An economist explains: Textbook economics is badly flawed when it comes to climate change


Junaid B. Jahangir, MacEwan University
Wed, April 10, 2024 

THE CONVERSATION

The federal carbon tax increase that has raised gas prices by three cents per litre in most Canadian provinces has been met by nationwide protests, many featuring slurs against Prime Minister Justin Trudeau.

Riding on this tide of protest, Alberta Premier Danielle Smith called the carbon tax “inhumane,” pushing back against more than 200 economists who signed a letter defending the carbon tax by telling them to come out of their ivory towers.

But economists are hardly infallible experts on the carbon tax and other fiscal measures implemented by governments.

A seasoned politician seizes the opportunity that populist outrage affords them despite their own inconsistencies. Indeed, Smith spoke of the benefits of the carbon tax in 2021.

While the carbon tax increase kicked in, the Alberta fuel tax was hiked by 13 cents the same day. In other words, the carbon tax has been a blessing for Smith as she deflects attention away from her own government’s role in raising gas prices.
Double standards

The carbon tax has come at an opportune moment for me as an economics professor, because I have been teaching about externalities — a cost or benefit that is caused by one entity but financially incurred by another — in intermediate microeconomics. I’ve noted the carbon tax serves as a scapegoat or a punching bag.

For instance, some homeowners have blamed the carbon tax for higher electricity bills in Alberta, ignoring the fact that the carbon tax does not apply to the electricity sector.

When the Alberta government implemented its fuel tax of 13 cents per litre, electricity bill rebates expired and deferred repayments kicked in.

Double standards abound on the carbon tax. While protesters chant “Axe the tax,” they ignore that fossil fuel subsidies cost them more than the carbon tax. This seems to be a common trend in economic issues.

Read more: Fossil fuel subsidies cost Canadians a lot more money than the carbon tax

As another example, businesses complain about the increase in minimum wage but remain quiet about the rising compensation of CEOs and senior management.

In a similar vein, the Alberta government rushes to economists to lend their expertise on critiquing the minimum wage, but spurns them when their views do not fit the desired narrative on the carbon tax.

This is because Economics 101, or what Harvard University Prof. James Kwak terms as “economism,” opposes initiatives like the minimum wage but supports measures like the carbon tax. Both stances are problematic, as I discovered while preparing lesson plans on the minimum wage and climate.
Textbook economics backs carbon tax

As an economics instructor, a key lesson is that the carbon tax is the least costly method to address carbon emissions. In my pedagogical paper on climate change, I refer to McGill University economist Chris Ragan, who states that the carbon tax is more efficient than regulation.

We believe that under emission or technology regulations, there is no incentive to do better than achieving those standards. But the carbon tax incentivizes investment in new technologies to limit the tax payment. Regulations also fail to bring in revenues, whereas the carbon tax facilitates government revenues that can be used to offer rebates to low-income households and reduce other taxes.

Additionally, ending fossil fuel subsidies and imposing the carbon tax are effective since a significant reduction in emissions isn’t going to happen due to consumer actions, like lowering the thermostat or cycling instead of driving. That’s despite the fact that such actions contribute to public morality and facilitate the implementation of government policies on climate change.

Similar to Ragan’s views, University of Alberta economist Andrew Leach advocates for carbon pricing as the best policy to reduce emissions in his book Between Doom and Denial. While the Alberta government milks populist outrage for political advantage, Leach argues that climate change is the single biggest environmental, political and societal challenge of our time.

The limits of textbook economics

Yet there is something awry about the textbook carbon tax approach.

Ian Urquhart, a professor emeritus of political science at the University of Alberta, pointed out in 2019 that a $30 per tonne carbon tax in Alberta did not prompt the public to use more public transit.

He argued that Canada would need a $200 per tonne carbon tax by 2030 to reach the target of 30 per cent less emissions than in 2005. The current estimated schedule for carbon tax hike by $15 each year will only lead it to $170 per tonne by 2030.

However, there is a more fundamental issue. The way textbook economics approaches climate change through externalities suggests it’s simply a minor aberration. Economist Kate Raworth points out in her book Doughnut Economics that this approach reduces the issue of climate change to a mere side-effect of production.

Mainstream economics focuses on two production factors — labour and capital. Energy and raw materials are ignored, which means that biophysical or ecological limits are disregarded in the pursuit of growth. According to Australian economist Steve Keen, that approach was embedded within the discipline of economics when Adam Smith shifted the focus on sources of wealth from land/environment to labour in his famous book The Wealth of Nations.

