tag:theconversation.com,2011:/global/topics/cap-and-trade-5008/articlesCap and trade – The Conversation2023-05-15T12:33:13Ztag:theconversation.com,2011:article/2046602023-05-15T12:33:13Z2023-05-15T12:33:13ZHow corporations use greenwashing to convince you they are battling climate change<figure><img src="https://images.theconversation.com/files/523328/original/file-20230427-660-vi0wh8.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5493%2C3171&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Consumers must do their homework before determining whether a company is actually green.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/greenwashing-of-the-coal-industry-conceptual-image-royalty-free-image/1386003375?phrase=greenwashing&adppopup=true">Victor de Schwanberg/Science Photo Library via Getty Images</a></span></figcaption></figure><p><em>Many corporations claim their products are “green-friendly.” But how do you know if what they’re selling is truly eco-safe? SciLine interviewed <a href="https://seas.umich.edu/research/faculty/thomas-lyon">Thomas Lyon</a>, professor of sustainable science, technology and commerce at the University of Michigan, on how to buy environmentally sustainable products, whether carbon credits actually work and the prevalence of greenwashing.</em></p>
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<figcaption><span class="caption">Dr. Thomas Lyon discusses the impact of corporate sustainability initiatives.</span></figcaption>
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<p><em>Below are some highlights from the discussion. Answers have been edited for brevity and clarity.</em></p>
<p><strong>What is greenwashing?</strong></p>
<p><strong>Thomas Lyon:</strong> <a href="https://doi.org/10.1177/10860266231168905">Greenwashing</a> is any communication that leads the listener to adopt an overly favorable impression of a company’s greenness.</p>
<p><strong>How can the consumer avoid falling for it?</strong></p>
<p><strong>Thomas Lyon:</strong> I still love the old concept of the <a href="https://www.ul.com/insights/sins-greenwashing">seven sins of greenwashing</a>. The first and most common is what’s called the sin of the hidden trade-off, where an organization tells you something good they do but neglects to tell you the bad things that go along with it. </p>
<p>For example, when you see an electric hand dryer in a public restroom, it may say on it: This dryer protects the environment. It saves trees from being used for paper. </p>
<p>But it neglects to tell you that, of course, it’s powered with electricity, and that electricity may have been generated from coal-fired power, which might <a href="https://ec.europa.eu/environment/biodiversity/business/assets/pdf/case-studies/Case%20study%2016_ReCiPe%20Hand%20drying%20systems_final.pdf">actually be more damaging than using a tree</a>, which is a renewable resource. That’s the most common of the seven deadly sins. </p>
<p>Other ones include the sin of irrelevance. For example, telling people that “this ship has an onboard wastewater recycling plant,” when all ships that go to Alaska are required by law to have exactly that kind of equipment. It’s no reflection of the company’s quality. </p>
<p>The sin of fibbing is actually the least common. Companies don’t usually actually lie about things. After all, it’s <a href="https://gbr.pepperdine.edu/2010/08/businesspersons-beware-lying-is-a-crime/">against the law</a>.</p>
<p>One of the increasingly common forms of greenwashing … is a hidden trade-off between the company’s market activities and its political activities. </p>
<p>You may get a company that says: Look at this, we invested US$5 million in renewable energy last year. They may not tell you that they spent $100 billion drilling for oil in a sensitive location. And they may not tell you that they spent $50 million <a href="https://www.forbes.com/sites/niallmccarthy/2019/03/25/oil-and-gas-giants-spend-millions-lobbying-to-block-climate-change-policies-infographic/?sh=7baf6f97c4fb">lobbying against climate legislation</a> that would have made a real difference. </p>
<p><strong>What are carbon credits (or offsets)?</strong></p>
<p><strong>Thomas Lyon:</strong> I think the easiest way to understand these may be to step back a little bit and think about <a href="https://www.c2es.org/content/cap-and-trade-basics/#:">cap-and-trade systems</a> … under which the government will set a cap on the aggregate amount of, say, carbon emissions. And within that, each company gets a right to emit a certain amount of carbon. </p>
<p>But that company can then trade permits with other companies. Suppose the company finds it’s going to be really expensive for it to reduce its carbon emissions. But there’s some other company next door that could do it really cheaply. </p>
<p>The company with the expensive reductions could pay the other company to do the reductions for it, and it then buys one of the permits – or more than one permit – from the company that can do it cheaply. </p>
<p>That kind of trading system has been <a href="https://www.economist.com/finance-and-economics/2022/05/26/carbon-markets-are-going-global">recommended by economists for decades</a>, because it lowers the overall cost of achieving a given level of emissions reduction. And that’s a clean, well-enforced, reliable system. </p>
<p>Now the place where things get confusing for people is that a lot of times the offsets are not coming from within a cap-and-trade system. Instead they’re coming from a voluntary offset that’s offered by some free-standing producer that’s not included in a cap. </p>
<p>Now it’s necessary to ask a whole series of additional questions. Perhaps the foremost among them is: Is this offset actually producing a reduction that was not going to happen anyway? </p>
<p>It may be that the company claims, “Oh, we’re saving this forest from being cut down.” But maybe the forest was in a protected region in a country where there was no chance it was going to be cut down anyway. So that offset is not what is called in the offset world “additional.” </p>
<p><strong>What should consumers make of companies that offer programs such as planting a tree for every widget they sell?</strong></p>
<p><strong>Thomas Lyon:</strong> Overall, it’s better that they’re trying to do something than just ignoring the issue. But this is where you, the consumer, <a href="https://theconversation.com/greenwashing-corporate-tree-planting-generates-goodwill-but-may-sometimes-harm-the-planet-103457">have to start doing your homework</a> … and look for a provider that has a strong reputation and that is making claims validated by external sources. </p>
<p><strong>Which rating schemes can people trust?</strong></p>
<p><strong>Thomas Lyon:</strong> There’s a cool little app that I like a lot. You can download it. It’s called <a href="https://www.ewg.org/apps/">EWG Healthy Living</a>. EWG stands for <a href="https://www.ewg.org/">Environmental Working Group</a>. It’s a group of scientists who get together and draw on science to assess which products are environmentally friendly, and which ones aren’t. And they have something like 150,000 products in their database. </p>
<p>You can scan the UPC code when you go to the store, and you just immediately get this information up on your phone that rates the quality of the company’s environmental claims and performance. That’s a really nice little way to verify things on the fly.</p>
<p><strong>Are there any examples of business practices that really do benefit the environment?</strong></p>
<p><strong>Thomas Lyon:</strong> Building is one big area. <a href="https://support.usgbc.org/hc/en-us/articles/4404406912403-What-is-LEED-certification-">LEED building standards</a> or <a href="https://www.energystar.gov/buildings/building_recognition/building_certification">Energy Star building standards</a> reduce environmental impact. They improve the quality of the indoor environment for employees. They actually <a href="https://nilskok.typepad.com/nils-kok/2020/05/green-building-has-a-strong-business-case.html">produce higher rents</a> because people are more willing to work in these kinds of buildings. </p>
<p>You can look at the whole movement toward renewable energy and companies that produce solar or wind energy. They’re doing something that really is good for the environment. </p>
<p>The move toward electric vehicles – that really will be good for the environment. It does raise trade-offs. There are going to be issues around certain <a href="https://www.npr.org/2022/03/13/1085707854/how-a-handful-of-metals-could-determine-the-future-of-the-electric-car-industry">critical mineral inputs into producing batteries</a>, and we’ve got to figure out good ways to reuse batteries and then dispose of them at the end of their life. </p>
<p><em>Watch the <a href="https://www.sciline.org/tech/corporate-sustainability/">full interview</a> to hear more.</em></p>
<p><em><a href="https://www.sciline.org/">SciLine</a> is a free service based at the nonprofit American Association for the Advancement of Science that helps journalists include scientific evidence and experts in their news stories.</em></p><img src="https://counter.theconversation.com/content/204660/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Lyon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Look for hidden trade-offs, political contributions and what businesses are not telling you.Tom Lyon, Professor of Sustainable Science, Technology and Commerce and Business Economics, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1974712023-01-12T08:21:32Z2023-01-12T08:21:32ZIs Europe’s new carbon border tax fair for everyone?<p>The European Union’s carbon market has shown remarkable success in encouraging industries to green their production processes. Known as the Emissions Trading Scheme (ETS), it has helped reduce the EU’s greenhouse gas (GHG) emissions by <a href="https://ec.europa.eu/commission/presscorner/detail/fr/qanda_21_3542">more than 40%</a> in covered sectors.</p>
<p>The largest environmental-commodities market in history, it spans 31 countries (the 27 member states plus Iceland, Liechtenstein and Norway) and more than 10,000 power plants and industrial installations. These include oil refineries, steel works, and production of iron, aluminium, metals, cement, glass, ceramics, pulp and paper, among others. Based on the <a href="https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_3542">“cap and trade” principle</a>, it sets an absolute limit on the total amount of certain greenhouse gases that can be released each year by the entities regulated by the system. Critically, that cap is tightened over time. Companies can buy or receive emission allowances, which they trade with one another as needed.</p>
<p>However, the policy has also had some undesirable side effects. Industries have looked to outsource their production to countries that <a href="https://www.eionet.europa.eu/etcs/etc-atni/products/etc-atni-reports/etc-atni-report-7-2019-emissions-outsourcing-in-the-eu-a-review-of-potential-effects-on-industrial-pollution/">do not adopt similar policies</a>, which can lead to a rise in emissions outside Europe, potentially even exceeding the EU’s emission reductions.</p>
<p>To avoid this, in December the European Commission voted on a preliminary agreement to set up a <a href="https://www.consilium.europa.eu/en/press/press-releases/2022/12/13/eu-climate-action-provisional-agreement-reached-on-carbon-border-adjustment-mechanism-cbam">border carbon adjustment mechanism</a> (CBAM). Instead of charging for GHG emissions only within the European Union, the CBAM will also tax emissions embodied in imports of the high-emission industries. Aluminium, electricity, cement, fertilisers, iron and steel are particularly targeted, while hydrogen was recently added because it was chiefly produced with coal in non-EU countries.</p>
