Carbon Tax rejected by the masses.

[shoegazer]

Well then Canadians are IDIOTS. Indeed the more I read blogs like this and the fora on the Globe and Mail, CBC and National Post the more I'm convinced the average Canadian is an idiot and the more the words of Winston Churchil ring true: "The best argument against democracy is a 5 minute conversation with the average voter".<br><br>

More than 230 economists during the economic turmoil wrote a letter supporting the Green Shift idea. The Economist, even in their endorsement of Mr. Harper said he was wrong to attack the green shift/carbon tax and that it is good public policy and they congratulated Mr. Dion for bringing forth the idea. <br><br>

Between ca and trade systems and a carbon tax, the vast majority of economists support the latter. Greg Mankiw, professor of economist at Harvard and outspoken supporter of pigovian taxes, has written extensively in support of carbon taxes.<br><br>

Canadians may have rejected carbon taxes but again that just means Canadians as a whole are ignorant and purely self-serving and I see daily comments that reinforce that view. And it is exactly that kind of thinking about negative externalities that leads us to the place we are in wherein they are a problem that needs to be addressed by some form of government regulation because the market alone never will address it, unless a price is attached to those externalities. <br><br>

[OddSox]

Well then Canadians are IDIOTS.

Pretty smart idiots, because the green shift is gone.

[Slim MacSquinty]

"BC already has a 2% carbon tax -- if we can do it then so can the rest of the country. "

Apparently BC's really loving that tax ya got there.

The truth to the matter of CO2 emmisions is that we'll have to do pretty much what the Americans do otherwise we lose out on trade big time, especially during tough economic times. We are such a bit player in the CO2 game that we're just going to have to learn to live with that fact. It will be interesting what the next round of international talks brings with the new economic conditions, if China, Russia and India don't play ball the Americans might just take it and go home, doesn't matter if its McCain or Obama.

[shoegazer]

Pretty smart idiots, because the green shift is gone.

Hardly. They're idiots pure and simple and the green shift being gone only supports that. The green shift was the far better policy, especially compared to the Conservatives Turning the Corner plan, which was the conclusion of their own economist who they hired to analyse and vet their program. His name is Mark Jaccard and you can read his report on the matter. Mr Jaccard, in fact came out in favour of the Green Shift plan.<br><br>

When all of the economists and experts come out in favour of a given course of action, those whose experience, knowledge and expertise give them the ability to make a real determination based on proper analysis and not memetic BS and people reject it, it says something about the level of intelligence of the people.

I read blogs like this over and over again and people who are barely capable of tying their own shoes make assertions about an economic policy proposal they've never done the slightest bit of analysis of. It's quite sad.

[shoegazer]

"BC already has a 2% carbon tax -- if we can do it then so can the rest of the country. "

Apparently BC's really loving that tax ya got there.

The truth to the matter of CO2 emmisions is that we'll have to do pretty much what the Americans do otherwise we lose out on trade big time, especially during tough economic times. We are such a bit player in the CO2 game that we're just going to have to learn to live with that fact. It will be interesting what the next round of international talks brings with the new economic conditions, if China, Russia and India don't play ball the Americans might just take it and go home, doesn't matter if its McCain or Obama.

Slim, may I ask what you base this on? Canada does things differently than the US right now and we aren't losing out on trade, in fact the thing that has most impacted trade has been the rising dollar and not any of the other factors. Canada has a very cost competitive environment for business and business investment when one looks at the broad range of factors that play into where a company decides to locate.

For business the green shift would have had three main impacts on business. First it would have raised the energy costs of businesses, especially energy intensive manufacturing. Second it would have raised the transportation costs on business. Lastly it would have cut corporate income taxes, it woul have increased the CCA deduction rate making investment, especially in green tech a cost effective and economical choice and it would have sweetened the SR&ED credits.

Concerning energy: The cost of energy increase would have varied by province and would have had minimal effect in Quebec. It would have had an effect in Ontario on average about 1.2 cents per KWh and that's with OPGs current coal production which would be phased out in the near term - the plants are nearly their technical lifetimes and need to be replaced anyway. Moreover Canada has among the lowest energy costs of any business jurisdiction within which to invest so a minor increase here wont change our competitive position.

Concerning transportation: The impact here will be even smaller. Again in transportation our competitive position is a leading position, we have the second lowest transport costs (IIRC) in KMPG's business cost comparison studies of a number of investment jurisdictions. The impact of $30/tonne of carbon taxes on diesel will be relatively minor spread out over all the goods transported and will result in about $0.07/Litre in additional cost, but this has been dwarfed by the change in fuel over this time.

Lastly the lower income taxes will help offset some of the increased costs that companies bear and most of those bearing the increased costs will be companies that cannot leave the country anyway: utilities and oil sands produces aren't going anywhere, they can't, the oil is here and energy cannot be transported long distances without severe transmission line losses. But the flip side of the coin is that lower taxes will encourage non-energy intensive industries to locate in Canada due to the widening gap between other jurisdictions and ours along the income tax lines. So I disagree that it will be a loss to Canadians and might even be a gain.

[Riverwind]

Concerning energy: The cost of energy increase would have varied by province and would have had minimal effect in Quebec.

i.e. the tax was just another social program designed to funnel money from the west into quebec.

It would have had an effect in Ontario on average about 1.2 cents per KWh and that's with OPGs current coal production which would be phased out in the near term - the plants are nearly their technical lifetimes and need to be replaced anyway.

Replace with what? Magic fairy dust? There are not really any alternatives to coal if one wants electricity.

Moreover Canada has among the lowest energy costs of any business jurisdiction within which to invest so a minor increase here wont change our competitive position.

If the tax was low enough that it 'did not affect our competitive position' then it is a sham that would not change behavoir.

The impact of $30/tonne of carbon taxes on diesel will be relatively minor spread out over all the goods transported and will result in about $0.07/Litre in additional cost, but this has been dwarfed by the change in fuel over this time.

Again you are contradicting yourself. If the tax is too low to affect business decisions then it is too low to accomplish its stated purpose (e.g. reduce CO2 production).

The But the flip side of the coin is that lower taxes will encourage non-energy intensive industries to locate in Canada due to the widening gap between other jurisdictions and ours along the income tax lines.

"non-energy intensive" industries? what might those be? all businesses need transport, eletricity and heat. increase those costs and you reduce competitiveness. besides tax breaks only mean something to companies that make a profit and higher energy costs would drive more companies hit by the economic downtown under. you would also see profitable companies stay in Canada to take advantage of the tax breaks but outsource operations and jobs to juristitions with lower energy costs.

Frankly, I am tired of the "have your cake and eat it" arguments. If CO2 is really a threat (and there are many reasons to believe it is not) then it will take a large drop in out standard of living in order to reduce CO2 emissions to the levels demanded by the alarmist scientists. People will be poorer and government programs like healtcare will have to be cut. There is no magic technology available that will allow us to enjoy the same standard of living with significantly lower emissions and anyone who says otherwise is peddling snake oil.

