To carbon tax, or not to...

In the United States, democratic candidates at a debate in New Hampshire were asked whether or not they would support a carbon tax. Overwhelmingly they rejected the proposal citing that such a tax would fall on to the shoulders of consumers. Yet Nobel Prize winner Al Gore endorses the idea of a carbon tax.
Canada’s political leaders have also rejected the proposal noting that it would impact most heavily on oil and natural gas producing provinces and users of petroleum products.
Most politicians would much rather impose a cap and trade system. Industries would be capped on carbon emissions and would be taxed for exceeding those limits. If an industry through conservation or innovation measures improves energy efficiency and falls below their caps, they could sell the difference to industries who were exceeding the caps.
The system rewards those who cut back on emissions while penalizing those who continue to pollute. Yet the cap and trade system also bears costs to consumers. The modernization of those plants and the upgrading costs to reduce pollutants will also be passed on to consumers. In the long run however those plants will ultimately be more efficient.
Green Bonds are about to floated as an idea to Canadians. The idea is that just as Canadians buy Savings Bonds to invest in Canada, they might be prepared to buy “Green Bonds” which would raise capital for research and carbon reductions in industries across Canada.
Although a high risk investment, the “Green Bonds” would be backed by the government of Canada. Canadians would get the chance in invest in green research and technology. It will give Canadians an opportunity to develop new businesses that can be marketed around the world.
Governments throughout the world are grappling to reduce pollution levels. In Canada, provinces and the federal government can mandate levels and impose taxes against those who fail to meet the targets. It will be much easier for the government to institute a carbon tax, than work out the complexities of cap and trade systems.
Already, Quebec has begun a carbon tax that is generating $200 million a year in taxes. The $200 million funds Quebec’s goal to meet the province’s Kyoto commitments.
Consumers can also understand carbon taxes much easier. A carbon tax would tax the heaviest polluters.
Ultimately it will be the consumer who holds companies to the higher standard. It will be the consumer who chooses to buy a smaller more fuel efficient vehicle.
It will be the average homeowner who adds insulation throughout their home and upgrades their windows.
It will be the consumer who chooses to put in a more fuel-efficient furnace or switches to a heat pump or who takes the initiative to reduce their thermostat settings while sleeping or away from their home. It will be the consumer who will change their incandescent light bulbs to energy efficient fluorescent bulbs.
It will be the worker who chooses to walk or ride their bike to work or who takes public transportation to work. It will be the consumer who demands that government upgrade public transportation.
It will be citizens who say to government we are ready to pay to clean up our pollution just as they said to government’s earlier when communities began building sewage treatment plants to clean up rivers and streams.
–Jim Cumming