<p>This may look like a smart move to motivate the EU’s trading partners to decarbonise their production alongside the 27-state bloc. It is true the adoption of the CBAM could lead to a wave of similar policies in other developed economies, such as Japan and North America, as well as in developing countries with the capacity to decarbonise their industries, such as China. Adopting a similar line will allow them to avoid paying a carbon tax at the border when exporting their goods and services to the EU.</p>
<p>However, some of the underlying assumptions remain controversial. Promoting the substitution of highly polluting technologies by green technologies seems notably <a href="https://green-transition-navigator.org/">easier in Europe</a> than in Africa.</p>
<h2>Strong dependencies</h2>
<p>Combining an enthusiasm for green politics and engineering traditions, Europe is a <a href="https://www.ft.com/content/195bb547-8b01-4c99-a789-f77e8b779620">leading manufacturer of green technologies</a>. The continent is home to top wind turbine producers (Vestas, Nordex and Siemens Gamesa) as well as green power generators (Enel, EDP, Iberdrola and Orsted).</p>
<p>The replacement of old industries by green ones therefore creates new employment opportunities and leads to a positive cycle of income growth and environmental progress. Elsewhere, by contrast, green technologies are more likely to be imported, which means that this process will weaken the economy rather than create opportunities.</p>
<p>For those unable to keep up, there will be further damage as they lose access to the EU market or become less competitive and no longer export. Many jobs, tax revenues and export revenues will be lost if the CBAM is implemented without taking into account the specificities of the EU’s trading partners.</p>
<p>Some studies have already addressed this issue with macroeconomic models, but these are flawed in their analysis of developing countries. They generally assume that all countries have a relatively high capacity to migrate from one industry to another.</p>
<p>In <a href="https://www.afd.fr/en/ressources/impacts-cbam-eu-trade-partners-consequences-developing-countries">recent work</a>, we try to avoid these assumptions by focusing on economies with less mature industries and therefore less capacity to adapt. We therefore analyse the consequences of the implementation of the CBAM on employment, wages, tax and trade revenues, following an <a href="https://oecd-development-matters.org/2022/06/07/low-carbon-transition-in-latin-america-what-are-the-risks-and-the-main-constraints/">approach</a> developed to understand the macroeconomic consequences of developing economies in the context of a global transition.</p>
<p>The results show that African countries such as Mozambique and Zimbabwe and some Eastern European countries, such as Bosnia and Herzegovina, Ukraine and Serbia, are highly dependent on exports of products subject to the CBAM. In the case of Mozambique, almost a fifth of its total exports are aluminium to the EU. Zimbabwe and Ukraine depend on iron and steel exports to the EU, while Serbia and Bosnia’s exports of CBAM products are more varied (iron and steel, electricity and aluminium) but still account for more than 5% of their total exports.</p>
<h2>Jobs at risk</h2>
<p>Our method allows us to analyse not only the industries producing such products, but also those supplying inputs farther up in the production chain, hence leading to cascading impacts. This is possible by using intercountry input-output matrices, which show the productive relationships between sectors within and between countries.</p>
<p>Based on this approach, we find that the potential job losses and the share of wage income exposed to CBAM. Mozambique and Moldova are the countries in which wage income is most likely to be impacted, accounting for around 6% of the wage bill. On the other hand, Serbia and Bosnia and Herzegovina can experience job losses of around 3% if the CBAM is implemented without taking into account the specific constraints of these countries.</p>
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<p>If one considers the <a href="https://ilostat.ilo.org/topics/social-protection/">share of the population benefiting from a welfare security net</a>, one finds additional socio-economic vulnerability. In Mozambique or Zimbabwe, only a small part of its population is covered by social protection policies. This is not quite the case for countries such as Ukraine, Bahrain and Armenia: even though they are highly exposed to the consequences of the CBAM, at least 50% of their population enjoys some form of social protection.</p>
<h2>What if others do the same?</h2>
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<p>This will also significantly increase the exposure of developing countries, particularly in Africa, Asia and Latin America. In the case of Zimbabwe and North Korea, for example, exports to China of these high-emitting industries play a very important role, and in the case of Trinidad and Tobago and Bahrain, their sales to North America are very significant as a proportion of total exports.</p>
<p>This potentially regressive nature of the CBAM therefore requires careful attention to its institutional design, especially if the objective is to reinforce global climate ambitions with the EU’s own decarbonisation strategy. One possible way to minimise its side effects is to exempt the so-called least developed countries from the CBAM. Instead, they should receive targeted support from the EU to reduce their dependence on highly emitting industries, via transfer of technologies, climate subsidies or concessional lending.</p>
<p>The design of a development-friendly CBAM, such as the one discussed, is key to the success of this emblematic part of the <a href="https://www.ecologie.gouv.fr/fit-55-nouveau-cycle-politiques-europeennes-climat">Fit for 55 package</a>, which aims to slash the continent’s emissions by 55% by 2030 compared to 1990 levels. The effectiveness of this measure will therefore need to be accompanied by a broader set of development policies to accompany the most exposed countries toward their own carbon neutrality strategy.</p><img src="https://counter.theconversation.com/content/197471/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>Already lacking the means to decarbonise their industry or turn to greener alternatives, poor countries could also be deprived of revenues from exports to Europe.Antoine Godin, Économiste-modélisateur, Agence française de développement (AFD)Guilherme Riccioppo Magacho, Chercheur en économie environnementale, Agence française de développement (AFD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1895552022-09-05T20:04:28Z2022-09-05T20:04:28ZTaxes out, subsidies in: Australia and the US are passing major climate bills – without taxing carbon<figure><img src="https://images.theconversation.com/files/482677/original/file-20220905-24-7ck41d.jpg?ixlib=rb-1.1.0&rect=8%2C4%2C2986%2C1967&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>At last, there’s action on climate change. The United States <a href="https://theconversation.com/the-us-has-finally-passed-a-huge-climate-bill-australia-needs-to-keep-up-188525">recently passed</a> its largest climate bill ever. And Australia is <a href="https://theconversation.com/government-set-to-legislate-its-43-emissions-reduction-target-after-greens-announce-support-188153">set to usher</a> a 43% emissions target into law this week, although the Greens will try to <a href="https://www.skynews.com.au/australia-news/the-greens-to-introduce-climate-trigger-bill-to-parliament-in-a-bid-to-further-cut-greenhouse-emissions/news-story/507a14a3228268ab661a3c032ec22eb8">amend</a> the bill so the climate impacts of new gas and coal projects are considered. </p>
<p>Good news, right? There’s one issue – these laws, packages and amendments conspicuously avoid the “T” word. Economists have long argued the best option to cut emissions is a tax or, failing that, a type of carbon market known as “<a href="https://www.lse.ac.uk/granthaminstitute/explainers/how-do-emissions-trading-systems-work/">cap-and-trade</a>”. But nowhere do the Australian or US bills mention taxing carbon dioxide to discourage dumping it into the atmosphere. </p>
<p>Why? The answer is basically politics. The Gillard Labor government introduced a carbon tax that, although it worked, turned out to be political kryptonite. So Labor’s climate policies now rely not on a tax, but on incentives for clean energy, carbon farming and electric transport.</p>
<p>This is not ideal. For decades, economists have pointed out carbon taxes and pollution allowance markets are the <a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">simplest and best way</a> to reduce emissions at the lowest possible cost. But it seems taxes are out and stimulus is in. </p>
<h2>A long history of tax avoidance</h2>
<p>This isn’t new, of course. For decades, politicians – particularly in Anglophone countries – have avoided carbon taxes or market-based ways of cutting planet-heating pollutants. </p>
<p>Every attempt to price carbon on a national level in the US <a href="https://www.cnbc.com/2021/11/15/will-us-ever-put-a-price-on-carbon-as-part-of-climate-change-policy.html">has failed</a>. The first was in 1990. Presidential candidate turned climate campaigner Al Gore <a href="https://www.belfercenter.org/publication/gores-carbon-tax-shift-beats-cap-and-trade">called for a carbon tax</a> in his influential 1992 book, Earth in the Balance. But it was <a href="https://www.politico.com/story/2009/09/gores-carbon-tax-makes-good-sense-027451">politically unappealing</a>. </p>
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Read more:
<a href="https://theconversation.com/the-us-has-finally-passed-a-huge-climate-bill-australia-needs-to-keep-up-188525">The US has finally passed a huge climate bill. Australia needs to keep up</a>
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<p>Why? Concerns over “federal overreach”, increasing cost of power, and, of course, <a href="https://doi.org/10.1016/j.jeem.2011.05.002">lobbying</a> from fossil fuel industries.</p>
<p>Australia has the sad title of the first country in the world to introduce and remove a price on carbon – a sign of <a href="https://www.abc.net.au/news/2014-07-10/carbon-tax-timeline/5569118">how fraught the idea</a> has been. Labor’s Rudd-Gillard government lost the 2013 election with the “carbon tax” issue front-and-centre <a href="https://theconversation.com/obituary-australias-carbon-price-29217">in the campaign</a>. </p>
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<a href="https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="electric car" src="https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/482680/original/file-20220905-20-egagse.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Subsidies for electric vehicles and green energy are set to grow strongly.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Policy and politics has evolved</h2>
<p>Since Australia repealed its carbon tax, we’ve seen significant change in climate policies towards what is politically possible. </p>
<p>In the US, federal inaction on climate change spawned stronger environmental regulation by some states. Coalitions of American states now operate some of the world’s best pollution markets, such as that covering <a href="https://doi.org/10.1016/j.jeem.2022.102620">12 eastern states</a> and California’s <a href="https://www.c2es.org/content/california-cap-and-trade/">own market</a>.</p>
<p>The EU avoided taxes in favour of a cannier approach. They created a <a href="https://doi.org/10.1007/s10640-009-9275-7">pollution market</a> but allowed each state to determine how many allowances domestic firms could obtain. This made the policy more politically appetising and the EU carbon market has since <a href="https://www.reuters.com/article/climate-change-carbonpricing-europe-idUKL8N2I61AY">expanded substantially</a>. </p>