Edited October 16, 2008 by Riverwind

[Mr.Canada]

Last night, the best leader out of the choices given was taken.

Plain and simple. Mr. Harper, love him or hate him was miles ahead of the rest of the field in terms of experience, vision, tact and delivery and Canada agreed with vigor.

Liberals and others may say what they want but if this wasn't so then your person would have won.

Mr. Harper isn't this big scary person he is constantly portrayed, if he were we would have seen evidence of that by now so give it up please.

Lefties don't like him because he doesn't bend to the loudest minority so easily as a Liberal would, scrambling so as to not upset anyone.

Plain and simple.

[Slim MacSquinty]

Slim, may I ask what you base this on? Canada does things differently than the US right now and we aren't losing out on trade, in fact the thing that has most impacted trade has been the rising dollar and not any of the other factors. Canada has a very cost competitive environment for business and business investment when one looks at the broad range of factors that play into where a company decides to locate.

For business the green shift would have had three main impacts on business. First it would have raised the energy costs of businesses, especially energy intensive manufacturing. Second it would have raised the transportation costs on business. Lastly it would have cut corporate income taxes, it woul have increased the CCA deduction rate making investment, especially in green tech a cost effective and economical choice and it would have sweetened the SR&ED credits.

Concerning energy: The cost of energy increase would have varied by province and would have had minimal effect in Quebec. It would have had an effect in Ontario on average about 1.2 cents per KWh and that's with OPGs current coal production which would be phased out in the near term - the plants are nearly their technical lifetimes and need to be replaced anyway. Moreover Canada has among the lowest energy costs of any business jurisdiction within which to invest so a minor increase here wont change our competitive position.

Concerning transportation: The impact here will be even smaller. Again in transportation our competitive position is a leading position, we have the second lowest transport costs (IIRC) in KMPG's business cost comparison studies of a number of investment jurisdictions. The impact of $30/tonne of carbon taxes on diesel will be relatively minor spread out over all the goods transported and will result in about $0.07/Litre in additional cost, but this has been dwarfed by the change in fuel over this time.

Lastly the lower income taxes will help offset some of the increased costs that companies bear and most of those bearing the increased costs will be companies that cannot leave the country anyway: utilities and oil sands produces aren't going anywhere, they can't, the oil is here and energy cannot be transported long distances without severe transmission line losses. But the flip side of the coin is that lower taxes will encourage non-energy intensive industries to locate in Canada due to the widening gap between other jurisdictions and ours along the income tax lines. So I disagree that it will be a loss to Canadians and might even be a gain.

First off the comment I made was referencing the fact that the Liberals were the big loser last night in BC, thereby telling me that BC isn't swallowing carbon taxes well.

Secondly, and I guess the first comment supports this, perception is everything, you can justify your positioin anyway you like but perception will win over.

Lastly, adding another layer of taxes cannot be efficient, we are already suffering from productivity/ efficiency gaps this can't make it better, and having an additional albeit (as you say) lower business tax rate to offset the carbon tax, is a temporary condition easily reversed and political promises are cheap, therefore nobody's buying this thing today. In addition it has been shown that the carbon tax did not work in Norway, which was held out as the great example of carbon taxes, at lowering CO emissions.

Too many what ifs.

Edited October 16, 2008 by Slim MacSquinty

[PoliticalCitizen]

The people of Canada have spoken NO CARBON TAX!!

The people of Canada have spoken NO STUPID MONEY-WASTING UNNECESSARY ELECTIONS THAT ONLY SERVE THE EGO OF ONE MAN !!!

[Riverwind]

The people of Canada have spoken NO STUPID MONEY-WASTING UNNECESSARY ELECTIONS THAT ONLY SERVE THE EGO OF ONE MAN !!!

What a silly argument. We would have an election within 6 months or so. The opposition was ready to go and the slowing economy would have emboldened them.

[shoegazer]

i.e. the tax was just another social program designed to funnel money from the west into quebec.

No it wasn't, though Quebec arguably would benefit more than some places, due to it's preponderance of hydro based power.

Replace with what? Magic fairy dust? There are not really any alternatives to coal if one wants electricity.

Bullshit. Nuclear is an alternative as is natgas/oil based co-generation, which has substantially less emissions than coal. Nuclear is the obvious replacement choice for large scale energy production and with Lakeview being past it's economic life now, indeed it's at its technical life, is being shutdown and Nanticoke is nearing the end of its economic life as well.

OPG is installing a 550Mw gas-fired co-gen, which will have substantially lower emissions than Lakeview, so there are alternatives.

Nuclear while hardly perfect as far an environmental concerns - like hydro, coal and gas - has a far more localized impact and thus easier to deal with negative externalities.

If the tax was low enough that it 'did not affect our competitive position' then it is a sham that would not change behavoir.

This is also fallacious. Our competitive position need not be changed but if a new price signal exists that encourages a differing course of action then it can and does change behaviour. Again simply look at OPG or TransAlta. Both will experience a significant increase in their costs of operation but both are due to the nature of their business unable to relocate so they will pass the increased costs on to consumer, business and individual in terms of higher electricity costs, about 1.2 cents / MWh in the case of OPG.

OPG will experience between $1.0 - $1.5 billion in additional carbon taxes (and a minor reduction in corporate taxes). That $1.0 billion will create a MASSIVE incentive to invest in lower carbon emitting technologies and to replace existing coal and dirty oil plants with cleaner oil/gas co-gen plants and nuclear, which will reduce a significant amount of GHG emissions. The new oil/gas co-gen I mentioned above (550Mw) plant has a total capital cost of $750 million, and thus this plant with CCA deductions and the savings from the decreased carbon taxes will create a MASSIVE economic incentive to change behaviour.

But the increased costs at the consumer end, especially for business, since it will be averaged over the entire economy will NOT significantly change Canada's competitive position given that we have the second lowest energy and transportation costs of our peers, in KPMG's most recent business cost analysis of various jurisdictions.

Again you are contradicting yourself. If the tax is too low to affect business decisions then it is too low to accomplish its stated purpose (e.g. reduce CO2 production).

I'm not contradicting myself at all. Our competitive position is such that we can afford to increase the cost of electricity and transportation because we are so low relative to our competitors that even a minor change, wont impact us.

You make assumptions based on specious reasoning and thus the contradiction exists on your side not mine. Our corporate taxes will go down, making Canada more attractive from that point of view but our electricity and transportation costs for business will go up making us less attractive. However given that our energy costs and transportation costs are significantly lower than virtually all of our competitors, the competitive position for business in Canada will not really change though the odd business may see a shifted environment, on the whole things will remain from a business cost point of view the same, except the source of those costs will shift.

