Why are carbon taxes so low?

The recent announcement by Canada’s Minister of the Environment, Catherine McKenna, that there will be a national carbon price by the end of the year, is extremely welcome news. As someone who has spent a great deal of time trying to articulate to the public the basic rationale for carbon pricing (here, here, here and here), this is about as close to a “win” as anyone could reasonably expect. Let’s hope it happens.

Most of the time that I spent writing about it, I was trying to explain very basic features of the policy (what a collective action problem is, how the price system works, why it’s not a “tax on everything,” etc.) This was aimed primarily at a right-wing audience, of people who were inclined to do nothing about climate change. I have spent comparatively less time addressing a left-wing, or environmentalist audience, explaining why pricing is an appropriate policy measure in this case (although there was this and this).… Continue reading

Three observations on the Leap Manifesto

With the way that the NDP convention played out last weekend, it looks like we’re going to be hearing a lot more about the Leap Manifesto over the course of the next year or two. So in the spirit of discussion, I thought I’d throw in my two bits.

I have three specific observations, but before getting to that, I’d just like to comment on the public reception of the manifesto. Setting aside stylistic complaints, the thing seems to me fairly reasonable as an aspirational document. Other than being a bit of a laundry list, I don’t see that much specifically wrong with it. However, the idea that we are in a position to take this “leap” right now is just old-fashioned balderdash (I’ll elaborate on this a bit below). But if you wanted to map out where we should be in, say, 50 years, there’s not all that much to object to in this document.… Continue reading

Why no one should listen to Lorrie Goldstein

Toronto Sun columnist Lorrie Goldstein has something of a fixation on carbon pricing. He never misses an opportunity to condemn the idea. Even when there is nothing really going on with the climate change file, he will pump out a column complaining about the “hysteria” or the “myths” surrounding global warming. Number one myth is the idea that carbon pricing can be an effective policy response. His reasoning is fairly simple: carbon taxes don’t work, and since they don’t work, they must be nothing other than a cash-grab by the government.

Now if you read his stuff regularly, you get the sense that there is something wonky in his understanding of how the economy works. Indeed, it’s always fun listening to people on the right try to explain why carbon pricing can’t possibly work, because they usually wind up inadvertently ‘proving’ that capitalism as a whole can’t work. In other words, the arguments they make inevitably boil down to the claim that consumers are insensitive to price signals for ordinary market goods, such as gasoline.… Continue reading

Everything you need to know about the provincial politics of climate change, in one chart

I came across this a while ago in a Macleans article by Paul Boothe and Félix-Antoine Boudreault. Check out the right-most column:


I had been used to citing to my students a figure of 20 CO2/tonnes per person as the current emissions level in Canada. I had not realized how unevenly that was distributed across the country. Keep in mind that the general target we want to get to, globally, is around 2 CO2/tonnes per person. This makes “Canada” seem a long way off. But if you look more carefully, some provinces are a lot closer than others. Quebec is at 9.7 (because of hydro power), and even Ontario is at a not-so-bad 12.5 (and that’s before implementing cap-and-trade, just by abolishing coal). The numbers from Alberta and Saskatchewan though are insane — 64 and 68.8 CO2/tonne per person respectively. (It is worth noting that SK is not the worst offender in absolute terms, it just has a low population compared to Alberta.) This is of course tar sands production (and coal dependence).… Continue reading

Brad Wall does not love the market

…or at least not the way I do.

Listening to Saskatchewan Premier Brad Wall talk about climate change the other day, I was reminded of a piece that I wrote for Policy Options a long time ago, about the difference between being pro-market and being pro-business. I still find it very helpful, when listening to conservative politicians, to classify their views using this distinction. Wall’s position on carbon pricing, for instance, is a perfect example of a conservative politician being pro-business, rather than pro-market.

Here is how I drew the distinction, way back when:

Those who are pro-market are enthusiastic about capitalism because they understand the virtues of the price system. They know that a properly structured competitive market is the most effective institutional arrangement for ensuring that resources and labour flow to their most productive employment.