<p>The world’s largest emitter, China, last year followed suit and launched the <a href="https://chinadialogue.net/en/climate/the-first-year-of-chinas-national-carbon-market-reviewed/">world’s largest</a> carbon trading scheme. </p>
<p>But Australia didn’t follow the emissions trading model pursued by the EU and many US states. Instead, the Abbott Coalition government brought in an <a href="https://theconversation.com/australias-emissions-reduction-fund-is-almost-empty-it-shouldnt-be-refilled-92283">emissions reduction fund</a> to subsidise pollution reduction. </p>
<p>Companies can use pollution reduction to gain carbon credits, which can be sold to government or on the private market. The policy has proven thoroughly <a href="https://theconversation.com/we-blew-the-whistle-on-australias-central-climate-policy-heres-what-a-new-federal-government-probe-must-fix-185894">underwhelming</a>. </p>
<h2>What trends are we seeing?</h2>
<p>So tax and markets seem to be off the table when it comes to climate bills. </p>
<p>Last month, the US passed a sweeping <a href="https://theconversation.com/the-us-has-finally-passed-a-huge-climate-bill-australia-needs-to-keep-up-188525">A$530 billion bill</a> aimed at boosting health care funding and tackling climate change.</p>
<p>It’s aimed at speeding up the shift to clean energy and electric transport, through rebates and tax credits for electric cars, efficient appliances and rooftop solar. Conspicuously absent was any mention of a carbon tax or pollution allowance market. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1558864379176697861"}"></div></p>
<p>Australia’s climate bill requires us to reduce emissions by 43% by 2030 – but there’s very little information on the crucial question of how. </p>
<p>Labor’s bill <a href="https://theconversation.com/australia-may-be-heading-for-emissions-trading-between-big-polluters-188799">envisages</a> a type of market, regulating large polluters by allowing them to trade credits created by emissions reduction.</p>
<p>But both Australia and the US have shied away from the principle of “polluter pays”. </p>
<p>This is disappointing. Yes, subsiding pollution reduction can create incentives for behaviour change. But subsidies are <a href="https://www.theage.com.au/politics/victoria/competing-solar-and-fast-rail-schemes-economically-wasteful-report-20181028-p50chy.html">often wasteful</a> and inefficient. Taxes and markets are better options. We now know countries with a price on carbon have emissions growth rates <a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">around 2% lower</a> than those without. Longer term, this is often enough to see overall emissions begin to fall.</p>
<p>While the direct costs of subsidies are not immediately seen by citizens and companies, these subsidies have to be paid for through increases in general taxation. Carbon taxes, by contrast, are more explicit. A polluter will clearly notice having to pay the tax and be motivated to avoid it. </p>
<h2>We’ll still need taxes and market approaches, even with the subsidies</h2>
<p>Instead of splashing out on subsidies, governments could still <a href="https://theconversation.com/economists-back-carbon-price-say-benefits-of-net-zero-outweigh-costs-169939">introduce a carbon tax</a> to raise much-needed revenue while offering assistance to low-income households, cutting taxes elsewhere, or even reduce the deficit. </p>
<p>In Australia, there’s surprising support for a <a href="https://www.theaustralian.com.au/technology/majority-want-carbon-tax-back/news-story/de67bf2831809123d2e227788704ecb0">return of the carbon tax</a>. But Labor may well be wary, given how their last carbon tax was easily defeated with a political scare campaign. One alternative could be to follow the EU and China and begin <a href="https://doi.org/10.1086/717898">auctioning</a> off pollution permits. </p>
<p>We could also borrow from America’s approach. Deep in the bill is a <a href="https://subscriber.politicopro.com/article/eenews/2022/08/11/climate-bills-methane-fee-could-pave-the-way-to-a-carbon-tax-00050941">fee on methane emissions</a>. This, some environmentalists believe, could be the crucial first step towards wider pricing of pollution. </p>
<p>Even though subsidies and rebates are politically popular, by themselves they cannot end greenhouse gas emissions. While carrots are popular, we will still need a stick – taxes or markets – to actually encourage polluters to cut emissions. </p>
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<a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">Carbon pricing works: the largest-ever study puts it beyond doubt</a>
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<img src="https://counter.theconversation.com/content/189555/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian A. MacKenzie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Climate bills in Australia and the US promise progress without carbon taxes or markets. Here’s why.Ian A. MacKenzie, Associate Professor in Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1614632021-05-25T13:37:38Z2021-05-25T13:37:38ZNew EU carbon tax: wrong rate could wreck net-zero goals – but right rate can help world’s poor<figure><img src="https://images.theconversation.com/files/402581/original/file-20210525-21-1cvu5ka.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Factories like this one in Serbia will have to pay carbon duties to export to EU in future. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/DqF_3g6lZak">Árpád Kiss</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The European Commission is holding <a href="https://www.ft.com/content/17e157b2-21ea-4e22-9278-35f157046e85">a meeting</a> in June that is, on the face of it, very boring. The EU’s senior bureaucrats will be considering at what level to set a tax on carbon emissions for goods imported into the bloc. </p>
<p>Yet the consequences will be pivotal – both to the future of the EU’s world-leading system for managing corporate carbon emissions, and for how this market develops around the world. It’s therefore an absolutely vital part of the battle for net zero global emissions. </p>
<p>Let’s first understand what has prompted the tax. Within the EU, carbon emissions are governed by a cap-and-trade system: a cap is set on the total amount of carbon emissions that can be emitted, and power providers and other firms each get an allowance for how much they can emit themselves. </p>
<p>If their pollution exceeds their permit allowance, they must buy more permits on an open market. Crucially, if they pollute less than their permit allowance, they can sell their unused permits to other firms. The upshot is that firms earn more if they pollute less – a win-win. </p>
<p>Economists love the <a href="https://ec.europa.eu/clima/policies/ets_en">European Trading System (ETS)</a> for this reason. Increasingly the market does too. <a href="https://www.ft.com/content/2b965427-4fbc-4f2a-a14f-3be6019f0a7c">With speculators betting</a> that the days of unrestricted carbon emissions are coming to end, ETS permit prices have doubled since the start of the pandemic. </p>
<p><strong>ETS carbon price</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="EU carbon price chart" src="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=346&fit=crop&dpr=1 600w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=346&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=346&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=434&fit=crop&dpr=1 754w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=434&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=434&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://uk.tradingview.com/chart/UajHAaVc/">Trading View</a></span>
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<p>To a large extent, this price hike has been a good thing. It makes it more costly for firms to pollute and so ramps up their incentive to green their production processes. The only problem is that producers outside the EU are not required to pay for their pollution with permits. As permit prices rise, these competitors are becoming relatively less expensive and taking market share from their EU rivals. </p>
<p>To level the playing field, EU industries are in the <a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.ft.com%2Fcontent%2F17e157b2-21ea-4e22-9278-35f157046e85&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343987939%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=Jeonuem6swuGlLc2N3tU8A6sy1S8PhIFV%2F7L8F7FjEk%3D&reserved=0">unusual position</a> of lobbying Brussels to impose a new tax – in this case on the carbon emissions of goods being imported into the bloc. Yet in the teeth of this high-stakes negotiation, several possible outcomes could actually make the situation with carbon emissions much worse than it is already. </p>
<h2>Scenario #1: ETS implosion</h2>
<p>The worst-case scenario is that the EU sets the tax too low. This could happen because the best outcome for any given EU country is to protect its own industry while not damaging its preferred trading partners outside of the EU. Because each EU member state has different industries and different preferred trading partners, horse-trading is likely to bid the border tax lower. In this case, pollution-intensive industries within the EU would continue to face higher costs relative to their overseas competitors.</p>
<p>This could lead to the ETS being undermined in one of several ways. EU industries might use their political clout to lobby for the ETS rules to be relaxed, for example by creating exemptions. Or firms might simply breach their emissions allowances. The European Commission has a <a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Flink.springer.com%2Farticle%2F10.1057%2Fcep.2015.8&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343997957%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=d%2BE90Fex4XNjQM91IKKAUeDpNlf2gWyPzlSFqbzFSNs%3D&reserved=0">patchy track record</a> for collecting on fines and, again for reasons of political clout, national governments might side with industry against the EU (<a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.independent.co.uk%2Fnews%2Fbusiness%2Fnews%2Feu-takes-ireland-court-15-billion-dollars-fine-apple-back-taxes-latest-european-court-justice-a7982211.html&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343997957%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=PnDWMJTjZi%2BtEJbqDefbXoksCPSFMXs6DmFgGUO%2BVXM%3D&reserved=0">which happens</a> from <a href="https://curia.europa.eu/jcms/upload/docs/application/pdf/2020-03/cp200029en.pdf">time to time</a>). If both these things happen, it could effectively dismantle the ETS, returning us to a world of rising carbon emissions and global climate disaster. </p>
<p>Thankfully, a couple of factors make these outcomes unlikely. One is that Europe’s biggest trading partners are sympathetic to the cause. China already has its own <a href="https://www.forbes.com/sites/scottcarpenter/2021/03/02/toothless-at-first-chinas-carbon-market-could-be-fearsome/#:%7E:text=China%20has%20no%20carbon%20tax,buildout%20of%20renewable%20energy%20infrastructure.&text=Under%20the%20scheme's%20initial%20rollout,period%20from%202019%20to%202020.">carbon emissions scheme</a> and the Biden administration has signalled a commitment to <a href="https://www.politico.com/news/2021/04/22/biden-climate-goal-congress-484141">making deep cuts</a> to US carbon emissions. </p>
<p>But more importantly, the ETS has an in-built release valve. If the scheme makes it too expensive for a firm to produce within the EU, it can shift production overseas. It then ceases to need ETS permits and releases it stock of permits on to the market. Demand reduces, supply increases and the price of permits falls. This might help keep the system intact, but emissions would rise in the meantime. </p>