Keen argues that mainstream economics assumes 90 per cent of GDP will be unaffected by climate change. He adds that urgent warnings from climate scientists have been diluted by optimistic estimations by some economists who don’t account for tipping points that lead to catastrophic outcomes. In short, he argues, mainstream economics has been complicit in the existential crisis of climate change.

Other scholars make a similar argument, accusing mainstream economics of fostering dangerous complacency and delay on climate change by suggesting technological progress will address emissions via a profit motive.
Radical solutions

The carbon tax is an important policy tool. But it may be too little too late, necessitating radical solutions beyond the carbon tax.

In this regard, Keen argues that carbon pricing is not enough, calling for carbon rationing. His proposal rests on a universal carbon credit and pricing everything in terms of carbon and money, where the rich would have to buy credits from the poor.

Others call for immediate action on halting material growth. This is because by focusing on the tax-versus-regulation debate and ignoring ecological limits, mainstream economics fails to convey the urgent need to address the climate crisis.

Raworth argues in her book for replenishing living systems through designs like rooftops that grow food, pavements that store storm water to add to aquifers, buildings that sequester carbon and sewage that is turned into soil nutrients.

In essence, economists need to convey a sense of urgency on climate change. This happens by going beyond textbook economics and technical jargon by highlighting the ecological and biophysical limits to growth.

This article is republished from The Conversation, a nonprofit, independent news organisation bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: Junaid B. Jahangir, MacEwan University

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I am not affiliated with any organization. Though, I have in the past done research assistance work for the Parkland Institute.

Kenney's claim carbon tax damaged Alberta economy is refuted in court documents 

NDP’s Climate Leadership Plan had marginal effect on GDP growth, analysis shows

Charles Rusnell, Jennie Russell - CBC News

Posted: December 16, 2019

Premier Jason Kenney's claims that the former NDP government's carbon tax crippled the Alberta economy are refuted by his government's own analysis, filed in court. (Jason Franson/The Canadian Press)

During the provincial election, and on many occasions since, the government of Premier Jason Kenney has claimed the NDP government's carbon tax damaged Alberta's economy.

That claim is false, according to economic modelling contained in the Kenney government's own legal documents. 

"I think not surprisingly to those of us who have studied carbon taxes, [Kenney's claims] seem quite exaggerated," said University of British Columbia political scientist Kathryn Harrison, an expert in environmental, climate and energy policy. 

Those legal documents are now before the Alberta Court of Appeal as part of the province's constitutional challenge of the Trudeau government's federal carbon tax. 

• Alberta Court of Appeal to live stream carbon tax reference case

The federal tax will be imposed on consumers in Alberta on Jan. 1 to replace the one contained in the Notley government's Climate Leadership Plan, repealed by Kenney this spring as one of his first acts as premier. 

The federal government recently accepted Alberta's plan to tax the emissions of heavy emitters at a rate of $30 a tonne in 2020. 

The court documents show the economic effect of the Notley government's Climate Leadership Plan, which included a $30-per-tonne carbon tax, was an average reduction in annual growth of Alberta's gross domestic product (GDP) of only 0.05 per cent. 

GDP is the total dollar value of goods produced and services provided and is considered a basic measure of economic performance.

Healthy growth under carbon tax, expert says

A recently released government report, entitled Economic Assessment of Climate Policy in Alberta, looked at four different economic scenarios, including the looming federal carbon tax.

Those government scenarios examined how Alberta would fare:

• Under the province's 2015 pre-carbon tax climate policies.
• With the NDP's climate leadership plan and a carbon price of $30 a tonne.
• With the climate leadership plan and a carbon price rising to $50 a tonne.
• Under the federal carbon pricing system.

UBC political scientist Kathryn Harrison says the Alberta government's own analysis showed healthy economic growth and job creation under a carbon tax. (CBC)

"What they found is that there is healthy economic growth and healthy job creation under all of the scenarios from 2020 to 2030," Harrison said.

And she said the data showed even with a carbon tax rising to $50 a tonne, the difference in effect on the province's GDP would be marginal.

"The difference in the average growth of GDP at the maximum is a difference between 2.57 per cent [growth] per year and 2.5 per cent per year," said Harrison, who in addition to a doctorate in political science, holds a masters degree in chemical engineering from the Massachusetts Institute of Technology.