Business can't lower their corporate taxes, except by earning less, in general. They can however adopt less energy intensive technologies and when energy is priced higher, the economic incentives to do so or the ROI from such projects becomes more attractive.

"non-energy intensive" industries? what might those be? all businesses need transport, eletricity and heat. increase those costs and you reduce competitiveness. besides tax breaks only mean something to companies that make a profit and higher energy costs would drive more companies hit by the economic downtown under. you would also see profitable companies stay in Canada to take advantage of the tax breaks but outsource operations and jobs to juristitions with lower energy costs.

Services for one which currently makes up 65-70% of Canada's GDP. Green energy production as a second, who can sell excess energy to the US grid. Numerous other business. Yes they all use electricity, heat and transportation but Canada, even with a Green Shift will remain competitive here but it will given existing businesses an incentive to invest in more energy efficient technology or modify behaviour by switching off the lights.

Again you make this comment that business will be outsourced but to where? Canada has the second lowest energy costs for business in number of recent studies of business costs. Canada has strong competitive position.

Frankly, I am tired of the "have your cake and eat it" arguments. If CO2 is really a threat (and there are many reasons to believe it is not) then it will take a large drop in out standard of living in order to reduce CO2 emissions to the levels demanded. People will be poorer and government programs like healtcare will have to be cut. There is no magic technology available that will allow us to enjoy the same standard of living with lower emissions and anyone who says otherwise is peddling snake oil.

What a load of crap. This kind of thinking is exactly the reason we face the problems we do. There are tradeoffs to be sure but the fear mongering by people who believe it will result in a massive drop in our standard of living is crap. Read the Stern report, the consequences of doing nothing will also be a massive drop in our standard of living. Bull, we can change our source of energy to something which doesn't emit GHGs. We could all go wholesale nuclear, not without problems but it is an option which will substantially reduce GHGs. Transportation as well could largely be switched over - over a longer term - to hydrogen or electric power, and thus we can maintain our standard of living but it requires not a reduction in energy but a change in how we generate it. We've used coal and fossil fuels thus far simply because they are cheap up front. US energy costs have increased massively lately as a result of rising fuel costs because of their greater dependence on oil based generation.

Moreover the denier crap is pretty much played out at this point. Only those with an agenda deny the existence and the massive preponderance of evidence supporting the AGW position.

I wont even bother to argue that position with you, it would be a waste of my time, because if one doesn't accept the rationale now, one is bing intentional obtuse or is pushing an agenda and nothing I do will change that.

[PoliticalCitizen]

What a silly argument. We would have an election within 6 months or so. The opposition was ready to go and the slowing economy would have emboldened them.

Huh?

Who would have called it 6 months ago?

[shoegazer]

First off the comment I made was referencing the fact that the Liberals were the big loser last night in BC, thereby telling me that BC isn't swallowing carbon taxes well.

Yes and the country didn't swallow the GST/MST tax shift too well either but guess what, the electorate was wrong then as well. Just because the electorate votes in a given way doesn't make the electorate correct any more than the market's response to the prevailing economic conditions is rational or correct given fundamentals, which is why David Ricardo made himself a wealthy man and why Buffett is making himself a wealthier man, markets often over-correct and simply exhibit herd behaviour, which isn't rational.

Secondly, and I guess the first comment supports this, perception is everything, you can justify your positioin anyway you like but perception will win over.

Perhaps but perception doesn't make something right. People perceive things to be a certain way all the time but it doesn't make their perceptions right and they can change over time.

Lastly, adding another layer of taxes cannot be efficient, we are already suffering from productivity/ efficiency gaps this can't make it better, and having an additional albeit (as you say) lower business tax rate to offset the carbon tax, is a temporary condition easily reversed and political promises are cheap, therefore nobody's buying this thing today. In addition it has been shown that the carbon tax did not work in Norway, which was held out as the great example of carbon taxes, at lowering CO emissions.

Yes they can. Taxes can be an efficient means of creating a price signal to deal with an existing, environmental and economic problem, just as taxes are added to tobacco and alcohol to deal with the negative externalities - increased health costs - associated with consumption of these behaviours, which leads to a lower of this behaviour as people decide it's too expensive to smoke.

To paint the notion of a lower corporate tax rate as temporary belies and overt agenda. Any tax can easily be changed, the carbon taxed could easily be changed and eliminated. That said I don't see it as likely, that the corporate tax cuts would be changed given that it was the Liberals who started cutting corporate income taxes in the first place and the recent Conservative corporate tax cuts were only an acceleration of the existing schedule of corporate tax cuts contained with the Liberals past budgets. So what I believe is an insinuation that the Liberals would reverse the cuts seems to be to be based on nothing but wild speculation with no substantiative support. Moreover such a position is so highly cynical that one wonders what possible policy proposals could ever pass such a test.

Regarding Norway, they have chosen to exempt a huge amount of industry from the carbon taxes which is why carbon emissions have continued to rise and thus it is not similar to what was proposed here. Denmark's carbon taxes were far more similar to Canada's as proposed and they experienced an emissions reduction. Considering that Mark Jaccard, who was hired by the Conservatives to analyse their program concluded theirs wouldn't accomplish anything meaningful in way of reductions due to similar loopholes to Norway makes the status quo far from a reasonable alternative. Moreover the cost of $65/ton carbon credit for non-exempt industries will certainly raise prices for consumers with no offsetting income tax reductions.

Both carbon taxes and cap and trade seek to create a pric signal in the market for the negative externalities and a number of recent comparisons such as that in the Economist conclude that carbon taxes are the more efficient means to achieve emissions reductions. Intensity reductions do little themselves. Under that metric the LIberals from 1990 - 2006 were a resounding success as emissions intensity dropped 21.1% from 1990 - 2006, yet emissions increased 21.4% during the same time frame, down slightly from 25.4% over 1990 levels as of 2003.

Too many what ifs.

As opposed to what?

[Riverwind]

No it wasn't, though Quebec arguably would benefit more than some places, due to it's preponderance of hydro based power.

Whatever the reason the plan showered benefits on Quebec for doing nothing - hardly a vote getter in the West.

Bullshit. Nuclear is an alternative as is natgas/oil based co-generation, which has substantially less emissions than coal.

natgas still a fossil fuel even if the emissions are lower but natgas costs more which still increases energy costs. Nuclear is also quite expensive and unpopular.

This is also fallacious. Our competitive position need not be changed but if a new price signal exists that encourages a differing course of action then it can and does change behaviour.

It is one or the other. Either businesses will be hit with higher costs that will undermine their competitive position or the costs will be too low to have any effect. I actually agree it is the latter which I why I say the carbon tax was nothing but a re-redistribution scheme disguised as an environmental measure.

However given that our energy costs and transportation costs are significantly lower than virtually all of our competitors, the competitive position for business in Canada will not really change though the odd business may see a shifted environment, on the whole things will remain from a business cost point of view the same, except the source of those costs will shift.

