Canada passed a carbon tax that will give most Canadians more money

[Grumpy Old Man]

Canada's carbon-tax plan would be dysfunctional and ineffectual, according to Nobel Laureate William Nordhaus's work

https://business.financialpost.com/o...king-this-plan


In an effort to bolster the federal Liberals shaky arguments for a semi-national, cash-circulating Rube Goldberg carbon-tax price mechanism, Prime Minister Justin Trudeau and his government are pointing to the work of William Nordhaus, one of this year’s Nobel Prize-winning economists.

Canadians would be better off taking advice from a Nobel Prize winner who supports carbon taxation than listening to “ideologues and politicians who deny there’s a problem in the first place,” Trudeau told high school students in Ottawa on Monday.

Similar appeals to Nordhaus as bearer of a Nobel encyclical for the new tax have come from Environment Minister Catherine McKenna and Gerald Butts, Trudeau’s personal secretary. Butts, a former World Wildlife Fund activist, earlier this month tweeted: “You can now choose between a Nobel Prize-winning economist and (conservative politicians) Kenney/Ford/Scheer when deciding who is right about the economics of pollution pricing.”

Rube Goldberg, by the way, is the famed cartoonist from the early 20th century who drew images of wildly improbable contraptions. In 1931, he produced a pretty good illustration of a “Professor Butts” demonstrating his self-operating dinner napkin, which appears to function in roughly the same way as the climate-fixing carbon price. (The napkin contraption can be found at Wikipedia’s Rube Goldberg entry.)

Aside from the twisted problems embedded in the Trudeau-Butts carbon-price scheme, there’s another niggling issue. Any reading of Nordhaus’s work on carbon taxation cannot avoid the conclusion that Canada’s half-baked, go-it-alone deployment of such a regime is doomed.


As I mentioned in a recent column on Nordhaus, the Nobel economist reached a “bottom line” conclusion in a 2014 paper that a carbon tax would require “clubs” of participating nations that would impose “penalties and sanctions on non-participants” to enforce international climate agreements. Unless most or at least a large number of major countries adopted a similar carbon tax and imposed direct tariffs of up to 10 per cent on all imports from non-carbon-tax countries (so-called free riders) then the carbon tax idea will fail — just like the Kyoto protocol, which set out to reduce greenhouse gas emissions back in 1997.

In other words, based on Nordhaus’s own writing on the subject, the Nobel Laureate would have to assess Canada’s carbon tax plan as dysfunctional and ineffectual.

However, in response to my recent assessment, Andrew Leach, a University of Alberta economist and sometime adviser to Alberta’s NDP government, dropped me a tweet: “@andrew_leach Replying to @terencecorcoran my PhD thesis built on Nordhaus’s work. I’ve got a pretty good grasp of his body of work. But, by all means, keep trying to use quotes out of context from a guy who won a Nobel for climate change econ to advance your petty agenda. Just make sure to ignore what he said about BC.”

With this, Leach has woven a sarcastic web in which he gets a little tangled up in his own cleverness.

First, regarding the PhD thesis: Leach’s thesis was written in 2003, 10 years before Nordhaus published his critique of carbon-tax theory in a 2014 paper, Climate Clubs: Designing a Mechanism to Overcome Free-riding in International Climate Policy. Perhaps Leach missed this and other nuances in Nordhaus’s views, although that’s hard to imagine.

Second, Leach sarcastically tells me to make sure I ignore what Nordhaus said about British Columbia’s carbon tax. OK, let’s look at what he said about the B.C. tax in a New York Times interview. “When I talk to people about how to design a carbon price, I think the model is British Columbia. You raise electricity prices by $100 a year, but then the government gives back a dividend that lowers Internet prices by $100 year. In real terms, you’re raising the price of carbon goods but lowering the prices of non-carbon-intensive goods.”

Except 95 per cent of the electricity produced in B.C. is hydropower and is not CO2-taxed. B.C. does import more coal-fired power than any other province, but the CO2 tax is not applied to imported electricity. Therefore the carbon tax has had next-to-no impact on the province’s electricity prices — in spite of its significant imports of coal-fired power from Alberta.

