simply a new set of targets. I am repeatedly amazed that Canadian climate-change plans say so little about implementation.

Rather than engaging in endless debate about precise percentage reductions by specific future years, I would like to see the Canadian government get the ball rolling by introducing a carbon tax, even at a very low rate. I am not convinced that slightly higher gasoline prices would noticeably reduce fuel consumption. However, putting a price on carbon would curtail greenhouse-gas emissions from various industrial processes whose managers currently have absolutely no incentive to pay attention to such emissions.

2 comments

  • I don’t think we a good handle on the elasticity of responses to a carbon tax, though we might just introduce it at a low level with a commitment to steadily raise it over time (say fifteen years) to an “optimal” level, whatever that is.

    We also need to get a better understanding of the distributive consequences of a carbon tax. We could reach our targets by pricing out the bottom 80-90% of the distribution, but I bet that would undermine popular support, especially if it means that those who are most responsible for causing the problem are able afford the tax and thus do not have to change their behaviour.

  • I agree that it’s a good idea to start with a low-ish carbon tax: we can ratchet it up as we learn about how it affects behaviour and what sort of levels we really need to hit Kyoto-style targets. It’s better to low-ball the carbon tax and adjust up than to set it at catastrophically high levels and be forced to abandon the project for a generation.

    And the point about the distributive effects is an important one: a carbon tax that increases gasoline prices will have regressive effects. But Terence Corcoran’s claims nothwithstanding, no-one is suggesting that the carbon tax be used as a revenue-generating mechanism. A carbon tax plan should be accompanied by a program designed to redistribute those revenues to low-income households, so that they can adjust to higher prices.

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