But job creation would be affected by a carbon tax, Harrison said. The government report said the Notley carbon tax would reduce the number of jobs created by between 10,000 and 16,000 a year.

In an emailed statement, a spokesperson for Alberta Environment Minister Jason Nixon did not address the government analysis filed as part of its court challenge. 

Instead, she referenced the government report that said Alberta's average annual GDP growth, under the Climate Leadership Plan with a carbon tax rising to $50 per tonne, would be reduced by between 0.6 to 0.9 percentage points, which is about $2 billion to $3.9 billion a year. 

The statement also maintained the UCP government's position that the carbon tax imposed an unacceptable financial burden on individual households.

Government relied on Pembina Institute modelling 

Simon Dyer of the Pembina Institute said the reduction in GDP growth under the Notley government carbon tax was insignificant. 

"The carbon tax was misrepresented in the most recent provincial election in Alberta," Dyer said, adding that the tax "hasn't had a significant impact either on consumers or on industry."

Pembina Institute executive director Simon Dyer says the UCP government's public attacks are at odds with its praise of the institute in court documents. (Nathan Gross/CBC)

The Pembina Institute has been publicly targeted by the UCP government for allegedly being anti-oil-and-gas development. And so the irony is not lost on Dyer that the Alberta government, in its legal challenge, chose to use environmental modelling by Pembina rather than its own modelling. 

During cross-examination in October as part of Alberta's challenge to the federal carbon tax, Alberta assistant deputy minister for energy Robert Savage seemed to admit the Alberta government chose Pembina's modelling knowing it produced emissions-reduction data that was better for the government's case.

"So you had information that the Pembina Institute's modelling provided significantly smaller differences [in emissions reduction] because it had a more optimistic 'business as usual' approach?" B.C. government lawyer Gareth Morley asked Savage.

"My understanding is that there were some differences in the forecast," Savage replied, adding that he believed Navius Research, the firm hired by the Alberta government to model the effects of a carbon tax, was working with the Pembina Institute on that issue.

Under questioning, Savage also conceded the general consensus among economists is that a carbon tax is one of the most economically efficient ways to curb emissions.

Savage however, resisted a line of questioning that sought to establish that the Notley government's carbon tax had resulted in a significant reduction in emissions.

Attempted 'to misdirect Albertans,' NDP says

The environmental model Pembina used to forecast emissions reduction was developed by a San Francisco policy firm. The Alberta government used a draft version of that model to forecast that a $30-per-tonne carbon tax on building and transportation emissions would only reduce annual emissions by 1.4 megatonnes in 2020, and 2.7 megatonnes in 2030.

As part of the Paris climate agreement, Canada has committed to lowering its greenhouse-gas emissions by 30 per cent from 2005 levels by 2030. That means lowering emissions to 513 megatonnes from 732 megatonnes.

The Alberta government's own environmental modelling data, produced in court after the government filed its initial legal documents, forecast the carbon tax would reduce annual emissions by one megatonne in 2020, and by five megatonnes in both 2025 and 2030.

Dyer said the Pembina model is a "rigorous but simplified" model that doesn't consider how carbon-tax revenues could be used to drive further emissions reductions, for example through investment in public transit.

He said while carbon pricing isn't the only solution to reducing emissions, it is a critical and relatively low-cost tool that has proven effective.

"Carbon pricing works. It works for consumers in terms of helping them make different choices, especially if you provide rebates to ensure that they're not out of pocket," Dyer said, adding it is also necessary for industry.

"If we don't have strong enough carbon pricing in place, this industry is never going to be able to innovate fast enough to compete in this global market that is demanding low-carbon oil," he said.

Under the former NDP government's climate leadership plan, about 60 per cent of households were eligible for carbon-tax rebates.

University of Calgary researchers found four out of 10 households received a rebate that was greater than their carbon-tax costs. The federal government has said that under its system, that figure would be eight out of 10 households.

NDP environment critic Marlin Schmidt said the Kenney government misled the public about the carbon tax.

"I think what we saw during the election campaign was an attempt to misdirect Albertans," Schmidt said.

"We know that Albertans have been going through a really tough economy over the past few years, and Kenney used the carbon tax as a simple but wrong explanation as to what was going on with Alberta's economy."