And it gets worse. If a utility burns B.C. natural gas to produce electricity in the province, the CO2 tax appears in the consumer’s utility bill. But if B.C. natural gas is shipped across the border into Washington, made into electricity there, and then exported back to the province, there’s no CO2 tax in the utility bill. How bizarre is that?

So, note to Leach: Make sure you find out what Nordhaus actually knows about the B.C. tax. And, while you’re at it, have a look at whether B.C.’s carbon tax has been effective in curbing emissions and fossil fuel use.

Finally, the suggestion that Nordhaus’s conclusion on the “bottom line” on carbon taxes was taken “out of context” does not stand up. In his 2014 paper, Nordhaus uses “bottom line” four times, including this reference from the abstract summary of his conclusions:

It “has proven difficult to overcome the obstacles to reaching international agreements caused by free-riding, as seen with the defunct Kyoto Protocol… The bottom line of this study is the following: Using a simplified representation of climate change economics and international trade, it finds that without sanctions there is no stable climate coalition other than the non-cooperative minimal-abatement coalition. However, a regime with small trade penalties on nonparticipants can induce a stable coalition with globally efficient levels of abatement. Moreover, such a regime would attract a large majority of countries relative to the current situation, where international climate treaties are essentially voluntary. The essential feature for making the club effective is uniform penalty tariffs on nonparticipants.”

Nordhaus is equally explicit in his 2013 book, The Climate Casino. On pages 256-7 (look it up), he says an effective climate policy involves a carbon price set nationally and internationally and enforced through sanctions, penalties and tariffs — as high as 10 per cent, he has suggested — applied across the board on all imports from non-complying countries.

The message to Leach and Butts is that the Trudeau carbon tax contraption does not follow the Nordhaus international trade model. As a result, the plan will not and cannot work. Look it up.

[Dog Face Pony Soldier]

Originally Posted by Grumpy Old Man

[SIZE="4"]Canada's carbon-tax plan would be dysfunctional and ineffectual, according to Nobel Laureate William Nordhaus's work[/SIZE]

Cue the panicked cries of "even if it doesn't work, we need to do something!"

[Grumpy Old Man]

'

[MrRoboto]

It will be interesting to see what plan Scheer has to address the carbon tax. As of now he has nothing.

[________]

Originally Posted by MrRoboto

It will be interesting to see what plan Scheer has to address the carbon tax. As of now he has nothing.

This

[MrRoboto]

Originally Posted by OnerDriver

This

Replace with what? That's his problem and the problem with most of these 'new conservatives' They have NO replacement plan. The only answer is to repeal. t's going to be difficult to take money away from Canadians as this who are affected by the federal system will have more money in their pocket after all is said and done.

We need to remember that it was Harper that signed on to the Paris accord and agreed to the reduction targets.

[________]

Originally Posted by MrRoboto

Replace with what? That's his problem and the problem with most of these 'new conservatives' They have NO replacement plan. The only answer is to repeal. t's going to be difficult to take money away from Canadians as this who are affected by the federal system will have more money in their pocket after all is said and done.

We need to remember that it was Harper that signed on to the Paris accord and agreed to the reduction targets.

I'd say give tax breaks to those that show reduction in emissions, not the other way around.

[MrRoboto]

Originally Posted by OnerDriver

I'd say give tax breaks to those that show reduction in emissions, not the other way around.

From a taxpayer perspective, that's exactly what the plan does. If you pay less to carbon emitting companies then your rebate is, you are ahead. Companies who emit more will see less usage of their products and have to change. It all about influencing behaviour.

[________]

Originally Posted by MrRoboto

From a taxpayer perspective, that's exactly what the plan does. If you pay less to carbon emitting companies then your rebate is, you are ahead. Companies who emit more will see less usage of their products and have to change. It all about influencing behaviour.

I'll disagree but with an utmost respect towards you.

[MrRoboto]

Originally Posted by OnerDriver

I'll disagree but with an utmost respect towards you.