<h2>Scenario #2: widening global inequality</h2>
<p>A way to get around the horse-trading is for the EU to pre-commit that no external country will get special treatment. That entails a higher tax rate that reduces the risk of the ETS imploding, but there is a cost that would reveal itself over decades: the tax would disproportionately hit economies that rely on heavy industry. </p>
<p>Countries like Canada that have plenty of (clean) white-collar jobs would be hit less hard than middle-income countries like India, for instance. And more worrisome than the initial hit would be the consequences for business opportunities: a high tax would create opportunities for innovators in green energy. </p>
<p>This might sound like a great thing, but these people – and the tools they require to do their research – are disproportionately located in the developed world. This points to a dystopian future of increasing north/south and white collar/blue collar divergence.</p>
<h2>Scenario #3: a better world for all</h2>
<p>The European Commission therefore faces two risks here: climate disaster from setting the tax too low, and greater global inequality if the rate is too high. The sweet spot is to set a border tax rate such that the worst-off countries get a break and the best-off countries fully pay their dues. So what would that look like?</p>
<p>One opportunity open to the European Commission is to tax imports in proportion to some reliable metric of development. So imports from countries like New Zealand would be taxed as though they were produced in the EU whereas concessions would be made for those coming from countries with, say, low life expectancy or high levels of poverty. That outcome would build on the promise of the ETS as a means to reduce global carbon emissions and would also rebalance global development.</p><img src="https://counter.theconversation.com/content/161463/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Comerford receives funding from UKRI for survey research in relation to the Covid-19 pandemic. </span></em></p>In setting new tax on the carbon emissions of goods being imported into the bloc, there are two potential disasters for EU to avoid.David Comerford, Senior Lecturer of Economics and Behavioural Science, University of StirlingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1464712020-09-22T16:34:22Z2020-09-22T16:34:22ZSupreme Court case on carbon price is about climate change, not the Constitution<figure><img src="https://images.theconversation.com/files/359390/original/file-20200922-20-zpsj9c.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4991%2C3087&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">After a six-month delay, the Supreme Court of Canada is hearing arguments against the federal carbon pricing system. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span></figcaption></figure><p>The Supreme Court of Canada begins hearing appeals in three cases on Sept. 22 to determine whether Ottawa’s national carbon price is constitutional. Appellate courts in Saskatchewan and Ontario had previously upheld the law, but the Alberta Court of Appeal had ruled that it was unconstitutional and intruded on provincial powers. </p>
<p>Contrary to what critics of the federal carbon-pricing legislation say, neither the provinces’ authority to act on climate change nor the balance of the Canadian federation is in jeopardy.</p>
<p>But what is at stake is Canada’s ability to contribute to global climate action under the 2015 Paris Agreement. <a href="https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf">The agreement aims to limit global warming to 1.5 C above the pre-industrial norm</a>, a goal increasingly on the public’s mind as wildfire smoke blows across the country.</p>
<p>In 2016, Ottawa obtained provincial and territorial consensus on a coordinated national approach in the <a href="https://news.gov.bc.ca/stories/vancouver-declaration-on-clean-growth-and-climate-change">Vancouver Declaration on Clean Growth and Climate Change</a>. The Vancouver Declaration begat the <a href="https://www.canada.ca/content/dam/themes/environment/documents/weather1/20161209-1-en.pdf">Pan-Canadian Framework on Clean Growth and Climate Change</a>, <a href="https://www.cbc.ca/news/politics/trudeau-premiers-climate-deal-1.3888244">a detailed action plan</a> agreed to by all except Saskatchewan.</p>
<p>In 2018, Ottawa enacted the <a href="https://laws-lois.justice.gc.ca/eng/acts/G-11.55/">Greenhouse Gas Pollution Pricing Act</a> to implement the Pan-Canadian Framework. The act operates as a backstop — a national safety net — with two parts. The first imposes a charge on a broad range of greenhouse gas emitting fuels. The second establishes an “output-based performance system” that requires industrial facilities to pay for the emissions that exceed an annual limit.</p>
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<p>Crucially, the backstop only applies in provinces or territories that request it or that have failed to price emissions through a direct price or cap-and-trade system at the minimum benchmark level established by Ottawa. Additionally, the backstop is “revenue neutral,” meaning that any money collected by Ottawa is returned to the jurisdiction. Provinces and territories are otherwise free to regulate within their borders, allowing them to impose even stronger limits on emissions.</p>
<h2>Challenging co-ordinated climate action</h2>
<p>With this co-ordinated national approach in place, Canada appeared poised to meaningfully contribute to global climate action, with both levels of government acting co-operatively.</p>
<p>Soon after, however, Ontario and Alberta adopted what’s been dubbed the “<a href="https://www.macleans.ca/politics/ottawa/a-carbon-tax-just-try-them/">Saskatchewan strategy</a>” of challenging the act on jurisdictional grounds. Each province asked its respective Court of Appeal for an advisory opinion on whether Ottawa has the jurisdiction to regulate greenhouse gas emissions. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Jason Kenney and Doug Ford clasp raised hands" src="https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/359203/original/file-20200921-16-yny8gm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">United Conservative Party Leader Jason Kenney and Ontario Premier Doug Ford cheer with supporters at an anti-carbon tax rally in Calgary, Oct. 5, 2018.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
</figcaption>
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<p>In 2019, <a href="https://www.canlii.org/en/sk/skca/doc/2019/2019skca40/2019skca40.html">a majority of the Saskatchewan Court of Appeal</a> concluded that Ottawa has jurisdiction under the “national concern branch” of the federal government’s constitutional “peace, order and good government” power. Shortly thereafter, <a href="https://www.canlii.org/en/on/onca/doc/2019/2019onca544/2019onca544.html">a majority of the Ontario Court of Appeal</a> reached the same conclusion. In 2020, however, <a href="https://www.canlii.org/en/ab/abca/doc/2020/2020abca74/2020abca74.html">a majority of the Alberta Court of Appeal</a> concluded Ottawa lacked jurisdiction to regulate greenhouse gas emissions. All three decisions are now before the <a href="https://www.scc-csc.ca/case-dossier/info/dock-regi-eng.aspx?cas=38663">Supreme Court of Canada</a>.</p>
<p>The thrust of these provinces’ constitutional challenges is that affirming Ottawa’s authority to regulate greenhouse gas emissions would intrude too deeply into provincial jurisdiction and jeopardize the balance of the Canadian federation. </p>
<p>But the “<a href="https://commentary.canlii.org/w/canlii/2019CanLIIDocs2718#!fragment//BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoByCgSgBpltTCIBFRQ3AT0otokLC4EbDtyp8BQkAGU8pAELcASgFEAMioBqAQQByAYRW1SYAEbRS2ONWpA">Saskatchewan strategy</a>” of challenging Ottawa’s jurisdiction was as much about <a href="https://c2cjournal.ca/2019/04/wrecking-the-federation-to-save-the-planet/">continuing a public policy dispute</a> by other means. Climate policy, the provinces and their supporters argue, should be considered a local matter best left to local governments consistent with the constitutional principle of <a href="https://commentary.canlii.org/w/canlii/2019CanLIIDocs2719#!fragment//BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoByCgSgBpltTCIBFRQ3AT0otokLC4EbDtyp8BQkAGU8pAELcASgFEAMioBqAQQByAYRW1SYAEbRS2ONWpA">subsidiarity</a>, the idea that public policy issues should be addressed at the most effective level of government closest to the citizens affected. </p>
<p>Neither argument is sound.</p>
<h2>Canadian federalism is flexible and co-operative</h2>
<p>Recognizing the federal government’s jurisdiction to regulate greenhouse gas emissions as a “national concern” won’t displace provincial climate regulations or alter the balance of federalism. The Supreme Court of Canada made this abundantly clear in <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/306/index.do"><em>R. vs. Crown Zellerbach Canada Ltd.</em></a> more than 30 years ago. </p>
<p>That case concerned the federal government’s jurisdiction to regulate marine pollution, including dumping occurring entirely within the coastal waters of British Columbia. The court recognized federal jurisdiction to regulate marine pollution because it’s a transboundary issue reaching beyond both B.C.’s and Canada’s borders. </p>
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<a href="https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A gas pump" src="https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=411&fit=crop&dpr=1 600w, https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=411&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=411&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=516&fit=crop&dpr=1 754w, https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=516&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/359396/original/file-20200922-22-186jitk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=516&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">In 2019, Doug Ford’s Ontario government required gas stations to display a sticker at the pumps that said, ‘the federal carbon tax will cost you.’ The Ontario court has since said the stickers were unconstitutional.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Chris Young</span></span>
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<p>Since the Crown Zellerbach case, <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7960/index.do">the Supreme Court of Canada has further clarified that where both provincial and federal laws apply to a regulatory problem, those laws may operate alongside one another</a>. This overlap helps protect against the creation of legal vacuums where neither level of government acts, which would defeat the very purpose of a federal-provincial division of powers; it also recognizes the increasing complexity of Canadian society. </p>
<p>Only in cases <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3651556">where federal and provincial laws genuinely conflict — where it’s impossible to follow both laws or where a provincial law frustrates the purpose of a federal law — is federal law paramount</a>. And courts will construe such potential conflicts narrowly to safeguard provincial jurisdiction and facilitate federal-provincial cooperation.</p>
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Read more:
<a href="https://theconversation.com/energy-development-wins-when-its-pitted-against-endangered-species-117961">Energy development wins when it's pitted against endangered species</a>
</strong>
</em>
</p>
<hr>
