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Why BC Isn't Rushing to 'Cap and Trade' Carbon

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California will also allow at least 600 industrial emitters across the state to use offsets to satisfy up to eight per cent of their compliance obligation. For the moment, those offsets are restricted to investments in four sectors: forestry, urban forestry, "dairy digesters" and the destruction of ozone-depleting substances. (The latter targets the destruction of a wide range of waste refrigerants and air conditioning substances -- which not only deplete ozone, but have profound global warming potential impacts, ranging between 100 and 11,000 times the greenhouse gas potency of carbon dioxide.)

Assuming a company gets 90 per cent of its allowances for free, and can meet eight per cent of its remaining commitment through offsets, it could meet its compliance obligation either by a minimal two per cent reduction in its emissions, or the purchase of an equivalent number of allowances.

And at the outset, only U.S.-based offset projects will be eligible for purchase by California participants, even though California's only partner in the system is Quebec, and the closest jurisdictions to joining are B.C., Ontario and Manitoba.

"It is absolutely not a problem that California's actual regulation restricts the emission of offset credits to the U.S.," says Hélène Simard of Quebec's Ministère du Développement Durable, de l'Environnement et des Parcs. "Technical work has to be done on California's offset protocols to adapt them to Canada. This work will be done in the upcoming months."

The case for waiting

One expert who believes that B.C. has more to lose than gain by rushing off the bench to join the California-led scheme is Mark Jaccard, a Simon Fraser University economist best known as a member of the Nobel Prize winning UN Intergovernmental Panel on Climate Change.

First of all, he argues, joining too soon could unravel B.C.'s carbon tax. If allowance prices for industry suddenly crashed to something like $5 dollars per tonne, while the rest of British Columbians were stuck paying $30 per tonne through the carbon tax, Jaccard says, political pressure to axe the tax could become overwhelming. (Thomson Reuters has projected a WCI carbon price of $30 per tonne for 2013-20 -- exactly the dollar figure that B.C.'s carbon tax is scheduled to hit next July.)

Then there is the juggernaut California economy. Even if no other jurisdiction signs up, California's cap and trade system alone will be the second largest on the planet, covering about 400,000 tons of annual CO2 (by 2015) and 350 businesses -- representing 85 per cent of the state's greenhouse gas emissions. (Initially the program will cover just electric utilities and large industrial facilities; by 2015 distributors of transportation, natural gas and other fuels will also participate)

Jock Finlayson, executive vice president for policy at the Business Council of B.C. (representing many of B.C.'s biggest companies), says some of his members in aluminum and concrete production see advantages in cap and trade versus carbon taxes, but too many questions remain unanswered. "Will the eventual rules for such a scheme be largely set by California, whose economy is 10 per cent larger than all of Canada and 10 times bigger than B.C.'s?" (B.C. mining giant Teck, Shell Canada and aluminum producer Rio Tinto Alcan declined comment when contacted for this story.)

Jaccard says two things need to happen before B.C. considers joining cap and trade: more jurisdictions must be part of it, forming a critical mass to counteract California's dominance, and a "floor" must be imposed on the carbon price to ensure it never dips below the value of our carbon tax.

A new realm of enterprise

Despite the uncertainty of design and growing pains, there are significant advantages to the cap and trade approach -- which B.C. might reap if it participates.

Unlike carbon taxes, cap and trade actually sets a hard limit on emissions that must be achieved over the short and longer term. The private sector is then set loose to innovate any way it sees fit, freeing government from dictating the winning and losing technologies. Compared to a carbon tax imposed from above, this approach appeals to the enterprising spirit of the private sector, personified by the likes of Shell Oil Company president Marvin Odum, who in 2009 expressed his company's preference for a market approach.

"There's an argument often that a carbon tax is more simple, it's more direct, more predictable," Odum said, "but the question has to be, do you get the environmental result that you're really looking for?"

Even the complexities of developing and administering the system, often cited as a negative, have a silver lining. Creation of such a system in B.C. would grow a vast new bureaucracy of brokers, analysts, pundits and auditors. But is this a bad thing? Aren't these the "green collar jobs" we've all heard so much about, which will accompany the leap to a low carbon economy?

