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Goods News and Bad News: BC’s New Carbon Tax

By crooky | February 21, 2008

On Tuesday, February 19, the Government of British Columbia announced that it would introduce a new carbon tax in July, 2008 that would be applied to gasoline and other fuels.

The carbon tax will be phased in to give individuals, businesses, and industry time to adapt, innovate, and reduce the impact of the tax. The carbon tax starts at a rate based on $10 per tonne of associated carbon, or carbon-equivalent, emissions and will rise by $5 a year for the next four years — reaching $30 per tonne by 2012. This works out to 2.41 cents per litre for gasoline, rising gradually to 7.24 cents a litre by 2012. For diesel and home heating oil, it works out to 2.76 cents per litre, rising to 8.27 cents over the same five-year period.

Axel of Evil!!!

Tuesday was an interesting night for me because I was hosting at the SFU Outstanding Alumni Awards Dinner at the Four Seasons. As a member of the Alumni Association Board and as someone on the selection committee for the awards, I was pleased to see Mark Jaccard of SFU receive an award for Academic Excellence. Mark, if you don’t know, has been a big proponent of carbon tax for literally decades so Tuesday night was a big night for him on a number of fronts. In his own words: “I’m going to get really hammered tonight”.

Not everyone thinks that this carbon tax is a smart move though. My father and I were discussing it last night. He feels that it unfairly penalizes working class families that live in the subburbs and have no other option but to drive to work. The National Post seems to think that this tax will have little impact on consumer behaviour.

However, the best argument against the effectiveness of this particular piece of policy I have seen comes from a colleague of mine - “Zim” - who is a champion in the fight against global warming but thinks this tax is more political bullshit. [Edit: Zim is actually for the tax, he just doesn't think it's a strong enough measure.] He wrote me a lengthy e-mail this morning outlining his problems with the tax and I wanted to share that e-mail with you:

It’s amazing how people stick rigidly to a world-view no matter what the empirical evidence. On balance, though, one thing is clear: This tax is far too low to actually affect behavior, and in any case it’s aimed at the wrong audience — what we need is a hefty carbon tax on the order of $50 to $100 per tonne of carbon emissions, levied on the people who actually have the power to make the crucial decisions, namely the corporate executives who are in a position to decide whether to build a coal-fired power plant or a wind farm, or to produce lightweight electric vehicles instead of gas-guzzling miniature buildings on wheels complete with overstuffed couches and TVs. Supposedly this summer will see a cap-and-trade system emerge in BC, to get industrial executives to start thinking about their investment choices, but I’m not expecting it to be very strong, either.

I anticipate the cap will be so generous and decreases in the cap so slowly phased in that the industrialists will either ignore it or invest their energies in sabotaging it politically, or making it irrelevant by offsetting tax breaks that have the net effect of zero influence on their investment choices, rather than reworking their investment plans for radically low-carbon technology solutions, which is what we need and which is the ostensible goal of the program.

But on at least one level, a tiny step has been taken: The phrase “carbon tax” is now no longer hypothetical. Even though the tax is so low as to be more symbolic than real, and will clearly have either very little or absolutely no actual effect on behavior, now, people will have to deal with the fact that this meme has injected itself a tiny fraction of a distance into reality. The tax will have to get about 100 times larger in order to have any actual effect (e.g. on gasoline, two dollars a liter, not two cents a liter, is maybe where things would start to change).

So a few years from now, the debate will be over how large the tax has to get before it has any real effect, rather than whether a “carbon tax” is a Satanic device aimed at the heart of capitalism that will devour the righteous acolytes of capitalism entire, which the obsessive right-wing market-god ideologues seem to insist on (bizarrely, since a carbon tax is exactly what they should be advocating: in contrast to regulatory solutions simply outlawing the burning or export of coal, oil, etc., it’s a market-based solution for incorporating “environmental externalities” and solving a common-property problem by translating it into market prices).