If you have any information for this story, or information for another story, please contact us in confidence at cbcinvestigates@cbc.ca

Follow us on Twitter: @charlesrusnell @jennierussell_

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The carbon tax has its critics — do any of them have better ideas?

Story by Aaron Wherry • CBC

What would Canada be doing to reduce its carbon emissions if Pierre Poilievre and the premiers had their way?

The Conservative leader has vowed loudly and often that he would repeal the federal carbon tax — though he has been evasive when asked whether he also would eliminate the federally mandated carbon price for industrial emitters. He is now joined by seven premiers who would like to see the carbon tax either frozen at its current rate or scrapped entirely.

Not to be outdone, Ontario Liberal Leader Bonnie Crombie now says she wouldn't implement a provincial carbon tax, while New Brunswick Liberal Leader Susan Holt says she opposes increasing the federal tax. That at least suggests federal Liberals can't expect much support from those provinces if Crombie and Holt win power.


Ontario Liberal Leader Bonnie Crombie says a government led by her would not introduce a carbon tax. (Patrick Morrell/CBC News)© Provided by cbc.ca

It's obviously telling that so many political leaders have calculated they're now better off taking a position against the carbon tax. The sheer extent of that opposition does not bode well for Justin Trudeau's Liberal government.

But opposing the federal carbon tax is also a relatively easy thing to do — particularly when you're not responsible for explaining how Canada will do its part to reduce global greenhouse gas emissions.

Related video: Political Panel: Should B.C. halt carbon tax hike? (Global News)
Duration 8:03  View on Watch
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CityNewsBonnie Crombie rules out provincial carbon tax if elected in 2026

2:17

cbc.caPoilievre plans a non-confidence motion on carbon tax

0:45

Breakfast TelevisionWhat we really think of Trudeau defending the carbon tax hike

8:19

The varying ambitions of the provinces

Canada currently is committed to reducing its greenhouse gas emissions by between 40 and 45 per cent below 2005 levels by 2030. If all planned policies are implemented, Canada could be in sight of reaching that target.

But that national target obscures significant disparities between provinces.

Important actions at the provincial level in years past — British Columbia's adoption of a carbon tax in 2008, Quebec's move to a cap-and-trade system in 2013, the phaseout of coal-fired electricity generation in Ontario and Alberta — have helped to stabilize emissions in Canada. But an analysis published by the Canadian Climate Institute last fall concluded that "if you add up [all of the provinces and territories'] formal emissions reduction targets, they amount to less than half the national target."

Several provinces — including British Columbia and Quebec — have targets that meet or exceed the federal goal. Five provinces have written their targets into law. But three provinces — Alberta, Saskatchewan and Manitoba, which together account for 51 per cent of Canada's total emissions — don't have overall targets. After coming to office in 2018, the Ontario government weakened its target and is now aiming to reduce its emissions by just 30 per cent.

Such large differences complicate the argument that the federal government should defer to provincial governments on climate policy. But because climate policy is viewed largely as a federal issue in Canada, provincial politicians can point in Ottawa's direction whenever they want to assign blame or responsibility elsewhere.
The carbon tax in a vacuum

The Liberals may have undermined their own arguments for the carbon tax when they granted an exemption for home heating oil. And if the carbon tax eventually dies, the post-mortem inevitably will focus on whether the policy was fatally wounded by poor communication.

But the debate over the carbon tax continues to be conducted in a vacuum. If the carbon tax disappeared tomorrow, it's not clear what, if anything, would replace it. It's also not clear how that replacement might affect household budgets, the national economy and Canada's greenhouse gas emissions.

While the Liberals tend to focus on reporting by the parliamentary budget officer that indicated the vast majority of households receive more from the rebate than they pay in additional costs created by the carbon tax, the Conservatives prefer to focus on a PBO report that includes the larger economic costs of putting a price on carbon. When those costs are included, the carbon tax appears not to fare as well.


Parliamentary Budget Officer Yves Giroux: "Doing nothing would also have costs."

 (Adrian Wyld/The Canadian Press)© Provided by cbc.ca

But the PBO's economic analysis is another casualty of the political vacuum in which the carbon tax is being debated. In addition to not considering the economic benefits of reducing emissions, the PBO does not measure the carbon tax against any other policy.