What's more, cap and trade may be the world's best hope in putting a global price on carbon pollution. China has already announced plans for a nation-wide emissions trading system by 2015; India plans to set emission levels for its 563 biggest polluters by 2014. And Australia's daring new carbon tax will transform into a "market-set carbon price" within four years.

In North America, the most promising attribute of cap and trade is that it is not a tax, and thus not instantly anathema to most of us from the outset. (This did not stop the Republican Party from misrepresenting -- and ultimately derailing -- U.S. President Obama's 2009 effort to launch a national cap and trade system there as a "cap and tax," but the point stands.)

The cap and trade devil may reside in the details, but as the creeping recovery of once-sterilized North American acid lakes testifies, we already know it can work.

[Tags: Energy, Environment, Politics.]  [Tyee]

25  Comments:

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  • igbymac

    1 year ago

    Cap and Trade

    granting licenses for free reminds me of the fisheries fiasco and licensing.

    Regardless, why not both? Why not 'cap and trade' to govern industry AND a carbon tax to govern everyone's consumption (including industries)?

  • realisticman

    1 year ago

    Global temperatures could be

    Global temperatures could be less sensitive to changing atmospheric carbon dioxide (CO2) levels than previously thought, a study suggests.

    The researchers said people should still expect to see "drastic changes" in climate worldwide, but that the risk was a little less imminent.

    The results are published in Science.
    25 nov 2011

  • rantnic

    1 year ago

    It adds up

    This whole new level of bureaucracy will always add up to profits in someones pocket taken out of someone else pocket. Putting idealism aside it is all a scam for moving wealth which may, but probably won't do any good for anyone but the scamsters.

    --
    "Faith conquers all, especially logical thought"

  • rantnic

    1 year ago

    It adds up

    This whole new level of bureaucracy will always add up to profits in someones pocket taken out of someone else pocket. Putting idealism aside it is all a scam for moving wealth which may, but probably won't do any good for anyone but the scamsters.

    --
    "Faith conquers all, especially logical thought"

  • seth

    1 year ago

    more nonsense

    The Carbon tax/cap n'trade nonsense really is a pointless to little too late diversion in the battle against the fast approaching climate precipace. What is it that that low information backwoods "economists" like Jaccard and his team of corrupt politicians don't get when the IEA tells us that we have 2 years to get it or its too late.

    The recent increase in gasoline prices is in effect an immense carbon tax and yet has had no effect on BC's GHG consumption.

    BC gets 70% of its energy from carbon sources half transpo and half heating. Only direct government action can be at all effective.

    Much more useful would be public transit but only if coupled with large disincentives and fees to cripple the automobile commuter.

    Even better large scale government support has to be given to 3 day work week and telecommuting measures. These plans need to be made mandatory starting with the government forcing management to ensure any employee who can work a three day work week or telecommute does so. Potentially these two would end rush hour and eliminate the need for transportation builds.

    Supporting some sort of ICBC changes and taxi rules which would encourage ride sharing would be another easy target.

    A phenomena called Slugging — The People’s Transit basically hitching at a park and ride is a great start.

    http://www.miller-mccune.com/culture-society/slugging-the-peoples-transit-28068/

    BC could support a CHG conversion like in Utah where citizens can buy CNG at gas stations for the 30 cent a liter price that Teresen sells NG at home instead of the buck a lter T Boone Pickens Clean Energy from corrupt deals with the Campbelloni gang.

    Large amounts of clean electricity at a reasonable price needs to be available and the only possible source is nuclear power - currently 3 cents a kwh.

    If the $45B in contracts signed so far with another $29B to come at an enormous environmental cost the Campelloni's have already signed with Fascist cronies in the stockbroker power industry, had been instead used to buy zero environmental footprint nuke power instead, BC would already be net GHG free with BCHydro's clean power capacity almost tripled. Instead we got almost no new clean energy in the corrupt IPP scam..

    Much could be done but politicians are too afraid of losing the vote of the uninformed or the campaign donations and other favors of the special interest group to act responsibly. A citizens assembly type process where a random group of average citizens is selected and paid well to listen to interest groups and experts, gather information and make a decision based on knowledge not one liners from Vaughn and Keith. Here's an example of how

    http://bostonreview.net/BR31.2/fishkin.php

  • snert

    1 year ago

    Cap and Trade is prone to abuse.