I am so tired of ignorant people foaming incoherently at the mouth with self-contradictory stances on public policy issues spoon-fed to them by economically illiterate right-wing business owners and their sycophants in the corporate press. The irony is grotesque: The most strident self-described pro-business market-god-worshipping neoclassical-economics twits don’t actually understand the first fucking thing about economics, and they don’t realize they’re opposing exactly the public policy instrument (carbon taxes) prescribed by the academic economists from which the ideologues derive their own twisted ideology by a process of subtraction and simplification: they took Econ 100 back in first year undergrad, but forgot about the ‘externalities’ bits, which academic economists will attempt to explain to undergrads, who instead seem more influenced by the jejeune crap of Ayn Rand…our civilization is dominated by the memetic effulgences of twits who read Ayn Rand in their teens as undergrads and never grew out of it. They seem never to recognize that without taxation we’d have no public infrastructure, and few educated people; they never seem to notice that the richest countries in the world all have at least 40% of their GDP allocated by governments, and the poorest ones all have less, and they remember only an ideological line that “government is bad, taxes are bad” and “markets should never be interfered with”.

This includes a gross deliberate blindness on the controversy over wealth distribution. Ayn Randian ideologues, angry and resentful old white men in particular, never will admit that “markets” don’t do anything for equality of opportunity, in the sense that they’re mechanisms for one dollar, one vote, whereas democratic polities are built on the system of one person, one vote; and they never seem to admit to themselves that the natural tendency of wealth is to concentrate itself in a self-reinforcing spiral, leading to a natural emergence of a plutocratic aristocracy over a few generations. Bill Gates and Warren Buffett have spoken out about this repeatedly, advocating a stiff inheritance tax to counter this mathematically certain tendency. But our half-literate econo-ideologues won’t hear this. Taxes are bad! Gummint is bad! God damn gummint! God damn carbon taxes! Global warming is a hoax!

One of the frustrating things about the corporate press is that it never publishes extensive analyses of the contradiction between democracy and unbounded capitalism. Unbounded capitalism leads directly to plutocracy, not democracy, because a guy with $100 million has 100,000 times more influence and decision-making power than a guy with $1,000 in a system in which all choices are made via “markets”. The Harvey Enchins and Terence Corcorans of the world mouth-foamingly insist this is all good, and governments are all bad, that governments should barely exist and limit themselves strictly to enforcing contracts and defending the realm: an army, some police and the courts, that’s all they should do.

They don’t seem to realize that this is fundamentally opposed to the core principle of democracy, which is one person, one vote. Their role is to fill the pages of the public opinion manipulation agencies we euphemistically call “newspapers” with rants that constantly feed not-very-thoughtful businesspeople with ego-stroking justifications for unalloyed Ayn Randian selfishness and hymns to the holiness of the Market God, blessed be His holy name, whose only principle is: One dollar, one vote. I don’t think they’re smart enough to even admit to themselves that they’re advocating plutocracy over democracy.

Thanks for that thought-provoking rant Zim and thanks also for giving me permission to post it.

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Aaron “Crooky” Cruikshank is the Principal and Founder of Friuch Consulting. He has written professionally about science and technology for ten years.

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One Response to “Goods News and Bad News: BC’s New Carbon Tax”

  1. crooky Says:
    February 21st, 2008 at 11:57 am

    Zim also following up with this gem:

    I strongly advocate and support stiff carbon taxes, carbon taxes large enough to do the job they’re ostensibly intended to do. I understand Mark Jaccard’s point, repeated over many years, that we have to phase carbon taxes in gradually, ratcheting them up over time, to avoid undue shocks to the economy or, more germanely, to the political system, and I suspect he and I would end up at the same level of carbon taxation in the end, but I’m inclined to disagree with him on the scheduling: I think the economy would actually respond extremely quickly and very well to a large, hard carbon tax imposed very suddenly, provided capital is made available very generously to companies and entrepreneurs who are willing to respond with investments in green technology. I have far more faith in markets, really, than do all the carbon-tax-hating market-god ideologues out there. I’m not motivated by a fear of changes in economic incentives; I’m much more interested in what happens to the biosphere if we don’t let go of that fear and create the conditions that will stimulate everyone, everywhere, to get to work on solving the damn problem.

