Wednesday, May 8, 2013

Carbon pricing doesn’t work

Aldyen Donnelly is an economist writing on energy and environmental matters.
In the Financial Post, she offers a challenging read arguing the superiority of regulation to all existing attempts at carbon taxation.

Carbon pricing doesn’t work | FP Comment | Financial Post:
...the Canada 2020 background paper asserts that reducing Canadian greenhouse gas emissions (“GHGs”) and “pricing carbon” through government taxation are one and the same thing. They are not.
Interested and objective researchers can review fairly comprehensive datasets for over 120 developing nation pollution pricing policy precedents going back to 1978. Roughly one-third of these are “cap and trade”-type measures, while the rest are more direct consumption, production tax and/or tariff measures or measures that combine direct taxation and cap and trade.
Not one of the pollution pricing precedents can reasonably be described as effective...
Any objective reviewer of European energy taxation, pricing, demand and development trends since 1990 must reasonably ask: At prices well over CAD$0.40/kWh, why can’t Europeans afford zero-emission electricity? How can policies that deliver so little renewable energy at such a high cost to families be found, by objective analysis, to be efficient?
Canadian governments have a stellar history of adopting product standards that efficiently move suppliers of polluting products to “green up.” This is how we got lead levels down in gasoline and paint, sulphur levels down in gasoline and diesel and massively reduced the ozone-depleting substances in refrigerant chemicals.
In all of these examples, companies competing to secure their shares of the new demand arising from our regulated product standards massively reduced pollution content while nominal prices for the regulated products fell. Our historical environmental policy successes and failures clearly show that governments can only foster highly competitive, efficient pollution reduction outcomes with product standards that do not involve governments in either the price-setting or new technology selection processes.

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