I respect your respect but help me understand why you disagree? I'm located in one of those provinces who's government came up with their own cap and trade plan and we will see very small increases in 'carbon' products but no rebate.

[________]

Originally Posted by MrRoboto

I respect your respect but help me understand why you disagree?

The first is that with a tax you likely won't reduce emissions, just make things more expensive. It's just the cost of doing business, now increased.

Second is that this tax is just highway robbery, and where will the money go? He can't answer this basic question. More money = more corruption.
Also seems like he needs money to "balance the budget" which he promised would be done on its own...

[MrRoboto]

Originally Posted by OnerDriver

The first is that with a tax you likely won't reduce emissions, just make things more expensive. It's just the cost of doing business, now increased..

I guess this is a wait and see. My hope is that this will spur innovation in Canada and we will be in a position to export our green energy solutions to other countries in the future.

Originally Posted by OnerDriver

Second is that this tax is just highway robbery, and where will the money go? He can't answer this basic question. More money = more corruption.
Also seems like he needs money to "balance the budget" which he promised would be done on its own...

This is well documented. 90% of the tax will be returned to the consumer in the form of rebates. 10% is required to administer the program. The government nets 0 from this.

Lets not distract from the topic at hand with the budget, however while we are on this topic, I suspect the budget will be well balanced with the tax revenue collected from cannabis sales....another one of those wait and sees.

[________]

Originally Posted by MrRoboto

I guess this is a wait and see. My hope is that this will spur innovation in Canada and we will be in a position to export our green energy solutions to other countries in the future.

This is well documented. 90% of the tax will be returned to the consumer in the form of rebates. 10% is required to administer the program. The government nets 0 from this.

Lets not distract from the topic at hand with the budget, however while we are on this topic, I suspect the budget will be well balanced with the tax revenue collected from cannabis sales....another one of those wait and sees.

Yeah, it's always wait and see. Keeping it positive though.

My guess is we could be doing much more just by not freaking idling our cars every day... lol

[________]

You said the plan is clear, how is the money going to be distributed to us?

[Grumpy Old Man]

Originally Posted by MrRoboto

It will be interesting to see what plan Scheer has to address the carbon tax. As of now he has nothing.

So Canada produces about 1.6% of global GHG and the forests consume more than we produce so were already at negative. Ontario has reduced it's GHG emissions by 22% through the illumination of coal fired generator, and was replaced by the Green Energy Act (solar and wind power power generation), which effectively drove the cost of hydro in Ontario up so that it's higher than anywhere else in North America and likely close to the most expensive globally, effectively imposing a significant "green energy tax" on us. So why the hell does Prime Minister Dress Up need to tax us further. It is crystal clear that this tax is going to drive up the cost of every single consumer good, so the offset rebate will not cover the increase in the cost of living. This tax is a punishment for things that the consumer has no control over.

[Grumpy Old Man]

Originally Posted by MrRoboto

I guess this is a wait and see. My hope is that this will spur innovation in Canada and we will be in a position to export our green energy solutions to other countries in the future.




This is well documented. 90% of the tax will be returned to the consumer in the form of rebates. 10% is required to administer the program. The government nets 0 from this.

Lets not distract from the topic at hand with the budget, however while we are on this topic, I suspect the budget will be well balanced with the tax revenue collected from cannabis sales....another one of those wait and sees.

Ok, lets leave the budget out of the discussion, however I think trust has to be factored in and that's a real problem given the lies and broken promises from this PM and his government. I don't trust him on any of this. The deficit was supposed to be balanced next year with only modest increases to the deficit the last two years. The deficit is through the roof, and the budget won't be balanced for 27 years now. He is a liar, plan and simple so why do you and why should any one else believe a damn thing he's said about the carbon tax. It's a tax, by definition it won't be revenue neutral.

[MrRoboto]

Originally Posted by OnerDriver

You said the plan is clear, how is the money going to be distributed to us?