The key to their endorsement, however, lies not in the magic word “market,” but rather in the qualifications that precede it.

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If you want more than ambition, there is high-ambition: But what does it mean?

From Paris

At her closing speech on December 12, Christiana Figueres, Executive Sectretary of the UN Framework Convention on Climate Change, noted that the Paris Agreement was the result of years of work. Focused work started following COP17 in Durban, giving its name to the Durban Platform for Enhanced Action. In many respects the Ad Hoc Working Group of the Durban Platform (ADP) carried out the process of working on a new agreement from 2011 to 2015.

As the ADP completed its work at the end of the first week at COP21, the working draft was a patchwork of hundreds of square brackets. A sentence, a phrase, or a word put in square brackets meant that some parties wanted it in while others wanted it out. In parts of the text, not words but entire paragraphs were bracketed. This process was important, for there was a mandate to ensure that draft Agreement be truly “party-owned”.… Continue reading

Why were the COP21 negotiations in Paris so tough?

From Paris

The Paris Agreement (full text here), adopted on December 12, 2015, was negotiated with a fear of failure looming over the delegates throughout the two-week conference. It was a difficult process with many setbacks.

The conference went on extended time until Saturday evening. The final three days were carried out almost entirely in closed meetings. Negotiators, together with the French Presidency and the UNFCCC Secretariat, worked indefatigably round the clock.

As the details of what went on in closed sessions are transpiring, it becomes clear that aspects of the draft text were being disputed until the end. According to sources, some countries were stating that they still had problems with the text as late as ten minutes before all gave their consent.

Why was it so tough?

There were many difficult issues to be resolved at Le Bourget. One of them was the question of differentiation of responsibilities.… Continue reading

Final thoughts on Naomi Klein

Readers of this blog will have noticed that I’ve spent a fair bit of time since the beginning of the year discussing Naomi Klein’s book on climate change, This Changes Everything. Some have suggested, either subtly or not-so-subtly, that my apparent obsession with Klein has become somewhat unseemly. So let me offer a few words in my defence, and also provide something of a “roundup” of what I’ve written over the past year. Here are the posts:

Naomi Klein: This Changes Everything
Naomi Klein postscript 1
Naomi Klein postscript 2

Then there are my own posts on climate change:

What is a tax not a tax? Carbon taxes vs. carbon prices
The two worst talking points on carbon taxes/pricing
Hobbes’s difficult idea
and finally the syllabus for my course on climate change policy (for those who are interested in what I do consider to be worth reading).

Part of why I talked about Klein’s book at length is just that I’ve been thinking a lot about climate change lately.… Continue reading

The pope is not a liberal

That’s the upshot of my op-ed in the New York Times today.

For those who are wondering, these things are really hard to write — you have to cram so much into such a tiny space, there really is no room for nuance. The Times asked for 1000 words, I delivered 1250, they wound up having space for 850, so 400 words had to go!

Part of what went were the sections where I expressed my appreciation for the encyclical, which I actually think is an incredibly positive contribution to the current debate. If one thinks of how much damage the Church has done with respect to the population issue (and it’s important to remember that, back in the ’60s, the Church really could have gone either way on the contraception and abortion question), it’s absolutely wonderful that Pope Francis has positioned the Church on the right side of the climate change issue.… Continue reading

Great sentences: Alec Nove

I was flipping through Alec Nove’s The Economics of a Feasible Socialism (revisted) today, looking over my old underlined quotes from 20 years ago. This book is probably one of the dozen or so I’ve read that fundamentally changed the way I think about things. Looking back, this line in particular stands out:

Externalities arise not because of separation of ownership, but because of separation of decision-making units (p. 74).

Tiny sentence with huge implications. This idea is one that, when I read it, I had never seen articulated so clearly or forcefully. The implication is that some of the pathologies of capitalism do not arise because of the ownership structure of firms, or the profit-orientation, but merely from the decentralization of decision-making. As far as I’m concerned, this is something that every environmentalist needs to understand and grapple with, especially those who think that moving away from capitalist firms towards cooperatives is going to do anything for the environment.… Continue reading