Again - you keep trying to have it both ways. You want to say the tax would be too small to affect businesses but it would be large enough to change behavior. The two claims are mutually contradictory.

Business can't lower their corporate taxes, except by earning less, in general. They can however adopt less energy intensive technologies and when energy is priced higher, the economic incentives to do so or the ROI from such projects becomes more attractive.

Businesses already have an incentive to invest in energy saving technologies because energy costs them money. A tax that is too small to affect their competitiveness is not going to change that. If you made the tax large enough you could make currently un-economical technologies economical but that would represent a large cost to business which would hurt the competitiveness even if they invested in the technology because the technology is expensive. You can't have it both ways.

Services for one which currently makes up 65-70% of Canada's GDP.

All businesses have direct and indirect energy costs. For example, tourism industries need tourists and that requires energy. Any sort of export business needs to transport their goods to market.

it will given existing businesses an incentive to invest in more energy efficient technology or modify behaviour by switching off the lights.

Why don't you do some calculations on the potential savings by "switching off lights" and demonstrate that adding a "small" carbon tax would encourage businesses to turn off lights that don't already do so? I think you would find that the numbers don't add up. The business will either already have an incentive to do so or the carbon tax won't provide enough incentive to change behavour.

Again you make this comment that business will be outsourced but to where?

China, India, you name it. Energy costs are only one factor but if you hit businesses with increased costs the alternatives will become attractive.

Read the Stern report, the consequences of doing nothing will also be a massive drop in our standard of living.

The Stern report is a pile of BS that grossly exaggerates the potential costs of climate change and grossly underestimates the costs of reducing CO2 emissions to levels required to do anything about it. Even if you disagree, I don't see how anyone can say we should take an economic prediction for 100+ years seriously. Economist have a tough enough time predicting what will happen 6 months form now - never mind 100 years.

Hydrogen vehicles are expensive pipe dreams and require that hydrogen be produced. There are not many economical ways to do that now. Electric vehicles exist but are only suited for a small range of applications (i.e. short commutes in large cities). You are not going to transport goods to market on an electric powered 18 wheeler.

But what you forget is a large of CO2 emissions come from producing and/or transporting the goods we consume and the relatively low cost of fossil fuels in incorporated into the cost. Increase the cost of energy and cost of everything we buy goes up. This will result in a reduction in standard of living if we really want to stablize CO2 levels at 450ppm/350ppm. Give up on those impossible goals and I will agree that progress is possible but if one rejects the 450ppm/350ppm targets then one is basically agreeing that mitigation is impossible and adaptation is the only optoin.

[shoegazer]

Whatever the reason the plan showered benefits on Quebec for doing nothing - hardly a vote getter in the West.

Nothing is a vote getter in Alberta, the province is so blinded by Liberal hatred going back to the 1930's that they could have offered the world to Alberta and it wouldn't have made a difference.

natgas still a fossil fuel even if the emissions are lower but natgas costs more which still increases energy costs. Nuclear is also quite expensive and unpopular.

Nuclear has a high capital cost but is lower than other sources of energy for production on an ongoing basis . By raising the cost of GHG emitting production you make the TRUE price of coal based energy far less cost competitive on any analysis compared with nuclear. As I said, the cost of electricity would go up, I didn't say it wouldn't but the price rise would not be substantial for most consumers, the price of 1.2 cents isn't going to kill consumers or business.

It is one or the other. Either businesses will be hit with higher costs that will undermine their competitive position or the costs will be too low to have any effect. I actually agree it is the latter which I why I say the carbon tax was nothing but a re-redistribution scheme disguised as an environmental measure.

Again - you keep trying to have it both ways. You want to say the tax would be too small to affect businesses but it would be large enough to change behavior. The two claims are mutually contradictory.

NO I DONT. You keep assuming things are mutually exclusive when they are not. You're painting a false dichotomy, which doesn't exist. Canada's electricity costs to business are so much lower than our competitors that we can afford a minor rise in the cost of energy and STILL maintain our relative position to them, especially when the income tax cuts are factored in. The response of the system isn't linear as you seem to believe. Thus Canada, while changing the relative weight of business costs can maintain an overall relative position with regard to business cost environment and yet make some areas more punitive than others, the providing the pigovian incentive to modify behaviour.

The tax at the WHOLESALE level will be enough to change behaviour. OPG with $1.0 billion in extra costs each and every year will be MASSIVELY incented to change how they produce energy in order to reduce the carbon taxes they are subjected to, thereby reducing GHG emissions. The consumer end result of a 1.2 cent/ KWh won't significantly change the business cost environment. It will raise prices a bit and will make some energy efficiency projects which given current energy costs are not economically 'viably', viable. It will change the time to payoff of a number of energy efficiency projects just as higher gasoline costs make hybrids more attractive despite their higher initial capital costs.

Businesses already have an incentive to invest in energy saving technologies because energy costs them money. A tax that is too small to affect their competitiveness is not going to change that. If you made the tax large enough you could make currently un-economical technologies economical but that would represent a large cost to business which would hurt the competitiveness even if they invested in the technology because the technology is expensive. You can't have it both ways.

Again the false dichotomy fallacy. There are plenty of projects which from a cost effectiveness pov are marginal right now but with a 1.2 cent/ MWh increase for large companies will be worth investing in. Those investments will qualify for a CCA deduction speed up making them even more attractive.

All businesses have direct and indirect energy costs. For example, tourism industries need tourists and that requires energy. Any sort of export business needs to transport their goods to market.

And? Did I say they didn't? Those who don't have large costs will see their increased costs offset by the corporate and personal income tax cuts. It wont apply perfectly uniformly but on average most businesses from an overall cost perspective, especially those not directly emitting, will be no further ahead or behind but they will have a different set of economic incentives. Why is it there are hundreds of economists all saying this is the way to go. Do you think they haven't done the analysis, they don't understand the implications?

Why don't you do some calculations on the potential savings by "switching off lights" and demonstrate that adding a "small" carbon tax would encourage businesses to turn off lights that don't already do so? I think you would find that the numbers don't add up. The business will either already have an incentive to do so or the carbon tax won't provide enough incentive to change behavour.

I've done more calculations and analysis of this than you and every poster on these fora combined I'd venture. I've spent hundreds of hours of my own on analysis on this subject, plus copious amounts of reading of others. By the way I'm an expert in mathematical modeling of financial and economic systems. I have multiple degrees to the doctoral level in mathematics, engineering and finance, with a further background in economics, biophysics and biology, so I'm well qualified to do this analysis.

China, India, you name it. Energy costs are only one factor but if you hit businesses with increased costs the alternatives will become attractive.

You can't outsource energy production or oil production or mining to China and these industries will be the ones most impacted.

