Friday, April 17, 2009

Cap and Trade Sucks - Get Real Alberta and Start Taxing Carbon

There is lots of buzz about cap and trade as a scheme to reduce carbon emissions. I think it is merely wealth transfer and a petrie dish to grow a culture of more corporate corruption. To get some context read Stephen Murgatroyd's blog post on the subject.

This Edmonton Journal story on the Alberta perspective on carbon pricing is more context. And we are being told Canada has to rationalize with the US standards - and Obama is pushing cap and trade too.

The $2B Alberta investment in carbon capture and storage is pretty impressive. The Americans ponied up $1B for CCS and the Chinese are into it for $6B but look at the investment per capita and Alberta is definitely a leader in this effort. That is a longer term and capital intensive solution and will not solve the political issue of cap and trade versus carbon tax options.

This issue of how to respond to the CO2 emissions puts Alberta in the political, ecological and fiscal cross-hairs big time and on a world scale. We have dipped our provincial toes into the CO2 emissions issue with some legislation that is timid and tepid and hopefully temporary. We tax carbon now at $15 a tonne based on intensity targets. That is a start but the political credibility of this policy has lost its lustre long ago. As we grow the oil sands we allow emissions to grow in absolute terms and that is not a viable solution to the GHG issue for Alberta.

The experts say the real cost of CO2 is about $125 a tonne so we have long way to go to get realistic about paying the piper and not passing the problem on to future generations. Alberta Environment Minister Renner questioned on the Alberta price of carbon is quoted as saying: It probably would do better if it were higher." You bet Mr. Minister.

The perennial concern is what happens if Alberta pays a realistic price for carbon and others do not. Will our economy will suffer? That is known as the "Edge Effect" where everyone knows what is the right thing to do but can't agree on the right time to do it. I'm hoping Alberta takes the first serious step and taxes carbon as a carrot and a stick to get serious about encouraging new technologies and penalizing those who refuse to invest to reduce their carbon footprints.

A made-in-Alberta for Alberta carbon tax keeps the cash in Alberta. Transferring wealth out of Alberta with a cap and trade policy to pay who knows what for what kind of flaky schemes that alleged ecological advantages is stupid and breeds greed and corruption. Surely we have seen enough of that these days with the market meltdown. We are all enduring this recession/depression thanks to the under-regulated American financial system and the breathtaking personal greed and corporate corruption in that sector.

Albertans want the problem solved here - not just a fiscal surcharge penalty that somehow absolves us of the duty to adapt our economy to better serve the environment. The best way to do that is to park the ideological posturing about taxes and use taxes to change behaviour. We know that works and it is easier to monitor and evaluate effectiveness.

That way the money raised with such a tax stays in Alberta to foster investment in things like a state of the art mercantile upgrader so more bitumen gets processed here with jobs and value added benefits here too.

I think we Albertans need to get that comprehensive carbon tax happening now and stifle the efforts of those who are pushing a wealth transfer away from Alberta with their cap and trade ecological schemes and bad economic dreams.

It will not solve the Alberta emission challenges and only penalize our economy. Beat them to the punch and put in a realistic tax on Alberta carbon now Premier Stelmach.