    This floated by the other day.

    http://www.calgaryherald.com/story_print.html?id=5771512&sponsor=curriebarracks

    As much as I think the tax neutral carbon tax was a stupid idea it wouldn't take much to get it to be a productive revenue generator by using the money to fund environmental research and green energy projects. This may also be prone to abuse but in the long run may also have better results.

  • The Truthinator

    1 year ago

    Tax the bads to engourage the goods

    Cap and trade may be OK in theory, but it assumes that measurement is certain and the system overall is not subject to gaming and outright corruption. With folks like Goldman Sachs involved in creating the "carbon markets", what are the odds that it will be an ethically sound system?

    Also, the resulting "vast new bureaucracy of brokers, analysts, pundits and auditors" sounds like a deadweight loss to society as even more materially unproductive managers are added to an already abstract economy based on false value and imagined assets. We've already seen how corrosive it is to the greater good when a few "special" people make royal fortunes by producing nothing. Imagine the bribery incentives and pressures on the GHG "auditors".

    Taxes on carbon-based fuels, as evil as they sound, are simple and direct disincentives to using them with the side benefit of providing revenues to OUR cash-strapped government coffers rather than the vaults of Goldman Sachs. People and industries will be better able to adjust to the new cost structures on their own terms as the taxes gradually rise, leading more directly to innovations in the way society organizes itself as well as alternative technologies.

    For the same reasons plus personal privacy, I am for fuel taxes over road tolls.

    If carbon taxes don't work to change behaviour, they are just too low. Overall, we don't have to pay much more in tax; as governments derive more revenue from carbon taxation, they can and should lower other taxes, especially on alternative modes of transportation, conservation, or generation.

  • The Truthinator

    1 year ago

    That should have read "enCourage the goods"

    Sorry 'bout that!

  • freewilly

    1 year ago

    re more nonsense

    "Large amounts of clean electricity at a reasonable price needs to be available and the only possible source is nuclear power - currently 3 cents a kwh."
    Nuclear power is hugely unpopular, but I say, its better than burning fossil fuels.
    I'm a huge proponent of Fusion reactors and research, we may have had a viable commercial reactor by now if this form of energy creation was properly funded. The timeline for fusion is probably another 80 years away. Its going to take a Manhattan style project to get this puppy going. We need to get started right now. To hell with the free market, they are taking us into the dark ages. The benifits of fusion are too tantalizing to pass up, not only could we have an almost inexaustible supply of energy but a means of also creating rare elements, even gold. We might even be able to get rid of the by products of fission reactors. But thats much further into the glorious future.
    Instead of wasting good minds on developing apps for ipods and cell phones, water pumps for fracking,and trillions of dollars developing weapons, lets go for the gusto.
    Lets say its a lark and find out fusion will never work, the byproducts of the research can only benifit humanity.
    Here are some inspiring videos on the subject:
    http://documentaryheaven.com/can-we-make-a-star-on-earth/
    http://documentaryheaven.com/fusioneer/

  • LeftSeater

    1 year ago

    dirty words for the CMIA

    It appears the Carbon Market & Investors' Association have found CARBON to be a dirty word and now have chosen a new eco-friendly term, so voila! the new name is Climate Market & Investors' Association.

    http://www.reuters.com/article/2011/11/22/us-carbon-climate-idUSTRE7AL1GE20111122

    Moi? I'd be happier if the anything to do with global warming, climate change, carbon trading, carbon credits, carbon offsets, carbon neutral et al were simply referred to as "Ponzi scheme"...

  • North of Hope

    1 year ago

    Sustainable BC

    The gas tax was just a tax grab, it was not an environmental plan. All the BC Liberals did was institute a tax on petrochemical energy products, but they had no plan on how to reduce the use of such fuels. They called it a Carbon Tax to dress it up, not to reduce its use. Look at their plans for highway construction and expansion to see the myth that they were interested in GHG reduction. They have no plan to implement to help GHG reduction. You can imagine Joe the Plumber saying to himself, "Gee the gas tax is causing the price of gas to be so high, I need to trade in my 4X4 pick-up and get a hybrid car." Look at the increase in highway construction in the last few years. The NDP did have a plan. They were set to implement a Cap and Trade system. They wanted to tax the petrochemicals at their source so all would be covered, including exports. And they were initiating a fund to help establish environmental sound processes to develop and use in our homes and communities. Not much in the press about that during the election campaign, but lots about attack ads. In fact so much that it became an attack on the NDP.