"The PBO compares costs relative to a world in which Canada simply ignores its emissions — and faces no consequences. Obviously, that world does not exist," the Climate Institute's Dale Beugin and Rick Smith wrote in 2023.

Even the parliamentary budget officer himself has lamented how his office's economic analysis has come to be used.

"Anything we do with respect to addressing or trying to curb climate change will have costs," Yves Giroux said last year. "Doing nothing would also have costs."
Doing something different, or doing less?

As recently as three years ago, Conservatives were running on a platform that said putting a price on emissions was the most cost-effective way to reduce emissions. But Poilievre has returned the party to its previous position of simply opposing the federal carbon tax — while also rejecting the government's clean fuel regulations.

As loudly as Poilievre has opposed the "carbon tax" — technically, a fuel levy that applies to consumers — he has not yet said whether he also would repeal the carbon price that is paid by industry. The Conservative leader has said simply that he would subsidize clean energy and emissions-reducing technology, while making it easier for such projects to get regulatory approval.

But it remains unclear exactly what a Conservative government would do — or not do — to combat climate change, or how it would differ from what the Liberal government is already doing (federal subsidies for carbon capture already exist, for instance).

As a result, it's not possible to know what a Conservative government's climate agenda would cost, or by how much it would reduce Canada's emissions. If Conservatives have a plan that would achieve the same level of emissions reduction at a lower cost, they haven't offered it up yet.

The only thing really standing in the way of a fuller debate on climate policy in Canada is political convenience — opposition parties like to withhold their own proposals until an election has been called.

In the meantime, it's entirely fair to question the merits and practicalities of the Liberal government's carbon-pricing policies. Every policy involves trade-offs and serious study of what the government has done might raise real questions about its implementation and design.

But it's equally fair to ask whether the carbon tax's critics are proposing to do something different to combat climate change — or something less.

Commonwealth Carbon Tax Model Law
02 April 2024



Author: Dr Daniel Wilde, Economic Adviser

At last year’s UN climate summit (COP28), the world committed to transitioning away from fossil fuels and reaffirmed its commitment to limiting global warming to 1.5 degrees Celsius.

But business-as-usual will not achieve these goals. Greenhouse gas emissions continue to rise, forecasted emissions are higher than the carbon budget consistent with limiting climate change to 1.5 degrees Celsius, and given current policies, fossil fuel production is expected to continue increasing. Countries need to implement new policies if they hope to tackle climate change.

Carbon taxation is one such policy. The idea is simple: tax emissions and incentivise emitters to clean up their act by transitioning to clean energy and/or reducing their energy consumption. Carbon taxation offers the triple benefit of reducing emissions, boosting investment in clean energy, and increasing government revenues.

Yet carbon taxation, and carbon pricing generally, can be politically fraught. In 2012 Australia introduced a carbon pricing scheme that was subsequently ended by the next administration who argued that it was causing electricity prices to increase. In the United States, political constraints to the federal government taxing carbon was also a motivation behind the subsidy-driven approach to reducing emissions taken by the Biden administration in the Inflation Reduction Act.
Carbon pricing is on the rise

Despite examples of political opposition, carbon pricing is an increasing global trend. The World Bank, State and Trends of Carbon Pricing 2023 for example, reports that while a decade ago only 7 per cent of global emissions were priced, today this has risen to nearly a quarter of global emissions being priced through either a carbon tax or an emissions trading scheme.

The EU Carbon Border Adjustment Mechanism, which comes into force in 2026, is further increasing demand for carbon taxation. Under this mechanism, imports of carbon-intensive goods (initially aluminium, cement, electricity, fertilizer, hydrogen, iron and steel) will be charged, while carbon taxes paid on these goods during their production will be creditable, thereby reducing the amount paid to the EU.

Countries exporting these goods to the EU then face a question: should the carbon in these goods be taxed domestically or by the EU (in which case the EU will receive the revenue)? The UK is also committed to introducing a carbon border adjustment mechanism, which will provide further motivation for carbon taxation in countries that export carbon-intensive goods to the UK.



Commonwealth Carbon Tax Model Law

The benefits of carbon taxation have motivated a growing number of Commonwealth countries such as Botswana, Gabon, Malaysia and Nigeria to consider taxing carbon. In response, the Commonwealth Secretariat has drafted a Carbon Tax Model Law to aid those Commonwealth countries considering carbon taxation as part of their climate policy.