The Stern report is a pile of BS that grossly exaggerates the potential costs of climate change and grossly underestimates the costs of reducing CO2 emissions to levels required to do anything about it. Even if you disagree, I don't see how anyone can say we should take an economic prediction for 100+ years seriously. Economist have a tough enough time predicting what will happen 6 months form now - never mind 100 years.

And neither can you yet you seem to without any qualifications whatsoever be able to say that it will only have detrimental effects. If you honestly believe that the cost of doing nothing is lower than the cost of doing something, well you're beyond help and redemption, because it's ludicrous. Stern isn't the only economist to come out and take this position.

Moreover fossil fuels are going to run out and as they do the price of those goods will climb ever skyward making the economy based on them extremely unresponsive to changes in prices structure, so I highly doubt Stern is incorrect. The fact is there will be a very real cost to doing nothing and whether you agree with the exact number in Stern's report, there are costs to maintaining the status quo.

Hydrogen vehicles are expensive pipe dreams and require that hydrogen be produced. There are not many economical ways to do that now. Electric vehicles exist but are only suited for a small range of applications (i.e. short commutes in large cities). You are not going to transport goods to market on an electric powered 18 wheeler.

Hydrogen, while hardly efficiently, can be produced by electrolysis and the energy needed to do so could be produced by green forms of energy production with mainline energy to supplement periods of intermittent supply. And it was merely one example.

I didn't say that goods needed to be transported by electric vehicles did I? Even reducing the number of gasoline vehicles on the market would be significant in terms of emissions and the vast vast majority of those vehicles are for short commutes, or even the stepping stone hybrid vehicles are a start to transforming the energy basis of our economy.

But what you forget is a large of CO2 emissions come from producing and/or transporting the goods we consume and the relatively low cost of fossil fuels in incorporated into the cost. Increase the cost of energy and cost of everything we buy goes up. This will result in a reduction in standard of living if we really want to stablize CO2 levels at 450ppm/350ppm. Give up on those impossible goals and I will agree that progress is possible but if one rejects the 450ppm/350ppm targets then one is basically agreeing that mitigation is impossible and adaptation is the only optoin.

I dont forget anything. I'm fully aware of where our GHG emissions come from. But everything is ULTIMATELY the consumer that drives all of it.

I'm fully aware that if you raise the cost of energy, then the cost of good will go up, since producers will pass the costs on to the consumer. Hell I've said as much. That cost rise in goods will be offset the income tax savings that consumers will see from the tax shift, it's the entire point of the shift aspect of it.

The cost of all of those goods however will be minor on an individual goods basis. The casts both energy and transportation will be spread over a huge number of goods and so the price rises while real will be minor on an individual good basis. In aggregate for a family the price rises will be more meaningful but they will be again offset by the income taxe savings.

To say that the goals are impossible is an agenda driven defeatist attitude, designed to paint the problem as impossible to address so lets just keep going as we are. It's BS.

If I told you I was lowering you income taxes to ZERO but raising your carbon taxes, be it gasoline, home heating, etc by an equivalent revenue generating percentage, that you wouldn't seek to invest as either a consumer or business in technology that reduces your consumption of carbon emitting goods? It would be absurd to say no. This is the same idea applied at a less extreme approach and phased in to allow consumers and business a chance to adapt to the changing economic signals.

[blueblood]

Nothing is a vote getter in Alberta, the province is so blinded by Liberal hatred going back to the 1930's that they could have offered the world to Alberta and it wouldn't have made a difference.

Nuclear has a high capital cost but is lower than other sources of energy for production on an ongoing basis . By raising the cost of GHG emitting production you make the TRUE price of coal based energy far less cost competitive on any analysis compared with nuclear. As I said, the cost of electricity would go up, I didn't say it wouldn't but the price rise would not be substantial for most consumers, the price of 1.2 cents isn't going to kill consumers or business.

NO I DONT. You keep assuming things are mutually exclusive when they are not. You're painting a false dichotomy, which doesn't exist. Canada's electricity costs to business are so much lower than our competitors that we can afford a minor rise in the cost of energy and STILL maintain our relative position to them, especially when the income tax cuts are factored in. The response of the system isn't linear as you seem to believe. Thus Canada, while changing the relative weight of business costs can maintain an overall relative position with regard to business cost environment and yet make some areas more punitive than others, the providing the pigovian incentive to modify behaviour.

The tax at the WHOLESALE level will be enough to change behaviour. OPG with $1.0 billion in extra costs each and every year will be MASSIVELY incented to change how they produce energy in order to reduce the carbon taxes they are subjected to, thereby reducing GHG emissions. The consumer end result of a 1.2 cent/ KWh won't significantly change the business cost environment. It will raise prices a bit and will make some energy efficiency projects which given current energy costs are not economically 'viably', viable. It will change the time to payoff of a number of energy efficiency projects just as higher gasoline costs make hybrids more attractive despite their higher initial capital costs.

Again the false dichotomy fallacy. There are plenty of projects which from a cost effectiveness pov are marginal right now but with a 1.2 cent/ MWh increase for large companies will be worth investing in. Those investments will qualify for a CCA deduction speed up making them even more attractive.

And? Did I say they didn't? Those who don't have large costs will see their increased costs offset by the corporate and personal income tax cuts. It wont apply perfectly uniformly but on average most businesses from an overall cost perspective, especially those not directly emitting, will be no further ahead or behind but they will have a different set of economic incentives. Why is it there are hundreds of economists all saying this is the way to go. Do you think they haven't done the analysis, they don't understand the implications?

I've done more calculations and analysis of this than you and every poster on these fora combined I'd venture. I've spent hundreds of hours of my own on analysis on this subject, plus copious amounts of reading of others. By the way I'm an expert in mathematical modeling of financial and economic systems. I have multiple degrees to the doctoral level in mathematics, engineering and finance, with a further background in economics, biophysics and biology, so I'm well qualified to do this analysis.

You can't outsource energy production or oil production or mining to China and these industries will be the ones most impacted.

And neither can you yet you seem to without any qualifications whatsoever be able to say that it will only have detrimental effects. If you honestly believe that the cost of doing nothing is lower than the cost of doing something, well you're beyond help and redemption, because it's ludicrous. Stern isn't the only economist to come out and take this position.

Moreover fossil fuels are going to run out and as they do the price of those goods will climb ever skyward making the economy based on them extremely unresponsive to changes in prices structure, so I highly doubt Stern is incorrect. The fact is there will be a very real cost to doing nothing and whether you agree with the exact number in Stern's report, there are costs to maintaining the status quo.

Hydrogen, while hardly efficiently, can be produced by electrolysis and the energy needed to do so could be produced by green forms of energy production with mainline energy to supplement periods of intermittent supply. And it was merely one example.

I didn't say that goods needed to be transported by electric vehicles did I? Even reducing the number of gasoline vehicles on the market would be significant in terms of emissions and the vast vast majority of those vehicles are for short commutes, or even the stepping stone hybrid vehicles are a start to transforming the energy basis of our economy.