Here is pretty thorough article by Global News that lays everything out.

https://globalnews.ca/news/4586374/c...-need-to-know/

[MrRoboto]

Originally Posted by Grumpy Old Man

Ok, lets leave the budget out of the discussion, however I think trust has to be factored in and that's a real problem given the lies and broken promises from this PM and his government. I don't trust him on any of this. The deficit was supposed to be balanced next year with only modest increases to the deficit the last two years. The deficit is through the roof, and the budget won't be balanced for 27 years now. He is a liar, plan and simple so why do you and why should any one else believe a damn thing he's said about the carbon tax. It's a tax, by definition it won't be revenue neutral.

What are you saying....politicians break promises? This can't be true.

I think you need to read more on how the carbon tax works. 90% of the tax collected will be rebated back to consumers, 10% is used to administer the program so it is revenue neutral to the government.

[MKSixer]

This is yet another example of well-intentioned, do-gooder-ism specifically designed to give the illusion of solving a problem.

The list of these is topped by the Affordable Care Act followed by all of the laws, such as this one, designed to move capital via a tax and transfer scheme.

I will ask yet again: What does the transfer of money have to do with the reduction of what amounts to background emissions in the great scheme of all emissions?

Everything around the monetary policies related to global warming is a wealth transfer scheme. They aren't doing anything about the greatest polluter in the world...China.

[Grumpy Old Man]

Originally Posted by MrRoboto

What are you saying....politicians break promises? This can't be true.

I think you need to read more on how the carbon tax works. 90% of the tax collected will be rebated back to consumers, 10% is used to administer the program so it is revenue neutral to the government.

If you believe government then, they may run the program as laid out. However, my experience with government is that they can't do anything for the amount they project, so based on everything they have done I can almost guarantee that the 10% to administer is about half what it will really cost. Second, when government starts getting new money coming in they tend to piss it away as it will go to general coffers. (all funds do)

The other thing I will say and that seems to get glossed over is that cost of everything is going up, it has to. Trucking companies will have their costs go up, no subsidy for them. They can't reduce their cost as the business model requires them to use fossil fuels, the increase is getting passed down to the consumer.

There is no way the notion that Prime Minister Dress Up keeps pushing is that the pressure will force businesses to reduce carbon use, I'm going to suggest that most business don't have that option, they sure won't absorb the cost so it means their prices go up as do the prices of everything that comes on a truck. Which is every thing. The "pollution fee" will drive the cost of fuel up at least 5% to start and will likely go higher so expect the cost of living to go up.

But lets all hope you're right and that Trudeau keeps this promise because his track record to date sucks.

[MrRoboto]

Originally Posted by Grumpy Old Man

If you believe government then, they may run the program as laid out. However, my experience with government is that they can't do anything for the amount they project, so based on everything they have done I can almost guarantee that the 10% to administer is about half what it will really cost. Second, when government starts getting new money coming in they tend to piss it away as it will go to general coffers. (all funds do)

The other thing I will say and that seems to get glossed over is that cost of everything is going up, it has to. Trucking companies will have their costs go up, no subsidy for them. They can't reduce their cost as the business model requires them to use fossil fuels, the increase is getting passed down to the consumer.

There is no way the notion that Prime Minister Dress Up keeps pushing is that the pressure will force businesses to reduce carbon use, I'm going to suggest that most business don't have that option, they sure won't absorb the cost so it means their prices go up as do the prices of everything that comes on a truck. Which is every thing. The "pollution fee" will drive the cost of fuel up at least 5% to start and will likely go higher so expect the cost of living to go up.

But lets all hope you're right and that Trudeau keeps this promise because his track record to date sucks.

The provinces should have developed their own program. Carbon pricing has been in place in BC since 2008 and has been successful. Ontario had a cap and trade program but Ford scrapped it and cost the taxpayers 3B to refund companies on carbon credits and eliminated the federal transfer payments. Ford should have worked with the previous plan to make it better.

[________]

Originally Posted by MrRoboto

Here is pretty thorough article by Global News that lays everything out.

https://globalnews.ca/news/4586374/c...-need-to-know/

It makes 0 sense

Plus, I asked you a question about how the money will be distributed. Care to elaborate?