This model law is consistent with the key principles of international environmental law, including the ‘polluter-pays’ principle. The individual parts and sections of the model law have been drafted to ensure clarity around the legal obligations and rules, and to ensure transparency and procedural fairness in carbon taxation.

If implemented globally, the model law would cover approximately 79 per cent of global greenhouse gas emissions and is likely to tax the majority of emissions in most countries. This contrasts with the much lower coverage achieved by existing carbon taxes and shows that the model law could be a powerful tool for reducing emissions. The high coverage of the carbon tax would be achieved by taxing emissions from three sources: the burning of fossil fuels, industrial processes such as cement production, and the venting of methane.

The model law also provides for an easy to administer carbon tax. The tax is levied on fossil fuel companies and large industrial emitters, which are sizeable and sophisticated taxpayers that are well-placed to meet reporting requirements. Households, small businesses, and most companies are not legally liable for the carbon tax and would not have to fill in any new forms or face any change in the administration of their taxes due to the carbon tax, albeit they may bear part of the economic burden of the tax through higher prices.

To ensure a just transition, the model law includes provisions for measuring and mitigating the carbon tax’s impact on low-income households and other vulnerable groups. This is achieved through regular impact reporting, stakeholder engagement and directing revenue generated from the tax towards clean energy initiatives and/or low-income households. These measures are also important to build public support for the carbon tax.

It is clear that demand for carbon taxation is growing as countries strive to achieve their global commitments, increase domestic revenues, and avoid carbon border adjustment mechanism taxes on their exports. The Commonwealth Carbon Tax Model Law is designed to provide countries with a tool for implementing carbon tax that’s comprehensive, easy to administer and consistent with a just transition.

Saskatchewan

Saskatchewan premier plans to appeal carbon tax decision to Supreme Court

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Court rules 3-2 in favour of federal government; but dissenters say carbon tax wholly unconstitutional

THIS IS A WASTE OF TAXPAYERS MONEY, ALBERTA HAS THE BEST CARBON TAX WHICH IS PROVINCIALLY REDEEMABLE FOR 60% OF THE POPULATION
THIS LEGAL CHALLENGE WILL GO NOWHERE AS DID THE PROVINCES CHALLENGES TO THE FEDERAL GUN REGISTRY (EP)

Creeden Martell · CBC News · Posted: May 03, 2019 12:03 PM CT | Last Updated: May 3

Saskatchewan's Court of Appeal ruled in favour of the federal government by a margin of 3-2 in a legal battle against the federal carbon tax. Saskatchewan Premier Scott Moe says the province will appeal to the Supreme Court of Canada. (Michael Bell/Canadian Press

Saskatchewan's Court of Appeal has ruled that the carbon tax imposed on the

province by the federal government is constitutionally sound and falls within the

legislative authority of Parliament. The ruling was released Friday.

Premier Scott Moe said the decision will be appealed to the Supreme Court of Canada. The province has about 30 days to appeal, according to Saskatchewan Attorney General Don Morgan. The provincial government would act as intervenor in other court challenges against the carbon tax. 

"I remain hopeful for a different outcome," Moe said in the aftermath of the decision's release.

"No one in this nation should confuse climate action with a carbon tax."

Lawyers for the provincial government had argued the tax is unfair and unconstitutional. The 155-page decision was not unanimous. Three judges ruled in favour of the federal government while two ruled the law was wholly unconstitutional.

Justices Ralph Ottenbreit and Neal Caldwell were the dissenting opinions as they argued Part 1 of The Greenhouse Gas Pollution Pricing Act,which imposes a charge on greenhouse gas-producing fuels and waste, is invalid and an unconstitutional delegation of Parliament's law-making power. 

Environment and Climate Change Minister Catherine McKenna speaks in the foyer of the House of Commons in Ottawa on Friday. McKenna called out political opponents of the carbon tax, challenging them to 'stop the partisan games and join in on serious and effective climate action.' (Adrian Wyld/The Canadian Press)

Moe said Saskatchewan, and the rest of Canada, will be able to have their say on the federal carbon tax when the next general election rolls around. He pointed out that the carbon tax became a hot button issue in recent provincial elections and will be a factor again in October.

"It was forced on the provinces across the nation ... by the prime minister of Canada," Moe said of the carbon tax. "The only effectiveness this tax has is ultimately moving jobs out of our jurisdiction into other areas of the world, and we won't stand for that."