<p>This is how effective environmental regulation works in Canada. The City of Victoria, for instance, regulates sewage discharge into the ocean alongside federal law. Ottawa regulates toxic pollution federally under the <a href="https://laws-lois.justice.gc.ca/eng/acts/C-15.31/index.html">Canadian Environmental Protection Act</a> in conjunction with the provinces’ environmental pollution laws. Species at risk are protected in the same way: there’s a <a href="https://laws-lois.justice.gc.ca/eng/acts/s-15.3/">federal safety net</a> to backstop provincial endangered species laws. </p>
<h2>The urgent need for co-operative climate action</h2>
<p>The principle of subsidiarity wisely <a href="https://doi.org/10.1068%2Fa3211">advises that regulatory action should be taken by the level of government that’s most effective and closest to the citizens who are affected</a>. Opponents of the Greenhouse Gas Pollution Pricing Act argue that this supports provincial authority over greenhouse gas emissions. But it equally supports the argument that the regulatory response must be global, because climate change affects everyone. In the absence of a global constitution, that means it requires a national response. </p>
<p>In the current Canadian context, there’s no evidence that the provinces alone can provide an effective level of climate governance. Rising emissions from the Alberta and Saskatchewan oilsands <a href="https://www.pembina.org/reports/the-oilsands-in-a-carbon-constrained-canada.pdf">will hamper Canada’s efforts to achieve net-zero emissions by 2050</a>. Ontario <a href="https://policyoptions.irpp.org/magazines/october-2019/canadas-progress-toward-its-ghg-reduction-target/">has withdrawn from the Québec-California carbon market, eliminated its renewable energy investment programs</a> and <a href="https://d36rd3gki5z3d3.cloudfront.net/wp-content/uploads/2019/10/ENVIRONMENTAL-DEFENCE-Report-Failure-To-Launch-A-Progress-Report-on-Ontarios-Climate-Actions.pdf?x76404">implemented a less ambitious climate plan that’s estimated to increase carbon emissions by 30 million tonnes by 2030</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/work-on-climate-not-weaponizing-the-constitution-116710">Work on climate, not weaponizing the Constitution</a>
</strong>
</em>
</p>
<hr>
<p>While the federal Greenhouse Gas Pollution Pricing Act <a href="https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/2019/Paris_Target/Paris_Target_EN.pdf">isn’t sufficient</a> to meet Canada’s initial — <a href="https://www.theglobeandmail.com/opinion/an-unambitious-emissions-target-we-wont-even-hit/article24490986/">and notably unambitious</a> — target under the Paris Agreement, to say nothing of Canada’s net-zero aspiration, this doesn’t strengthen the provinces’ argument for local regulatory authority. Instead, it further illustrates the urgent need for greater federal-provincial co-operation on climate action. </p>
<p>In 2018, the <a href="https://www.ipcc.ch/sr15/chapter/spm/">UN Intergovernmental Panel on Climate Change’s special report on 1.5 C of global warming</a> sounded a clarion call for “rapid,” “far-reaching” and “unprecedented” transitions to achieve “deep emissions reductions in all sectors.” We can ill-afford <a href="https://commonlaw.uottawa.ca/en/jurisdictional-wrangling-over-climate-policy-canadian-federation-key-issues-provincial">jurisdictional wrangling</a> and the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3519379">politicization of constitutional principle</a>. Every moment of delay makes these transitions more difficult and costly, and reduces the likelihood that we’ll avert the devastating harms of climate destablization.</p><img src="https://counter.theconversation.com/content/146471/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nathalie Chalifour is serving as co-counsel (pro-bono) to Friends of the Earth and the National Association of Women and the Law who are jointly intervening in the case. </span></em></p><p class="fine-print"><em><span>Jason MacLean does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Paris climate change agreement aims to limit global warming to 1.5C above pre-industrial temperatures — and the federal carbon pricing plan was meant to help Canada meet its commitments.Jason MacLean, Assistant Professor of Law, University of New BrunswickNathalie Chalifour, Associate Professor, Faculty of Law, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1256312019-10-24T23:24:06Z2019-10-24T23:24:06ZThe economic illusions of the Canadian election<figure><img src="https://images.theconversation.com/files/298398/original/file-20191023-119449-1d4nak5.jpg?ixlib=rb-1.1.0&rect=0%2C173%2C4000%2C2113&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The time has come to accept that energy corridors and fossil fuel exports will be a declining feature of Canada’s economic future.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span></figcaption></figure><p>As an economist, I approached voting in the Canadian federal election with deep ambivalence that was shared by most everyone I know regardless of vocation or political persuasion. </p>
<p>Most expressed resignation and stated, with a sigh, that: “X is at least better than the alternatives,” or “I don’t want X to win, so am voting for Y.” I too fell into that ditch of despair, but then remembered a strategy from my <a href="https://theanarchistlibrary.org/library/george-woodcock-what-is-anarcho-syndicalism">anarcho-syndicalist</a> days of my early 20s. </p>
<p>I now feel much better about how I voted, but before revealing my choice and a recommendation for the construction of future ballots, let me share the source of my pre-vote despondency from the perspective of an economist.</p>
<p>It is really time we insisted that party platforms reflect some modicum of economic literacy and coherency, at least at the first-year university level. </p>
<p>Let’s consider some of the prominent positions of the national parties that irked me and have repercussions for Canadians’ financial well-being now and in the future.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&rect=0%2C351%2C3911%2C2201&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&rect=0%2C351%2C3911%2C2201&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/298396/original/file-20191023-119459-odggnx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A man fills up his truck with gas in Toronto in April 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Christopher Katsarov</span></span>
</figcaption>
</figure>
<p>What is striking about many of the policy positions of the federal parties is their timidity. Take climate change. The three left-of-centre parties would continue the current <a href="https://newsinteractives.cbc.ca/elections/federal/2019/party-platforms/">Liberal program</a>, which currently adds about four cents per litre at the gas pumps, and would lead to an additional 11 cents by 2022. </p>
<p>While I support a carbon tax, this modest increase applied to only some provinces, won’t change driver behaviour or industrial use of fossil fuels. The increases must be greater, progressive and locked in.</p>
<h2>Conservative mishmash</h2>
<p>The Conservatives reject the carbon tax as ineffective in meeting the challenge of climate change, which at these levels it is, but they proposed a <a href="https://www.andrewscheer.ca/en/platform/more-innovation-to-fight-climate-change#greentech">vague penalty</a> system on big polluters presumably to fund investment in green technology, home improvements and investment standards. It’s a mishmash of a <a href="https://www.foreignaffairs.com/articles/world/2018-06-14/why-carbon-pricing-isnt-working">cap-and-trade</a> system that has proven elsewhere to be ineffective and a bureaucratic nightmare.</p>
<p>Maybe it’s time we accepted that energy corridors and fossil fuel exports will be a declining feature of Canada’s economic future. The Liberals clung to the fantasy that the Trans Mountain pipeline will proceed, and the Conservatives dreamed of an energy corridor. But these projects will be <a href="https://www.lesoleil.com/actualite/politique/projet-de-pipeline-legault-riposte-a-scheer-9d951d098591ee1b7dd1179e6582a4a2">“Bloq-ed” on provincial self-interest</a> as well as environmental and Indigenous opposition. </p>
<p>This election was an opportunity to either put forward a vision of a post-oil economy or present a strategy for how the federal government can navigate the competing interests that stymie resource development in Canada.</p>
<h2>Balanced budget pledges</h2>
<p>All party leaders also promised a balanced budgets in a set number of years, while planning billions in spending increases ranging from modest tweaks in the <a href="https://www.conservative.ca/andrew-scheer-will-give-more-support-to-seniors/">senior’s tax credit</a> (Conservatives), adjustments to <a href="https://www.cbc.ca/news/politics/liberals-will-promise-a-student-loan-repayment-break-for-new-parents-report-1.5301769">student loans</a> (Liberals), a national pharmacare program (all but the Conservatives) and a <a href="https://www.cbc.ca/news/politics/green-party-platform-2019-1.5284872">basic income</a> (Green Party). </p>
<p>These election promises came at voters like mosquitoes on a summer day and I am sure most, like me, became numb.</p>
<p>How can we improve this dismal situation?</p>
<p>This is the first election where the Parliamentary Budget Office (PBO) had a mandate to prepare estimates of <a href="https://www.pbo-dpb.gc.ca/en/election-proposal-costing">election spending proposals</a> over the next 10 years. However, the PBO only estimated the costs of proposals submitted, and nowhere could anyone locate a consolidated estimate of the total spending package for each party. </p>
<p>If each platform were independently and fully costed three weeks before the election, voters would see more responsible promises by the parties, who would need to justify their total spending plans. </p>
<p>Promising a balanced budget is also a meaningless gesture. A household with $50,000 annual income may balance its budget through frugality, while a household with an annual income of $250,000 may chronically run out of money. Rather than promising a balanced budget, we need politicians to debate the desirable size of government relative to the national income or GDP. </p>
<p>One useful measure is the tax-to-GDP ratio and on this front, Canada does not too badly at <a href="https://www.oecd.org/tax/revenue-statistics-canada.pdf">32.7 per cent</a>. Countries that include the United States, Australia and Mexico have lower ratios. Unsurprisingly, countries like France and Sweden have public spending at 46 per cent and 44 per cent of GDP. </p>
<p>France’s spending in particular is <a href="https://www.france24.com/en/20190625-rising-french-debt-worrying-public-auditors-warn">triggering warnings</a> from auditors.</p>
<h2>What about the size of government?</h2>
<p>So, a second task for the PBO in an election is to monitor how election promises affect the size of government. </p>
<p>The minor tinkering of tax credits and adjusting exemptions won’t have much impact, but a national pharmacare program or a universal basic income could greatly expand the scope of government. Voters need independent information to support an informed choice.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/298529/original/file-20191024-170458-e8697r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Instead of setting them on fire, imagine if we could write ‘none of the above’ on our ballots?</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Failing to find any sensible discussion of Canada’s economic issues, I did vote, but not for any candidate on the ballot.</p>
<p>I elected to write in “none of the above” and spoiled my ballot. But think for a moment. If “none of the above” officially appeared on the ballot and those votes were counted along with votes for candidates, two benefits might accrue. </p>
<p>First, it may encourage voting by those whose election ennui keeps them at home, and therefore could raise the turnout rate from the current <a href="https://www.cbc.ca/news/canada/voter-turnout-2019-1.5330207">66 per cent</a> toward the almost 80 per cent who <a href="https://www.elections.ca/content.aspx?section=ele&dir=turn&document=index&lang=e">voted in 1958</a>. </p>