    Go to this address to see the BC NDP's ideas.

    http://www.buildingsustainablebc.ca/

  • Artemesia

    1 year ago

    There is more than just money involved

    The carbon market has led to recent atrocities in Uganda and Honduras. Government troops and private security firms evicted peasant farmers to accommodate foreign owned forestry companies planning to cash in on Kyoto.

    http://www.nytimes.com/2011/09/22/world/africa/in-scramble-for-land-oxfam-says-ugandans-were-pushed-out.html?_r=2

    http://www.environmentalleader.com/2011/10/04/alleged-honduran-murders-cause-more-controversy-for-ets/

    After Kyoto expires it looks as though the scheme devised by Enron will fade away. I certainly hope so.

  • rantnic

    1 year ago

    Like a Ponzi

    Buy sell trade and make commissions. Making money is what it's all about if you think these schemes will make a difference in the global warming I have an igloo to sell you in Saudi Arabia.

    Whenever the government regulates, licenses or in any way exercises control over anything it costs more and more profits are made by the regulated, licensed and controlled. Is there anyone willing to say that is not true?

  • RonR

    1 year ago

    Cap & Trade is a con game

    Cap & Trade is a con game meant to make money for the big boys, doesn't everyone know that yet?? What does the word "market" say!
    This is related to the CDM- Clean Design Mechanism- that was being touted 6 years ago by our government & promoted around the world.
    How about Cap & Reduce!! Ron.

  • raging senior

    1 year ago

    CARBON CAP AND TRADE

    This is the biggest hoax ever pulled on us, this is designed for the rich to get richer and the carbon to keep building up because there is not reduction. Industry still pollutes and vehicles still pollute, no bus system or alternative transportation north of Cashe Creek.

  • Frank Lee

    1 year ago

    As Jaccard says

    the carbon tax and cap & trade are not mutually exclusive. The latter is more flexible and adaptable to changing market conditions and is better for large industrial polluters. The former has the opposite virtues: harder to game through lobbying, clearer, simpler and more direct, better for taxing small emitters (whoa re responsible for half of the carbon emissions). THe carbon tax acts a s a hard floor, the cap& trade as a flexible ceiling.

    The best short description that I have seen is here and its links: http://markcrawford.blogspot.com/2010/01/lets-not-forget-that-carbon-taxes-and.html

  • OwlRol

    1 year ago

    Could do nothing

    Theoretically a great start, but just another shell game in practice. Still better than the Harper plan.

  • Granville

    1 year ago

    Cap-and trade is the new Income Trust

    Both were conceived to meet a goal, and both are preverted and twisted beyond recognition. The first thing everyone does is to look for the loopholes, which is too bad.

  • realisticman

    1 year ago

    CCCP

    Once the social engineers take over there will be a fun Children's Carbon Credits Plan (CCCP). They and their parents will be able to build up credits if they walk or cycle to school or work. If they have enough credits by the time they start work they will be eligible to put their names on a list for a nice little 2 cylinder car. Like a committee approved and designed latter day Trabant.

  • freewilly

    1 year ago

    biggest hoax

    "This is the biggest hoax ever pulled on us, this is designed for the rich to get richer and the carbon to keep building up because there is not reduction."

    As sure as there are fish in the ocean and dogs barking at cats, bad hollywood movies, drug addicts in parks, and ICBC now, raising our car insurance because of bad investments.
    Almost every comment Ive read, makes the same point, we get it.
    The converted and enlightened are just jerking each other off. Please tell me something I havent heard before!

    "Once the social engineers take over there will be a fun Children's Carbon Credits Plan (CCCP)."
    Realisticman you are probably correct, youve been watching 'Rescue Me'

  • realisticman

    1 year ago

    It's a Byuers Market

    Opportunities for short sellers.

    http://blogs.nature.com/news/2011/11/european_carbon_market_plummet_1.html

  • Frank

    1 year ago

    Just say No to carbon taxes

    I'm sure people think of well-off middle class families living a 50's lifestyle when they contemplate adding a tax here and there as a disincentive to using cars and heating their homes.