    I think we could move from a brown energy economy to a green energy economy with amazing speed, and that in fact we have nothing to fear from a large carbon tax: on the contrary, provided capital is made generously available for green energy investments, we would experience an unprecedented economic boom that would last for many years as we set about rebuilding our entire energy infrastructure and manufacturing processes on a low-carbon-emissions basis. It would be “all hands on deck” for years to come. It would be awesome.

    We could easily set up the conditions to unleash the monumental forces of free-enterprise capitalism in solving the carbon emissions problem. In Canada, this could be achieved via a new low- or no-interest, large-scale green investment lending mission for the Business Development Bank of Canada, and a large pool of venture capital funds raised from a stiff carbon tax applied to fossil-fuel industries, in concert with a carbon tax somewhere between $50 and $100 a tonne.

    I keep waiting for people to wake up to this, to lose their fear and embrace the future. And to stop pretending that the threat of abrupt, horrifically destructive GHG-driven climate change will go away if we pretend it doesn’t exist — if we just agree to pretend that climate science is a hoax, that the prognoses of the great majority of working climate scientists, based on several intersecting lines of empirical evidence, that increasing GHG levels will cause the extinction of most species on this planet and fuck up our grandchildren’s future, is somehow a Big Lie perpetrated by a conspiracy of thousands of scientists from dozens of countries who have met somewhere in secret and agreed to falsify all their results and lie to the public (a completely, entirely, thoroughly ridiculous proposition to anyone who has actually ever met a working climate scientist or who has any idea of how the culture of science functions).

    We are setting about radically changing the conditions of life on this planet because fools committed to a stale ideology are so entrenched in their own dogmas, and so ignorant of the culture of science, and so intellectually lazy, and so committed to their self-imposed identities as, for example, “oilmen” rather than showing any willingness to redefine their careers and retune business planning skills as sustainable energy production engineers or financiers, and so motivated by fear and greed and short-sightedness, instead of by hope and creativity and a sense of adult responsibility to their own grandchildren, that they’re blind to the fact that the challenge of rebuilding our economy on a minimal-carbon-emissions basis is a megalicious business opportunity of unprecedented scale, and not in fact something we need to fear at all. We should all be stoked to the max at the opportunities this presents. And all we need to do to activate those opportunities and release those energies, overnight, is to set up a level playing field whose boundaries are defined by a carbon emissions tax somewhere between $50 and $100 a tonne. What the hell are we waiting for?

    I’ll tell you what we’re waiting for: Leadership. We’re waiting for leaders with the intelligence and the balls and the sheer political ‘game’ to explain this to people, leaders who will help people let go of their misguided collective fears and stop listening to these nutty Terence Corcoran types who are telling us constantly to fear change, as if by denying the seriousness of climate change we could stop massive change from happening.

    We need leaders who will persuade people to stop clinging obsessively to a thoroughly unsustainable fossil-fuel-powered status quo that has never been, and could never be, more than a passing phase in the history of humanity, given the fact that fossil fuel resources are finite in any event. We need leaders who will show the way and give us permission to replace our instinctive fear of change and our illusion that we can keep doing what we’re accustomed to doing, who can kill our obsessions with stale ideologies and call us out and get us to step up displace our fears with hope and determination, and unleash a flood of vibrant pragmatism, energetic entrepreneurialism, and capable hands building new technology.

    Leaders like that are already emerging all over the place. All we need is a serious carbon tax and the game will be on! Reconstruction can commence immediately; all the requisite technology is already waiting in the wings. I ask again: What the hell are we waiting for?

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