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TheGlobeAndMail.com - A made-in-Canada solution?
[Many] complex issues arise with cap-and-trade systems, such as determining allowances for new facilities and the phasing out of old ones. Offsets are notoriously difficult to monitor at an international level. And, as the Europeans have learned, utility companies engaged in different technologies, such as hydro, nuclear and coal-fire electricity, can profitably expand all forms of production, since they are in a net credit position.
On the other hand, as many experts now agree, a carbon tax or levy such as that adopted in British Columbia and in a different form, in Alberta, is in principle more efficient and fair. It gives more price certainty to businesses and is less subject to the complexities involved with the implementation of trading systems.
A carbon tax can be applied on all emitters, as well as yielding substantial revenues to governments so as to reduce other taxes or fund technologies needed to reduce greenhouse gas emissions. Nancy Olewiler of Simon Fraser University and I have estimated that Canada could collect almost $20-billion in revenues by imposing a $40 carbon tax on all energy sources, similar in value to the existing federal fuel excise tax of 10 cents a litre on gasoline. This proposal was adopted as part of the Liberal Green Shift, and soundly rejected in the last election.
Politically, a cap-and-trade system with auctioned credits looks like a tax on “dirty” industries, not on consumers or employees working for the businesses. Yet the effect of any carbon pricing scheme is to force up prices. A tax makes the cost much more obvious. That in itself is a virtue.
Last Updated: Monday, June 15, 2009 at 8:49:04 AM