<p>Second, it shrinks the degree of support for all candidates, reminding everyone that a group of voters exists who want someone to vote for, not against.</p>
<p>[ <em>Deep knowledge, daily.</em> <a href="https://theconversation.com/ca/newsletters?utm_source=TCCA&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/125631/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregory C Mason does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the aftermath of the election, what is striking about many of the policy positions of Canada’s federal parties is their timidity, especially when it comes to climate change.Gregory C Mason, Associate Professor of Economics, University of ManitobaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1237382019-09-26T08:24:39Z2019-09-26T08:24:39ZCalifornia polluters may soon buy carbon “offsets” from the Amazon — is that ethical?<figure><img src="https://images.theconversation.com/files/294146/original/file-20190925-51438-z8t8sc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The El Segundo Chevron oil refinery, left, and the Bom Futuro National Forest, right.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Chevron_El_Segundo_refinery,_2007.jpg">Pedro Szekely/WikimediaCommons, Reuters/Nacho Doce</a></span></figcaption></figure><p>Fires in the Brazilian Amazon have <a href="https://theconversation.com/are-the-amazon-fires-a-crime-against-humanity-122738">outraged the world</a>. But what can people living far from the world’s largest rainforest do to save it? </p>
<p>California thinks it has an answer. </p>
<p>On Sept. 19, the California Air Resources Board <a href="https://www.sfchronicle.com/business/article/California-approves-controversial-tropical-forest-14454158.php">endorsed</a> the Tropical Forest Standard, which sets the groundwork for electric utilities, oil refineries and other California polluters to “offset” their greenhouse gas emissions by paying governments in tropical forest areas not to cut down trees. </p>
<p>Everyone benefits from the existence of tropical forests because they <a href="https://theconversation.com/amazon-fires-are-destructive-but-they-arent-depleting-earths-oxygen-supply-122369">store enormous amounts of climate-changing carbon dioxide</a> and <a href="https://www.ipcc.ch/site/assets/uploads/2019/08/2c.-Chapter-2_FINAL.pdf">release enormous amounts of it</a> when destroyed. The theory goes, then, that it pays to protect them.</p>
<p>The standard is part of <a href="https://theconversation.com/california-aims-to-become-carbon-free-by-2045-is-that-feasible-102390">California’s ambitious climate policy</a>, which includes aggressive emission reduction targets and limits the number of offsets polluters can purchase.</p>
<p>Tropical governments around the world may now try to get their offsets admitted into California. That could channel <a href="https://www.ecosystemmarketplace.com/articles/california-is-poised-to-lead-on-climate-again/">an estimated US$1 billion by 2030</a> toward protecting tropical forests – 100 times more than the European Union <a href="https://www.npr.org/2019/08/27/754687137/brazil-rejects-g-7s-offer-of-22-million-to-fight-amazon-fires">recently offered Brazil</a> to aid in fighting fires in the Amazon. </p>
<p>But, as the <a href="https://cal-span.org/unipage/index.php?site=cal-span&owner=CARB&date=2019-09-19">contentious Sept. 19 hearings in Sacramento</a> showed, the Tropical Forest Standard is <a href="https://www.arb.ca.gov/lispub/comm/bccommlog.php?listname=tfs2019">controversial</a>. </p>
<p>Some indigenous peoples, policymakers, environmentalists and researchers view the standard as a novel way to financially support those struggling against the odds to protect tropical forests. Others say that not only won’t it stem deforestation – it could also harm vulnerable communities.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1174725851075629056"}"></div></p>
<h2>California’s ‘carbon market’</h2>
<p>Policymakers have been considering ways that California might reduce tropical deforestation at least since I began <a href="https://scholar.google.com/scholar?hl=en&as_sdt=0%2C30&q=maron+greenleaf&btnG=">my legal and anthropological research</a> on forest offsets in the late 2000s.</p>
<p>The state is home to one of the world’s most important <a href="https://ww3.arb.ca.gov/cc/ab32/ab32.htm">carbon markets</a>, also known as “cap-and-trade.” Ten U.S. states, the European Union, Quebec and several Chinese cities <a href="https://www.nytimes.com/interactive/2019/04/02/climate/pricing-carbon-emissions.html">use cap-and-trade programs</a> to limit greenhouse gas pollution.</p>
<p>In <a href="https://theconversation.com/setting-the-right-price-for-carbon-five-questions-for-economist-nicholas-stern-87803">cap-and-trade programs</a>, regulators limit the amount of greenhouse gases emitted each year and issue “allowances” to pollute. Polluters may also “trade” these allowances among themselves. </p>
<p>The premise, from a global climate change perspective, is that it doesn’t matter where greenhouse gases are emitted: Their impact on the climate is the same. </p>
<p>As a partial alternative to reducing their emissions, California polluters can already buy limited “offsets” from approved entities. For example, for every metric ton of carbon dioxide stored by the Yurok Tribe’s Northern Californian forests, the tribe can <a href="https://www.newyorker.com/news/dispatch/how-carbon-trading-became-a-way-of-life-for-californias-yurok-tribe">sell an offset to a California polluter</a>. In exchange, polluters —- like the Chevron oil refinery in Richmond – can keep spewing some of their climate-changing pollutants. </p>
<p>In a few years, that same refinery could potentially pay the <a href="https://wriorg.s3.amazonaws.com/s3fs-public/ending-tropical-deforestation-jurisdictional-approaches-redd.pdf">Brazilian state of Acre</a> for protecting its rainforest. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=464&fit=crop&dpr=1 600w, https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=464&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=464&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=583&fit=crop&dpr=1 754w, https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=583&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/293862/original/file-20190924-51401-1d3s4mp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=583&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Carbon emissions: reduce or offset?</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/California-Climate-Change-Lawsuits/ba4df2bbb4274f5bacc9a0caf110e4ff/3/0">AP Photo/Paul Sakuma, File</a></span>
</figcaption>
</figure>
<h2>Ethical concerns</h2>
<p>The <a href="https://ww3.arb.ca.gov/cc/capandtrade/meetings/022510/pres.pdf">economic logic of international carbon offsets</a> – that polluters can pay others to reduce emissions – is sound. </p>
<p>But, ethically, California’s Tropical Forest Standard may be on shakier ground. </p>
<p>Like <a href="https://www.nytimes.com/2009/02/10/nyregion/10indulgence.html">Catholic indulgences</a> that absolve the sinner who pays the church, carbon offsets give amnesty to companies that would do better to change their ways. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=851&fit=crop&dpr=1 600w, https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=851&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=851&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1069&fit=crop&dpr=1 754w, https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1069&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/293864/original/file-20190924-51421-3n7v8m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1069&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">For people who live with smog, it matters where pollution is emitted.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Southern-California-Smog/46b011b6ef47405f8a396d5be4b139a7/12/0">AP Photo/Nick Ut, File</a></span>
</figcaption>
</figure>
<p>This may buy the Earth some time while renewables and other low-carbon technologies develop further. But carbon offsets also delay the needed energy transition away from fossil fuels. </p>
<p>Environmental justice groups in California have also <a href="https://caleja.org/wp-content/uploads/2017/04/EJissuesinCAcapandtrade.pdf">criticized offsets</a>, insisting it does matter where air pollution occurs. Greenhouse gases from power plants and refineries are emitted along with <a href="https://doi.org/10.1371/journal.pmed.1002604">harmful particulate matter and other hazardous pollutants</a> that can <a href="https://doi.org/10.1016/S0140-6736(14)60617-6">worsen asthma and cause other serious health issues</a>.</p>
<p>Research shows that people of color often live and work in <a href="https://iopscience.iop.org/article/10.1088/1748-9326/10/12/125011/pdf">areas with the worst air quality</a>, both <a href="https://doi.org/10.1371/journal.pmed.1002604">in California</a> and <a href="https://www.mdpi.com/1660-4601/8/6/1755">elsewhere in the United States</a>.</p>
<p>In protecting tropical forests rather than reducing pollution in California, then, the Tropical Forest Standard may exacerbate existing injustices back home.</p>
<h2>Unintended consequences</h2>
<p>Carbon offsets are already allowed in the California market. So does it matter whether polluters buy them from forests in Northern California or the tropics?</p>
<p>Ethically, yes. That’s because offsets from tropical forests can harm the people who live there. </p>
<p><a href="https://doi.org/10.1016/j.landusepol.2015.09.021">Researchers</a> found that in a Kenyan program, for example, poorer communities received fewer benefits from the sale of carbon offsets than wealthier ranchers. In Zanzibar, an offset program <a href="https://doi.org/10.1016/j.geoforum.2018.04.021">undermined longstanding local forest protection norms</a>. </p>
<p>Other forest carbon programs, <a href="https://www.ecologyandsociety.org/vol18/iss4/art1/">like one in Ecuador</a>, haven’t obtained meaningful consent or participation from local people. Since offsets can exacerbate existing inequalities, indigenous people and other marginalized communities are particularly <a href="https://www.sciencedirect.com/science/article/pii/S0264837715002926">vulnerable</a> to such harms.</p>
<p>The Tropical Forest Standard was designed to avoid this. The standard requires that any offsets come from government anti-deforestation programs that meet its high social and environmental safeguards <a href="https://wriorg.s3.amazonaws.com/s3fs-public/ending-tropical-deforestation-jurisdictional-approaches-redd.pdf">in entire jurisdictions</a> – rather than from sketchy private ventures or oppressive states. </p>
<p><a href="https://www.latimes.com/opinion/story/2019-09-11/la-oe-uc-fossil-fuel-divestment-endowment">Supporters hope</a> that tropical forest governments everywhere will strive to meet this stringent standard to access funding.</p>
<p>Still, governments change. New leaders could <a href="https://www.aljazeera.com/news/2019/08/190827195351319.html">eliminate or reduce protections for tropical forests and communities</a> in ways that violate California’s standard. From thousands of miles away, it may be difficult to know if that happens. </p>
<p>Critics of the Tropical Forest Standard also <a href="https://www.arb.ca.gov/lists/com-attach/127-tfs2018-UDoFbFU9Az4LeQcq.pdf">worry</a> that it isn’t possible to know for sure that a forest would have been cut down without offset funding —- a concern also raised by other carbon offsets.</p>
<p>Big money flowing from California should incentivize governments to protect threatened forests. But it could also tempt them to claim that already safe forests are endangered. </p>
<h2>Changing climate, changing ethics</h2>