I dont forget anything. I'm fully aware of where our GHG emissions come from. But everything is ULTIMATELY the consumer that drives all of it.

I'm fully aware that if you raise the cost of energy, then the cost of good will go up, since producers will pass the costs on to the consumer. Hell I've said as much. That cost rise in goods will be offset the income tax savings that consumers will see from the tax shift, it's the entire point of the shift aspect of it.

The cost of all of those goods however will be minor on an individual goods basis. The casts both energy and transportation will be spread over a huge number of goods and so the price rises while real will be minor on an individual good basis. In aggregate for a family the price rises will be more meaningful but they will be again offset by the income taxe savings.

To say that the goals are impossible is an agenda driven defeatist attitude, designed to paint the problem as impossible to address so lets just keep going as we are. It's BS.

If I told you I was lowering you income taxes to ZERO but raising your carbon taxes, be it gasoline, home heating, etc by an equivalent revenue generating percentage, that you wouldn't seek to invest as either a consumer or business in technology that reduces your consumption of carbon emitting goods? It would be absurd to say no. This is the same idea applied at a less extreme approach and phased in to allow consumers and business a chance to adapt to the changing economic signals.

Does that University give refunds???

Punishing our economy chasing after a possible science experiment especially in these times is lunacy.

Canada is fine as it is, punishing our exports is also lunacy.

Canada needs to find an industry that will be as high of value and with the high employment numbers as the oil industry, thankfully we have a hundred years to do so.

The free market does a good job regulating fossil fuel usage, why should we burden ourselves with an unnecessary tax?

[Brunopolis]

It is pretty obvious that Canadas close proximity to the United States makes people think Canada is ¨tax heavy¨.

If you actually compare Canada to the rest of the first world you would see this is pretty far from the truth.

http://en.wikipedia.org/wiki/Tax_rates_around_the_world

It would be nice if people would actually compare their nation to the rest of the world before coming to ludicrous conclusions. Canada is one of the most capitalist nations on the earth and people should realize that reducing taxes more and more is not always the answer.

[blueblood]

It is pretty obvious that Canadas close proximity to the United States makes people think Canada is ¨tax heavy¨.

If you actually compare Canada to the rest of the first world you would see this is pretty far from the truth.

http://en.wikipedia.org/wiki/Tax_rates_around_the_world

It would be nice if people would actually compare their nation to the rest of the world before coming to ludicrous conclusions. Canada is one of the most capitalist nations on the earth and people should realize that reducing taxes more and more is not always the answer.

Alright you send 60% of your income to the government and don't accept the refund and tell us how that works.

I know how to spend my money thanks. I would like more of it back from the gov't though.

[Brunopolis]

Alright you send 60% of your income to the government and don't accept the refund and tell us how that works.

I know how to spend my money thanks. I would like more of it back from the gov't though.

It works well for the rest of the first world. If you dont like to pay taxes you can always move to Dubai.

As for spending your money. Im sure you do know how to spend it. Unfortunately, not everyone does and safety nets are their to protect those that stumble(whether it be a job loss, health problems, etc).

Sure this may not be your problem but just letting people fall with no help isnt always the best solution. Homeless and jobless people dont just ¨disappear¨. Go ask Detroit and Houston that.

[Riverwind]

Canada's electricity costs to business are so much lower than our competitors that we can afford a minor rise in the cost of energy and STILL maintain our relative position to them, especially when the income tax cuts are factored in. The response of the system isn't linear as you seem to believe.

I am not saying it is linear - I am saying it is stepped. Small cost increases have no effect on behavoir until they reach a certain threshold that will trigger changes in behavoir. Gas going from 0.90 to 1.20 did not change much but once it got 1.40 you saw large vehicle sales fall off a cliff and small car sales pick up. I doubt utilities and businesses behave any differently.

The cost of a hybrid is another example.

Someone driving an SUV that gets 15mpg could trade that in for a hydrid SUV that gets 25mpg for an extra 10K in capital cost, however, that new SUV would have to be driven 260,000 miles to break even on that 10K if there was a 0.38/gallon tax added to the gas price. And that calculation does not take into account the higher maintenance costs for hybrids. 260,00 miles is often longer than the useful life of the vehicle which means there is no economic reason to purchase the hybrid at an additional cost.

Every other calculation I have done with energy saving technology shows that the capital cost far outstrips any savings in energy costs unless the energy cost increase is quite high. That tells me that small carbon taxes cannot possibly change behavoir.

If you honestly believe that the cost of doing nothing is lower than the cost of doing something, well you're beyond help and redemption, because it's ludicrous. Stern isn't the only economist to come out and take this position.

And other economists take the position that wealthier societies will be in a better position to pay the costs of adaption - a position that can be easily supported by looking at the difference between a cyclone hitting florida and a cyclone hitting bangladesh.

The trouble with this debate is people take a bunch of unvalidated climate models that barely get the global average temperature right, make a pile of dubious assumptions about future technology and economic growth and then try to predict the consequences of climate change 100 years from now. It is an absurd exercise that tells us nothing useful. I don't believe astrologers should be consulted before setting government policy and I see no evidence that that climate models are any more reliable than astrologers.

To say that the goals are impossible is an agenda driven defeatist attitude, designed to paint the problem as impossible to address so lets just keep going as we are. It's BS.

What is BS is pretending that spending billions trying to reduce CO2 emissions in Canada will actually accomplish something.

If I told you I was lowering you income taxes to ZERO but raising your carbon taxes, be it gasoline, home heating, etc by an equivalent revenue generating percentage, that you wouldn't seek to invest as either a consumer or business in technology that reduces your consumption of carbon emitting goods?

A lot depends on the capital cost of the technology. If the rise in energy price was too small to give me an ROI then I would just pocket the tax savings and carry on. One thing that makes these calculations even more complex is the carbon emitted during the production of the energy saving equipment. Increasing the cost of energy will increase the cost of this equipment which will make it more difficult to justify the expense.

This is the same idea applied at a less extreme approach and phased in to allow consumers and business a chance to adapt to the changing economic signals.

You also forget that politicians will cave at the first sign of economic trouble so there is no way to ensure that people believe that those economic signals will be the same in the future. Gordon Campbell just caved on carbon tax for munipalities. Edited October 16, 2008 by Riverwind

[shoegazer]

Does that University give refunds???

Punishing our economy chasing after a possible science experiment especially in these times is lunacy.

Canada is fine as it is, punishing our exports is also lunacy.

Canada needs to find an industry that will be as high of value and with the high employment numbers as the oil industry, thankfully we have a hundred years to do so.

The free market does a good job regulating fossil fuel usage, why should we burden ourselves with an unnecessary tax?

Blueblood. Mine doesn't need to but if you attended one they should consider it so that they don't have to count you among their alumni given that the best you could offer is that NOT witty retort.