Saskatchewan had introduced its own carbon plan, Prairie Resilience, but did not place a price on carbon. The federal government's carbon price starts at a minimum of $20 a tonne and is to rise $10 each year until 2022. 

Federal Environment and Climate Change Minister Catherine McKenna praised the court's decision to uphold Ottawa's jurisdiction. 

"It confirms that putting a price on carbon pollution and returning the revenues to Canadians through the Climate Action Incentive rebate is not only constitutional, it is an effective and essential part of any serious response to the global challenge of climate change," McKenna said in Ottawa on Friday.

McKenna challenged opponents of the carbon tax to "stop the partisan games and join in on serious and effective climate action." She re-emphasized the court's findings that a price on carbon is "an essential aspect or element of the global effort to limit GHG emissions."

Brett Dolter, an economics professor at the University of Regina, said the decision means the Saskatchewan government must now look at how it should modify its own made-in-Saskatchewan carbon reduction plan — whether it's similar to the federal plan, or offering rebate cheques, or moving the revenue to other sectors of government which could use the funding.

Watch CBC Saskatchewan's special coverage:

"The policy can be designed to ensure people don't fall behind. That's the message I want people to realize," said Dolter. "We often talk about carbon pricing as if it's just this cost — and we often forget about the money coming in that could offset this impact."

Ontario has also launched a court challenge against the carbon tax, which was implemented by the federal government on April 1 in provinces that did not have their own carbon pricing plan that satisfied criteria laid out by Ottawa.

Alberta Premier Jason Kenney said in a statement that the decision from the Saskatchewan court is "far from the broad victory the federal government sought." 

• Sask.'s highest court to release decision on province's challenge of federal carbon tax

• Premier criticizes report that says most Sask. households come out ahead despite carbon tax

Kenney also said Alberta would be joining Saskatchewan's case as it appeals it to the Supreme Court. Kenney touted his province's plan, which includes carbon-capture storage but does not mention phasing out coal. Alberta's plan instead looks at emissions targets that could force some coal plants to close or switch to a cleaner fuel to remain profitable.

"We believe that our strong plan makes a federal carbon tax redundant and that a consumer-punishing retail carbon tax — whether imposed by the NDP or by Justin Trudeau ­— is the wrong way to go. It's all economic pain and no environmental gain," Kenney's statement reads.

New Brunswick Premier Blaine Higgs said he's disappointed by the decision, and that the province would consult its attorney general to "determine the most effective means to continue our opposition."

• Anti-carbon tax crusaders Doug Ford, Jason Kenney meet at Queen's Park

• OPINION
  Canada can learn from Australia's carbon pricing mistakes

"The unfair federal tax does not, and will not, work within the strategies developed in New Brunswick to address one of the most pressing issues of our times," he said in a statement. 

Manitoba's Premier Brian Pallister has said his province will also launch its own court challenge.

There's also the possibility that the Supreme Court may not hear the case if courts in Saskatchewan, Ontario and Manitoba come to similar conclusions about the constitutionality of carbon pricing, according to experts.

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A Tax Some Repubicans Like

The Carbon Tax, which by the by is actually in effect in Alberta.

Which brings us to Alberta's small carbon tax. It has one – $15 a tonne for companies that exceed certain emission limits, with the money going into a technology fund. The trouble is that $15 a tonne is too low today to generate a lot of money, and will certainly be far too low tomorrow to generate the income the government will need to finance this expensive policy option.

However in Alberta the beneficiaries of this tax are the taxpayers; big oil.

And so with this model it should be no surprise that another capitalist who supports taxes is the CEO of Exxon; in this case the much hated Carbon Tax that Republicans and Harpocrites claim will kill jobs.

But a carbon tax appears to have little support in Ottawa. Both Prime Minister Stephen Harper and Liberal Leader Stéphane Dion have rejected the idea in the past, saying it will damage the economy.

Then there are Republicans who support carbon taxes because it undermines cap and trade, which by its sheer complications cannot actually function in the real market place.


Ironically its not Republicans but environmentalists and social justice advocates in California opposing it in favour of a carbon tax

February 16, 2011

But the environmental justice groups that brought the lawsuit against the Air Resources Board oppose the cap and trade program. These groups include the Communities for a Better Environment and the Center for Race, Poverty and the Environment.