<p>From an environmental ethics standpoint, these details matter. </p>
<p>Climate change harms human and nonhuman life. If offset emissions reductions aren’t real, then they contribute to that harm.</p>
<p>Yet California has taken an ethical stance in endorsing the Tropical Forest Standard, too. Inaction on climate change <a href="https://theconversation.com/youth-climate-movement-puts-ethics-at-the-center-of-the-global-debate-123746">endorses the status quo</a>: Destruction of the Amazon and other tropical forests that are essential for a livable world. </p>
<p>With the window for avoiding the worst effects of climate change rapidly closing, the writer and climate activist Bill McKibben recently <a href="https://www.newyorker.com/news/daily-comment/money-is-the-oxygen-on-which-the-fire-of-global-warming-burns">compared</a> this moment to the last minutes of a football game. </p>
<p>“[I]f you are far enough behind, you dispense with caution,” he wrote, making riskier plays in the hopes of an unassured victory. </p>
<p>[ <em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em> ]</p><img src="https://counter.theconversation.com/content/123738/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maron Greenleaf has received funding from the Social Science Research Council, the Wenner-Gren Foundation, and Stanford University to conduct research on forest carbon offsets.</span></em></p>California’s new plan to fight global climate change is innovative. But it raises tricky ethical questions with no easy answers.Maron Greenleaf, Postdoctoral Fellow and Lecturer, Dartmouth CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1216852019-09-10T11:56:28Z2019-09-10T11:56:28ZMarket-based policies work to fight climate change, from India to Jamaica<p>The <a href="https://www.press.uchicago.edu/ucp/books/book/chicago/C/bo18146821.html">economic foundation</a> at the heart of conservative political philosophy is that markets are the best way to allocate the bulk of society’s resources.</p>
<p>That faith in markets explains the Republican Party’s preference for, say, <a href="https://www.economist.com/the-economist-explains/2016/12/11/why-republicans-hate-obamacare">private medical insurance</a> over a government-run American health system. And it informs their push to <a href="https://www.forbes.com/sites/mayrarodriguezvalladares/2018/08/22/why-do-republicans-want-to-gut-bank-regulations-even-more/">loosen regulations that have governed big banks</a> since the 2009 financial crisis.</p>
<p>This emphasis on markets is also on display in many policies that conservative parties across the globe are enacting to address climate change. Climate change may be a <a href="https://theconversation.com/caribbean-residents-see-climate-change-as-a-severe-threat-but-most-in-us-dont-heres-why-91049">partisan issue in the United States</a>, but numerous <a href="https://www.pewresearch.org/fact-tank/2019/04/18/a-look-at-how-people-around-the-world-view-climate-change/">surveys of other countries</a> reveal that tackling climate change is <a href="https://www.ipsos.com/en/global-warming-issue-unites-world-opinion">not incompatible with conservative principles</a>.</p>
<h2>Conservative governments with a strong climate record</h2>
<p>Across Europe, Conservatives have gotten behind <a href="https://theconversation.com/taxes-and-caps-on-carbon-work-differently-but-calibrating-them-poses-the-same-challenge-104898">cap and trade</a>, a market-based system for reducing carbon emissions. </p>
<p>The <a href="https://ec.europa.eu/clima/policies/ets_en">European Emission Trading</a> system, passed by the European Commission in 2005 with support across the ideological spectrum, sets limits on the continent’s annual carbon emissions. Companies that pollute more may purchase carbon rights from those who find innovative ways to reduce their own emissions, capping total pollution while giving individual firms the freedom to buy and sell their share. </p>
<p>The cap-and-trade strategy was first put into practice in the United States in 1990, under President George Bush, <a href="https://www.smithsonianmag.com/science-nature/the-political-history-of-cap-and-trade-34711212/">to combat acid rain</a>. </p>
<p>In Germany, an industrial powerhouse, <a href="https://www.cleanenergywire.org/factsheets/making-climate-chancellor-angela-merkel">Chancellor Angela Merkel</a> of the center-right Christian Democratic party, has <a href="https://www.climatechangenews.com/2019/06/19/merkel-fallen-climate-chancellor-chance-save-legacy/">strongly supported</a> a comprehensive climate law that would combine cap and trade, tax incentives for renewable energy and major investments in energy efficiency.</p>
<p>To be fair, the political spectrum in Europe skews left. But conservatives in more right-leaning countries are fighting climate change, too.</p>
<p>India’s hard-right Prime Minister Narendra Modi – leader of the world’s largest democracy – is a strong proponent of renewable energy. While his administration maintains support for the coal industry, solar production is set to <a href="https://www.news18.com/news/politics/promise-of-renewable-and-clean-energy-what-changed-in-bjps-five-years-2093747.html">increase five-fold in India by 2022</a>. </p>
<p>And Chilean President Sebastian Piñera, who holds <a href="https://www.nytimes.com/2017/12/17/world/americas/chile-presidential-election.html">strong conservative views</a> on many social issues, has nonetheless embraced some of the <a href="https://climateactiontracker.org/countries/chile/">most stringent climate goals</a> in Latin America. </p>
<p>According to the Climate Action Tracker, which monitors countries’ progress toward reducing carbon emissions, Chile will generate 65% of its electricity from renewable energy by 2035, and has imposed strict new energy efficiency standards on manufacturing, mining and transportation.</p>
<p>In Jamaica, the Labour Party – the island’s conservative party – has endorsed a new “<a href="https://theconversation.com/jamaica-leads-in-richard-branson-backed-plan-for-a-caribbean-climate-revolution-105478">climate accelerator</a>.” Backed by billionaire Richard Branson and the <a href="https://www.iadb.org/en/news/idb-join-new-caribbean-climate-smart-accelerator-facilitate-1bn-investments">Inter-American Development Bank</a>, the initiative aims to make this vulnerable region more resilient by <a href="https://www.worldbank.org/en/news/press-release/2018/08/09/caribbean-aims-become-world-first-climate-smart-zone">attracting financing</a> to scale up renewable energy, build low-carbon infrastructure and increase investments in green technology.</p>
<p><iframe id="nz8QR" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/nz8QR/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Climate change is a market failure</h2>
<p>I am an <a href="https://www.middlebury.edu/institute/people/jason-scorse">environmental economist</a>, but it doesn’t require advanced training in economics to recognize the basic principles underlying all these conservative-backed environmental policies.</p>
<p>The first is conservative faith that financial markets can adapt and innovate to address today’s climate challenge. </p>
<p>There’s evidence for this belief. Renewable power – which was economically unviable just a decade ago – <a href="https://www.forbes.com/sites/dominicdudley/2018/01/13/renewable-energy-cost-effective-fossil-fuels-2020/#55616b3e4ff2">is so affordable now</a> because governments and companies around the world have <a href="https://ourworldindata.org/renewable-energy">invested immensely in solar and wind</a>. What is expensive today can be made cheap tomorrow if governments put the right incentives in place. </p>
<p>The second basis for the climate policies conservatives worldwide support is an understanding that, under <a href="https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1017&context=econ_workingpaper">certain circumstances</a>, markets can and do fail. </p>
<p>Markets function properly only under certain conditions. </p>
<p>First, the harmful impacts of producing a given good – which economists call “<a href="https://pressbooks.bccampus.ca/uvicecon103/chapter/5-1-externalities/">negative externalities</a>” – cannot hurt anyone other than the producers and consumers of that good. There must also be clear and enforceable property rights over every good in the marketplace. </p>
<p>When these bedrock principles are violated, market breakdown ensues. </p>
<p>Take air pollution, for example. When a chemical factory that produces a cleaning product releases toxic fumes, the cost of that pollution – the negative externality – is not borne exclusively by the buyer or seller of that product. Everyone who inhales the fumes suffers. </p>
<p>Yet because no one owns the “property rights” to the atmosphere, no one can hold the chemical factory or its clients legally responsible for contaminated air. </p>
<p>This is market failure. And in the environmental realm, it is the norm. </p>
<p>Every coal plant or natural gas field that emits the <a href="https://www.nationalgeographic.com/environment/global-warming/greenhouse-gases/">greenhouse gases that drives climate change</a> free of charge is violating the fundamental principle of well-functioning markets. </p>
<p>Policies like Europe’s cap and trade system or Britain’s <a href="https://uk.reuters.com/article/uk-eu-britain-carbontrading/british-carbon-tax-to-start-november-4-in-the-event-of-no-deal-brexit-government-idUKKCN1U70NG">carbon tax</a>, which will soon require companies <a href="https://www.c2es.org/content/carbon-tax-basics/">pay a fee</a> for every unit of pollution they emit, are designed to fix this problem.</p>
<h2>Global outliers</h2>
<p>Not all conservatives embrace market-based environmental policies, of course.</p>
<p>Republicans in the U.S. voted overwhelmingly <a href="https://insideclimatenews.org/news/19072018/anti-carbon-tax-resolution-house-vote-climate-solutions-caucus-curbelo-scalise-koch-influence-congress">against a proposed carbon tax in 2016</a>. Then-House Majority Whip Steve Scalise <a href="https://www.atr.org/overwhelming-majority-house-votes-oppose-carbon-tax">said</a> it would be “detrimental to American families and businesses.” </p>
<p>Australia’s conservative party, which won a <a href="https://theconversation.com/labors-election-loss-was-not-a-surprise-if-you-take-historical-trends-into-account-117399">surprise victory</a> in May’s national election, is <a href="https://www.forbes.com/sites/jamesellsmoor/2019/06/01/climate-change-australias-election-has-far-reaching-consequences/#7c4136b71e75">propelling the country backwards on climate</a>. A few years ago, they repealed a <a href="https://www.vox.com/world/2019/5/17/18628180/australia-election-2019-labor-liberal-party-morrison">2010 carbon tax</a>. Now the country’s new prime minister, Scott Morrison, is reducing the emission-reduction target Australia signed onto in the Paris climate accords and renewing <a href="https://www.theguardian.com/australia-news/live/2017/feb/09/bill-shorten-malcolm-turnbull-union-liberal-labor-politics-live">his government’s commitment to the coal industry</a>.</p>
<p>Brazil’s far-right President Jair Bolsonaro, too, has <a href="https://theconversation.com/amazon-fires-jair-bolsonaro-faces-mounting-political-backlash-in-brazil-even-from-his-allies-122512">rolled back his country’s strict environmental regulations</a>. That’s left the Amazon rainforest open to <a href="https://theconversation.com/amazon-fires-deforestation-has-a-devastating-heating-impact-on-the-local-climate-new-study-122914">deforestation</a> and <a href="https://theconversation.com/the-amazon-is-burning-4-essential-reads-on-brazils-vanishing-rainforest-122288">fire</a>.</p>