Clearly your knowledge of economics is as piss poor as is your understanding of how markets work or fail too. Sadly you present the stereotypical myopic and misguided responses, what little their was, of an ideologue.

Well how about Finance. Considering that the banking sector is a bigger employer and produces huge profits I'd say we've found another. Moreover their is nothing wrong with oil production but it can be done more efficiently and with less emissions than is currently being done.

Because the free market does a piss poor job of providing a true price for the commodity that represents it's true cost, when it fails to price negative externalities and this is a perfect example of market failure.

Moreover the market doesn't do a good job of regulating use, despite your ideological leanings. The market seeks a kind of equilibrium, but one which is not solely based on economic fundamentals and that equilibrium is only a kind of equilibrium since the system is entirely dynamic and a true equilibrium in the sense of the a static system doesn't exists. Moreover market lags, dislocations, and friction prevent the system from even finding a true optimal dynamic equilibrium. You need to get your understanding of economics to a level beyond Econ 20. Fama's efficient market hypothesis holds, only over the longer term and then only the weak version of the hypothesis holds.

Funny cause pretty much every economist worth their salt, you know all the people that made you think the free market is perfect - since you clearly never came up with that thought on your own - agree that a carbon tax is a more efficient means placing a price on negative externalities.

[shoegazer]

I am not saying it is linear - I am saying it is stepped. Small cost increases have no effect on behavoir until they reach a certain threshold that will trigger changes in behavoir. Gas going from 0.90 to 1.20 did not change much but once it got 1.40 you saw large vehicle sales fall off a cliff and small car sales pick up. I doubt utilities and businesses behave any differently.

This is a poor analysis. First the cost of gasoline rose sufficiently fast enough within a given time frame that the impact is inelastic. Indeed it's known that responses to gasoline prices are largely inelastic over a short time period, since most people can't just run out and buy a new more fuel efficient car tomorrow or modify their behaviour instantaneously to respond to a changing price environment - it's part of the reason why the market isn't a truly optimal means of allocating resources.

Over a longer term however you will see a substantial change in consumer behaviour as consumers confront the choices of buying new cars, new furnaces, of insulating their homes, etc. I never said the responses would be immediate, indeed no reasonable approach can require an immediate approach since any changes will have some time and capital associated with them.

The cost of a hybrid is another example.

Someone driving an SUV that gets 15mpg could trade that in for a hydrid SUV that gets 25mpg for an extra 10K in capital cost, however, that new SUV would have to be driven 260,000 miles to break even on that 10K if there was a 0.38/gallon tax added to the gas price. And that calculation does not take into account the higher maintenance costs for hybrids. 260,00 miles is often longer than the useful life of the vehicle which means there is no economic reason to purchase the hybrid at an additional cost.

Every other calculation I have done with energy saving technology shows that the capital cost far outstrips any savings in energy costs unless the energy cost increase is quite high. That tells me that small carbon taxes cannot possibly change behavoir.

Well my point wasn't at the consumer end, it was at the wholesale level. You can't honestly believe that $1.0 billion in carbon taxes for OPG or TransAlta would not result in changes, nor capital cost investment, especially with accelerated CCA deductions, which makes the ROIs of numerous projects, including a complete replacement with nuclear, given the new cost structures for these industries, which again CANNOT leave Canada. In fact the new 550Mw co-gen plant being built has a total capital cost of $750 million. Considering that Lakeview is being retired and Nanticoke is nearly the end of it's lifetime, being with 5 years of it's economic lifetime and about 10 years of it's technical lifetime, it's replacement and the decision on how to replace it WILL CERTAINLY be impacted by the existence of carbon taxes.

Moreover lets address the SUV Hybrid you mention. First the cost difference between a Ford Escape XLT FWD 2.3L and the Ford Hybrid FWD, which are essentially comparable car is $25,399 vs $31,499, not $10000 difference but $6893 with taxes. Now assuming 200,000 Km of driving 75% city and 25% highway, which is consistent with average driving habits, at $1/L gas the Ford Escape Hybrid will use $11900 over it's lifetime and the Ford Escape XLT $19300, for a difference of $7400 in nominal terms, which if not spent over a differing time frame would make the Hybrid the more cost effective. If there was a small change in price, this borderline ROI would tip in favour of the hybrid, at the prevailing price point for gasoline with an additional tax.

And other economists take the position that wealthier societies will be in a better position to pay the costs of adaption - a position that can be easily supported by looking at the difference between a cyclone hitting florida and a cyclone hitting bangladesh.

True

The trouble with this debate is people take a bunch of unvalidated climate models that barely get the global average temperature right, make a pile of dubious assumptions about future technology and economic growth and then try to predict the consequences of climate change 100 years from now. It is an absurd exercise that tells us nothing useful. I don't believe astrologers should be consulted before setting government policy and I see no evidence that that climate models are any more reliable than astrologers.

And your level of knowledge of non-linear dynamical climate systems gives you the ability to make this assessment how? I'm absolutely sick of the denier crap. The models while not perfect are backtested and conform quite well to the historical climate data. Are there some things not fully understood? Yes. Will this have a substantial impact on the predictions, given that the predictions are being given as a range of predictions with uncertainty bounds being estimate. Likely not. Given that virtually every reputable climate scientist, every major science body, all of the major peer reviewed journals and a host of other qualified agencies all support the AGW theory and the conclusions drawn by the IPCC and other studies means that there is sufficient reason to do something.

What is BS is pretending that spending billions trying to reduce CO2 emissions in Canada will actually accomplish something.

Yeah people probably said the same against going to the moon which had about 100000000000000000000000000000000000000000000000% fewer direct benefits but numerous side benefits. Spending money converting our economy from one principally based around carbon to one less so, will help shield our economy as the cost of fossil fuels rise in the future as supplies further dwindle.

A lot depends on the capital cost of the technology. If the rise in energy price was too small to give me an ROI then I would just pocket the tax savings and carry on. One thing that makes these calculations even more complex is the carbon emitted during the production of the energy saving equipment. Increasing the cost of energy will increase the cost of this equipment which will make it more difficult to justify the expense.

Jesus wept. Not all projects will see a ROI for emissions reductions especially at the consumer and small business end, or at least it will be less so. The 700 large emitters who will be the principle companies paying the bulk of the carbon taxes will have a direct incentive, that will be large and real for them, but relatively small for the economy overall, to invest in capital. Again OPG and TransAlta who will be paying combined between $2.0 - $2.5 billion in carbon taxes. They will over the near to long term have substantial incentives to invest in cleaner technology and to swtich sources of production. The cost of capital technology will hardly rise that much as a result of increased energy costs to make the projects not viable. That's just completely specious.

You also forget that politicians will cave at the first sign of economic trouble so there is no way to ensure that people believe that those economic signals will be the same in the future. Gordon Campbell just caved on carbon tax for munipalities.

