Carbon pricing: Beyond the talking point

By Aaron Wherry - Friday, February 22, 2013 at 3:15 PM - 0 Comments

Michael Den Tandt wonders if the Conservatives will have to stop freaking out about the NDP’s cap-and-trade proposal if they hope to see the Keystone XL pipeline approved by the United States. If the Conservatives think likewise, we’ll presumably see a different tone on Monday when the House returns to business (the Conservatives certainly weren’t shying away from their preferred talking point when the House was sitting a week ago).

Meanwhile, China is talking about a carbon tax and Ontario is thought to be moving forward with cap-and-trade and here is what the woman thought to be President Barack Obama’s choice to lead the EPA told an audience of regulators yesterday.

Addressing a room full of familiar faces at a workshop of state and federal regulators, McCarthy applauded local efforts, such as the nine-state carbon cap-and-trade program in the Northeast United States, for showing Washington a path forward on combating climate change.

“At the EPA we will do our part to build on your success,” she said at the Georgetown University Law Center. “We can find a way instead of having national solutions…to open up opportunities for states to use all the flexibility, the ingenuity, the innovation that you have shown could be done, and just simply get it done.”

Stephen Gordon talks to Global about what international developments might mean for Canada.

As the rest of the world starts to put a price on carbon, any Canadian exporter is going to have start paying that price regardless of where it is located,” said Laval University economics professor Stephen Gordon. Carbon taxes are usually applied to imports as well, so local producers are not disadvantaged, according to Gordon.

The U.S. is Canada’s largest trading partner and accepted $330.1 billion worth of exports from Canada in 2011. China ranks number three when it comes to Canada’s largest export destinations, accepting $16.8 billion in exports in 2011. “If Canadian exporters are already paying for it why not send that tax revenue to Ottawa instead of Washington or Beijing,” Gordon said.

And PJ Partington compares coal regulations in Canada and the United States.

The U.S. ambassador has made it crystal clear that as America steps up its climate action it expects us to do better too. The new line from the Harper government is that we’re already there, particularly on curbing emissions from coal power. Foreign minister John Baird recently suggested “maybe the United States could join Canada” on “taking concrete direct action with respect to dirty, coal fired electricity generation,” adding that “we’re the only country in the world that’s committed to getting out of the dirty coal electricity generation business.”

Sadly, Canada isn’t the shining example of coal-curbing excellence that Harper’s ministers are claiming. When it comes to regulating greenhouse gases (GHGs) from coal power, we’re doing about the same as our neighbours to the South — and may well be eclipsed before too long. While coal power is America’s biggest source of GHGs, accounting for over a quarter of national emissions in 2010, it accounted for about 11 per cent of Canada’s in the same year. As for “getting out of the dirty coal electricity generation business,” Canada won’t be fulfilling that commitment until 2062.

Regulations and carbon pricing can work together

By Aaron Wherry - Saturday, December 8, 2012 at 8:00 AM - 0 Comments

On Friday, the Harper government’s new fuel efficiency regulations were published in the Canada Gazette, including the full cost-benefit analysis.

These costs are incremental to the baseline so, for example, technology costs add $195 million (present value) to the costs of the model year 2017 fleet, and add $2.4 billion (present value) to the costs of the model year 2025 fleet.

The incremental technology costs for model year 2017 are expected to be $127 for cars and $162 for light trucks, increasing to $1,856 for cars and $2,453 for light trucks in model year 2025 in order to meet the increasingly stringent standards of the proposed Regulations. In reality, relative changes in vehicle prices and performance may affect consumer choice; however, it is not within the capacity of the analysis to model consumer choice.

PJ Partington of the Pembina Institute defends the new standards and argues that a price on carbon would complement such regulations.

None of this is to say that carbon pricing doesn’t have an important role in tackling emissions from transportation. Carbon pricing would support these regulations by creating more demand for fuel-efficient vehicles and encouraging people to reduce their vehicle use. Carbon pricing would also provide revenues that governments could re-invest in clean transportation options like transit and electric vehicle infrastructure.

We don’t see it as a choice between carbon pricing and efficiency standards: they’re complementary, not alternatives. By ensuring that efficiency continues to improve across the board, standards like these help manage the impact of higher gas prices from carbon pricing, and ensures that they will have plenty of cleaner options to choose from. The Western Climate Initiative, which features a cap-and-trade system, also sees stringent vehicle standards as a key complementary policy to carbon pricing. An economic modeling assessment of climate policy options for Canada that we published in 2009 took the same approach.