“Cap and trade will create toxic hotspots in low-income communities of color,” said Maya Golden-Krasner, a staff attorney for Communities for a Better Environment.

Those who support cap and trade say the revenue gained from the trading of emission rights will be used to forge programs for these poor populations, Pincetl said.

This argument does not satisfy the environmental justice community, though.

“This heavy reliance on cap and trade won’t get us where we need to be,” Golden-Krasner said.

The coalition seeks methods other than cap and trade to reduce carbon emissions.

“We are supportive of AB 32,” Golden-Krasner said. “We just want to see the Air Resources Board actually examine alternatives to cap and trade.”

These alternatives include a direct tax to carbon emissions.

It is also the reason Alberta was the first province to impose a carbon tax, to avoid cap and trade.

Why GOP Rep. Bob Inglis is looking for a new job.

Tue Aug. 3, 2010 2:00 AM PDT

Inglis voted against the cap-and-trade climate legislation, believing it would create a new tax, lead to a "hopelessly complicated" trading scheme for carbon, and harm American manufacturing by handing China and India a competitive edge on energy costs. Instead, he proposed a revenue-neutral tax swap: Payroll taxes would be reduced, and the amount of that reduction would be applied as a tax on carbon dioxide emissions—mainly hitting coal plants and natural gas facilities. (This tax would be removed from exported goods and imposed on imported products—thus neutralizing any competitive advantage for China, India, and other manufacturing nations.)

Here was a conservative market-based plan. Did it receive any interest from House GOP leaders? Inglis shakes his head: "It's the t-word." Tax. He adds, "It's so contrary to the rhetoric we've got out there, to what Beck, Limbaugh, and others are saying."

January 2009

The world's biggest oil company, Exxon Mobil, has softened its hardline position on climate change by throwing its weight behind a tax on carbon emissions.

In a significant shift in stance, Exxon's chief executive, Rex Tillerson, told an audience in Washington that he considered a tax to be a fairer route to curbing emissions than a cap-and-trade system of pollution allocations.

"As a businessman it is hard to speak favourably about any new tax," said Tillerson. "But a carbon tax strikes me as a more direct, a more transparent and a more effective approach."

support for carbon taxes has been taken up by a growing cadre on the far right, including Exxon CEO Rex Tillerson, economist Arthur Laffer, Sen. Bob Corker (R-Tenn.), and yes, even climate wingnut Sen. James Inhofe (R-Gamma Quadrant). Hell, throw in a refunded gas tax and you get America's Worst Columnist© Charles Krauthammer too. Are we to believe that these folks understand the threat of climate chaos, want to reduce climate emissions the amount science indicates is prudent, and sincerely believe that a carbon tax is the best way to accomplish that goal?

Is a carbon tax in America's future?

By Timothy NoahPosted Thursday, Nov. 9, 2006, at 5:40 PM ET

Two days after the election, a movement is afoot to achieve an audacious Democratic goal. The weird part is that the people behind it are Republicans.

In a Nov. 9 Wall Street Journal op-ed, former Bush speechwriter David Frum suggested that President Bush propose a carbon tax. N. Gregory Mankiw, former chairman of the Council of Economic Advisers in the Bush White House, suggested the same thing in an Oct. 20 op-ed in the Journal, and former Fed Chairman Alan Greenspan talked it up in late September. Harvard's Martin Feldstein and Weekly Standard contributing editor Irwin Stelzer like the idea, too. Slate "Moneybox" columnist Dan Gross took note of this unexpected GOP trend in an Oct. 8 New York Times column ("Raise the Gasoline Tax? Funny, It Doesn't Sound Republican").

On a purely theoretical level, it's not at all inconsistent for a Republican to advocate a carbon tax. Conservatives prefer taxing transactions to taxing income because it's a way to avoid progressivity; rich and poor get taxed at the same rate. (In his op-ed, Frum makes no bones about wanting to use the carbon tax to "split the opposition" and to lower taxes on "work, savings and investment.")

The reason that that conservatives can support a carbon tax is because it is a Pigovian Tax, which is a classical liberal economic argument.

Pigou Club is described by its founder as “an elite group of economists and pundits with the good sense to have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes.”

Pigou Club was founded by Dr. Gregory Mankiw by stating his legendary manifesto in the Wall Street Journal. As time passed more and more economists were added to the list of people supporting the Pigou Club. They include people from all sides of political spectrum.