Perhaps however the same argument applies to the market price of gasoline or coal as well. The prices change and no one believes, nor knows where the price will go. A carbon tax creates and maintains a price signal in the market which ensures that the externalities are priced in and this helps avoid the problem of the 1970's where the fleet average mpg increased substantially due to

[Riverwind]

Over a longer term however you will see a substantial change in consumer behaviour as consumers confront the choices of buying new cars, new furnaces, of insulating their homes, etc. I never said the responses would be immediate, indeed no reasonable approach can require an immediate approach since any changes will have some time and capital associated with them.

These kind incremental efficiency improvements happen without carbon taxes because the efficiency of products increases anyways. e.g. A dryer bought today uses less energy than one bought 10 years ago. However, such improvements are a drop in the bucket if CO2 is really a threat and you will need a lot larger price signals to get people to get rid of the dryer and use a clothes line instead. Getting people to put up with that kind of inconvenience will take very large price signals.

Well my point wasn't at the consumer end, it was at the wholesale level. You can't honestly believe that $1.0 billion in carbon taxes for OPG or TransAlta would not result in changes, nor capital cost investment, especially with accelerated CCA deductions

The devil is always in the detail. No business will spend 1.1 billion to save on 1 billion in taxes. They would simply raise prices or find cost savings that don't reduce Co2.

If there was a small change in price, this borderline ROI would tip in favour of the hybrid, at the prevailing price point for gasoline with an additional tax.

The point of the example was to demonstrate price changes must exceed a certain threshold before any behavior will change. If the price of the more efficient options is comparable to the less efficient option then people will always choose the more efficient option and no additional incentive is required.

The models while not perfect are backtested and conform quite well to the historical climate data.

As someone with engineering background who has built and used numerical models I can tell you that hindcasts tell us nothing about the predictive skill of the models because there is no way to know whether the match is the result of correct theory or the result of curve fitting. The only way to know if the models are useful is to make predictions and compare the results with the real data. So far, the models have consistently predicted more warming than has actually occurred. The fact that the models over-predict climate trends and the scientific funding mechanisms which encourage hyperbole and exaggeration means that any reasonable person should be very cautious before adopting radical economic changes based on the model outputs.

More importantly, models may do ok on the hindcasts for GMST but they fail miserably when it comes to hindcasting regional trends or trends in other parameters suh as rainfall. i.e. you cannot reasonably take a model that can't hindcast regional rainfall patterns and then use that model output to predict the cost of water shortages in Saskatchewan 50 years from now.

The same issue exists with weather events like hurricanes - the models don't have the resolution required to produce these kinds of a phenomena which means they can tell us nothing about the frequency or patterns of such events in the future.

Yes. Will this have a substantial impact on the predictions, given that the predictions are being given as a range of predictions with uncertainty bounds being estimate. Likely not.

The ridiculously wide uncertainty bounds is one of the reasons why the models have no useful predictive skill. If any possible weather outcome is said to be "consistent with" the models then the models do not help us make decisions.

Given that virtually every reputable climate scientist, every major science body, all of the major peer reviewed journals and a host of other qualified agencies all support the AGW theory and the conclusions drawn by the IPCC and other studies means that there is sufficient reason to do something.

A climate scientist who has no clue about the energy system or the economy can reasonably argue that we have to "do something" given our limited knowledge. The trouble only shows up when we have to decide what that "something" is. You seem to be an advocate of small measures that will only have a marginal effect on CO2 production. Such an approach is fine for people who like symbolism over substance.

I don't take that approach. I look at what the IPCC and others are saying we need to do to actually stop climate change and they are saying we need to limit global CO2 concentrations to 450ppm or less. They also say that reaching that limit will require that virtually all electricity production be CO2 free by 2050 - a goal which is simply not obtainable when faced with the demands of a developing world and a growing population.

This puts us in a situation where we could spend more trying to limit our own CO2 emissions only to find that it makes zero difference in the end and we have to pay the adaptation costs anyways. This makes it impossible to justify any more than token measures that won't hurt the economy but they won't do much about emissions either.

The last point is fundemental to our disagreement. You seem to think that a mitigation strategy has a reasonable chance of success and should be viewed as an insurance policy. I see mitigation as a risky choice that is not likely to succeed. Given those perpectives we could agree completely on facts yet come to opposition conclusions on how to deal with the facts.

Spending money converting our economy from one principally based around carbon to one less so, will help shield our economy as the cost of fossil fuels rise in the future as supplies further dwindle.

By your own admission we need to switch to natgas or nuclear - both of which are resources in limited supply. In fact, they are currently more limited than coal so you can hardly argue that we are protecting ourselves from future supply shocks. That is one of the reasons why Germany and the UK are now looking seriously at coal again because they want energy sources which they can supply domestically.

The cost of capital technology will hardly rise that much as a result of increased energy costs to make the projects not viable. That's just completely specious.

Really? If the carbon tax is large enough to make projects viable that would not be viable otherwise then it is going to be large enough to increase the cost of concrete, steel and fuel required to build it. Of course, the utilities could cheat by importing the required materials from countries with no additional taxes on CO2 but even then you will see the cost of alternatives increase as the price on CO2 increases. Whether the additional costs are large enough to make a project not viable will depend on the numbers for partiuclar project.

For example, a project that costs $900 million and saves $1 billion would deliver a positive ROI, however, a 10% increase in costs would make that project unviable. This scenario is not unreasonable because we are talking about projects which are supposely not viable without the "small" carbon tax that you advocate.

Edited October 16, 2008 by Riverwind

[Drea]

100+mpg cars would be glorified tricyles. There are some basic laws of physics that require the consumption of fuel to go up as the size of the vehicle increases. The 30% figure you quote refers to the amount of energy in the gasoline that can be converted to kinetic energy. There are also physical limits on what can be achieved there too.

In any case, you clearly don't have a clue what is involved in producing the energy that you need to live your life so you really are not in a position to comment on what is possible or not. People who do understand the system know that solar and wind power can never provide enough power and no one wants nuclear power. That leaves gas or coal if we want electricty and no amount of whinging about GHGs is going to change that.

Any solutions? Or just insults?

As a citizen of this country I am in a position to comment.

Clearly, something needs to be done about our dependence on oil... today it's at $72/barrel. How much lower before it is no longer feasible to extract it from the tarsands? It doesn't just bubble up from the ground like in the middle east. So what happens then? When it's too late and we are paying $10/litre?

Realistically we need to seek alternatives (and offer incentives to companies -- tax breaks, etc) before it gets too expensive or we run out.

I am just being realistic. *shrug*

[Riverwind]

Clearly, something needs to be done about our dependence on oil... today it's at $72/barrel.

Think everyone would like to reduce our dependency on oil but anti-CO2 measures that increase the cost of electricity without taxing gas will do nothing.

The most sensible approach would increase fuel efficiency standards for vehicles. No carbon taxes required.

Edited October 16, 2008 by Riverwind