    The thing is, that's not the country we live in. We live in one where there is a lot of inequality, a lot of rich and a lot of poor. So any flat tax is going to hurt the poor far more than its going to act as a "disincentive" on the rich.

    Here's a scenario. The GVRD consists of something like 17 municipalities and big ones like Surrey and Vancouver also contain a number of large sections with their own names (Cloverdale, Kitsilano etc).

    Why not tear up all but one of the roads between those municipalities and large sections and that single road would be a toll road that would charge each vehicle $100.

    Does anyone seriously believe you wouldn't hurt the economy and people's personal lives with such a scheme where only the well-off would be able to work and shop and visit other municipalities? Because a carbon tax set to a rate high enough to actually discourage transportation will do the same thing.

    Look at the new bridge between Langley and Maple Ridge. It used to be free to go across the river on the slow ferry and there were always long lineups for that ferry. So government put in a toll bridge and got rid of the free alternative so as to force people to use it. Yet, at $8 for a round trip hardly anyone was using it. The lack of use for a new bridge, even at rush-hour, in a supposedly grid-locked city was on the tv news again and again.

    Many were confronted with the fact they were going to lose about $150 a month of their take-home pay and had to either pay it and spend less on food or whatever or quit and find something else on their side of the river.

    And what about those who travel across not because of work but to see family? Ample anecdotal evidence suggests they simply visit less.

    And let's not pretend that those who chose to pay the toll and become poorer were helping the environment. The old ferry was more envronmentally friendly than the construction that went into the new bridge or the traffic on it.

    continued next post

  • Frank

    1 year ago

    Just say no to carbon taxes part deux

    Besides, those who are more well-off will tell you they love the bridge. No more line-ups for a ferry, no more 15 minute ferry rides. The toll is minor to them and they can whip across the bridge in a minute and shop on the other side. In fact, those with money make more trips across the river than they used to, something retailers have noticed.

    So for those with lots of extra money, the toll has actually increased their use of their car because its removed those with less income from the road making it easier to travel. Sometimes the Marc Jaccard's of the world contemplating carbon taxes need to step out of their ivory towers and look at the real world.

    We're not an equal society and flat taxes will not affect the habits of the well-off, it will only make the less well-off poorer.

    Advocates of carbon taxes should state honestly they support making the poor poorer while making life for the rich less onerous.

  • lynnescape

    1 year ago

    I'm not buying it

    I have zero faith that this carbon tax is working. The Liberals are collecting the carbon tax, mostly from government, which they use to cut budgets, and giving this money to their friends, like Encana. You know, Encana, the oil guys, and their partners in crime Cenovous (the gas frackers), so they can wreak more havoc on the planet. The Liberals are hypocrites. Why don't they put a carbon tax on the millions of tonnes of coal they ship to Asia? If you buy coal in BC, the carbon tax is $51.97/tonne. Yet they can encourage coal mines all over the province, and ship it overseas with no carbon tax. The money from carbon taxes should either go into public transit or R&D for green energy, not to oil companies. And, if they did put a carbon tax on coal, the Asians wouldn't buy it, which means less global warming. It is a win win, the way I see it. See http://taxpayer.com/british-columbia/bc-pacific-carbon-trust-must-go.

  • lynnescape

    1 year ago

    I'm not buying it

    I have zero faith that this carbon tax is working. The Liberals are collecting the carbon tax, mostly from government, which they use to cut budgets, and giving this money to their friends, like Encana. You know, Encana, the oil guys, and their partners in crime Cenovous (the gas frackers), so they can wreak more havoc on the planet. The Liberals are hypocrites. Why don't they put a carbon tax on the millions of tonnes of coal they ship to Asia? If you buy coal in BC, the carbon tax is $51.97/tonne. Yet they can encourage coal mines all over the province, and ship it overseas with no carbon tax. The money from carbon taxes should either go into public transit or R&D for green energy, not to oil companies. And, if they did put a carbon tax on coal, the Asians wouldn't buy it, which means less global warming. It is a win win, the way I see it. See http://taxpayer.com/british-columbia/bc-pacific-carbon-trust-must-go.

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