<p>The current governments of the United States, Australia and Brazil are global outliers who defy overwhelming basic economics and <a href="https://climate.nasa.gov/evidence/">overwhelming scientific evidence</a> that climate change is one of the <a href="https://www.nytimes.com/2018/03/29/climate/united-nations-climate-change.html">gravest risks facing humanity</a>. </p>
<p>From Jamaica to India, rightist leaders have shown confidence that with the right incentives companies can and will innovate to transform the economy in a more sustainable direction.</p>
<p>[ <em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/121685/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In the past Jason Scorse has received funding from various environmental NGOs, including Natural Resources Defense Council, EarthJustice, and the Sierra Club for consulting work. </span></em></p>Conservatives worldwide favor carbon pricing, cap-and-trade systems and other innovative environmental plans – just not in the United States.Jason Scorse, Associate Professor, Chair, Director, MiddleburyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1229182019-09-05T17:56:11Z2019-09-05T17:56:11ZCanadians in every riding support climate action, new research shows<figure><img src="https://images.theconversation.com/files/290969/original/file-20190904-175663-142n1nq.jpg?ixlib=rb-1.1.0&rect=0%2C368%2C5565%2C2971&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">According to new research, the majority of Canadians in all but three ridings across the country believe their province has already felt the effects of climate change. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span></figcaption></figure><p>Canada’s fall election is in full swing and climate policy will likely be at the centre of debate. Prime Minister Justin Trudeau’s Liberals are <a href="https://www.liberal.ca/pricing-carbon-pollution/">trumpeting</a> their carbon pricing policy, while Andrew Scheer’s Conservatives want to <a href="https://www.conservative.ca/cpc/andrew-scheers-climate-plan/">get rid of it</a>. Meanwhile, Elizabeth May and her <a href="https://theconversation.com/the-green-party-wave-could-spread-across-canada-115970">newly relevant</a> Greens think Canada <a href="https://www.greenparty.ca/en/mission-possible">must do more</a> to manage the climate crisis.</p>
<p>But where do Canadian voters stand on this issue?</p>
<p>Our research team, based at the Université de Montréal and the University of California Santa Barbara, has new public opinion data to answer this question. Using recent <a href="https://doi.org/10.1371/journal.pone.0159774">statistical and political science advances</a>, we can estimate Canadian opinion in every single riding across the country (except for the less densely populated territories, where data collection is sparse). And we’ve released on <a href="https://www.umontreal.ca/climat/engl/">online tool</a> so anyone can see how their local riding compares to others across the country.</p>
<h2>Canadians are concerned about climate change</h2>
<p>Our results reinforce what is increasingly clear: climate change is on <a href="https://abacusdata.ca/will-climate-change-be-a-ballot-box-question-in-2019/">the minds of Canadians</a>, and not just in urban or coastal communities. A majority of Canadians in every single riding believe the climate is changing. The highest beliefs are in Halifax, where 93 per cent of the public believe climate change is happening. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=264&fit=crop&dpr=1 600w, https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=264&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=264&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=332&fit=crop&dpr=1 754w, https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=332&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/290798/original/file-20190903-175663-1eqbk48.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=332&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Percentage of Canadians, by riding, who believe climate change is happening.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>And a majority of Canadians in all but three ridings think their province has already experienced the impacts of climate change. These beliefs are particularly high in Québec, where 79 per cent feel the impacts of climate change have already arrived. </p>
<p>Canadians also want to see the government take the climate threat seriously. </p>
<p>A majority of voters supports <a href="https://www.theguardian.com/environment/2011/jul/05/what-is-emissions-trading">emissions trading</a>. <a href="https://www.theguardian.com/environment/2013/jan/31/carbon-tax-cap-and-trade">Carbon taxation</a> is more divisive, yet more people support carbon taxation than don’t in 88 per cent of Canadian ridings. </p>
<p>And the handful of ridings that <a href="https://www.umontreal.ca/climat/engl/">don’t support</a> the Trudeau government’s carbon pricing policy — Fort McMurray-Cold Lake, for example — are already in Conservative hands. </p>
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Read more:
<a href="https://theconversation.com/heres-what-the-carbon-tax-means-for-you-114671">Here's what the carbon tax means for you</a>
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<p>In other words, the path to a majority government — or even a minority government — goes through many ridings where Canadians are worried about climate change and want the government to take aggressive action.</p>
<p><a href="https://doi.org/10.1111/j.1541-1338.2012.00563.x">Compared to the United States</a>, the Canadian public believes climate change is happening in far higher shares. Even Canadian ridings where belief in climate change is the lowest have comparable beliefs to liberal states like Vermont and Washington. Overall Canadian support for a carbon tax is higher than support for a carbon tax in California, often thought of as the most environmentally progressive U.S. state.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=264&fit=crop&dpr=1 600w, https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=264&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=264&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=332&fit=crop&dpr=1 754w, https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=332&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/290804/original/file-20190903-175696-h9b3js.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=332&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Percentage of Canadians, by riding, who believe their province has already been impacted by climate change.</span>
<span class="attribution"><span class="license">Author provided</span></span>
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</figure>
<p>Importantly, support for specific climate policies remains high in provinces that have already implemented climate laws. For instance, support for a carbon tax in British Columbia, where this policy <a href="https://doi.org/10.1016/j.enpol.2015.08.011">was introduced in 2008</a>, is the second highest in the country at 61 per cent (Prince Edward Island has the highest support). Similarly, support for emissions trading is second highest in Québec, again just behind P.E.I., where a carbon market <a href="https://www.researchgate.net/profile/David_Houle2/publication/276289377_The_Political_Economy_of_California_and_Quebec's_Cap-and-Trade/links/5555f92508aeaaff3bf5ea49/The-Political-Economy-of-California-and-Quebecs-Cap-and-Trade.pdf">was implemented in 2013</a>.</p>
<h2>Even Conservative ridings want action</h2>
<p>We don’t find evidence of a backlash to carbon taxes or emissions trading — Canadians living in provinces with substantive climate policies continue to support them. Instead, we find substantial support for climate action in the ridings of Canadian politicians who have done the most to undermine Canada’s climate policy. </p>
<p>Ontario Premier Doug Ford’s provincial riding matches up with the federal riding of Etobicoke North, where 62 per cent of the public supports emissions trading. In other words, Ford ignored the majority will of his own constituents when he acted to repeal Ontario’s policy last year. </p>
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<p>
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Read more:
<a href="https://theconversation.com/ontarios-new-climate-plan-is-far-from-conservative-108406">Ontario's new climate plan is far from conservative</a>
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<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=345&fit=crop&dpr=1 600w, https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=345&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=345&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=433&fit=crop&dpr=1 754w, https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=433&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/290797/original/file-20190903-175714-hxz319.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=433&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Riding-level public opinion estimates for the Saskatchewan riding of Regina-Qu'Apelle, currently represented by Conservative Leader Andrew Scheer.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The same is true federally. In Scheer’s own riding of Regina-Qu'Appelle, support for carbon taxation is at 52 per cent. Only 41 per cent of Scheer’s own constituents oppose a carbon tax. He too is offside with the people he represents.</p>
<h2>The political risks of opposing climate reforms</h2>
<p>Our results emphasize how the media can sometimes misinterpret electoral mandates. In Ontario, Doug Ford promised to repeal the province’s emissions trading scheme — and won. But the former Conservative leader, Patrick Brown, <a href="https://www.cbc.ca/news/canada/toronto/ontario-pc-convention-1.3477623">supported</a> carbon pricing while enjoying a <a href="https://globalnews.ca/news/4037303/ontario-pcs-election-poll/beta/">comfortable lead in the polls</a>.</p>
<p>There are lots of reasons why Canadians choose to change their government, but opposition to carbon pricing <a href="https://doi.org/10.1080/09644016.2019.1608659">hasn’t been one of them</a>.</p>
<p><a href="https://www.ipcc.ch/sr15/">Climate science</a> is clear on the need to rapidly decrease greenhouse gas emissions to avert the most disastrous consequences of climate change. As a northern country, <a href="https://www.nrcan.gc.ca/environment/impacts-adaptation/10029">climate impacts</a> in Canada are already larger than in other places. </p>
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Read more:
<a href="https://theconversation.com/more-frequent-fires-could-dramatically-alter-boreal-forests-and-emit-more-carbon-122355">More frequent fires could dramatically alter boreal forests and emit more carbon</a>
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<p>Our research, which the public can explore, shows that Canadians everywhere — from the most Conservative to the most Liberal ridings — are united in understanding that climate change poses a major threat to the people and places they cherish. The election provides an opportunity for Canadians have a say in the future of climate policy in their country — and all Canadian politicians should take note. </p>
<p>[ <em>Like what you’ve read? Want more?</em> <a href="https://theconversation.com/ca/newsletters?utm_source=TCCA&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=likethis">Sign up for The Conversation’s daily newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/122918/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matto Mildenberger has received funding from the Social Science and Humanities Research Council of Canada and Environment Canada.</span></em></p><p class="fine-print"><em><span>Erick Lachapelle receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC). He is a researcher with EcoAnalytics. Funding for individual survey waves (between 2011-2018) was provided by the Social Sciences and Humanities Research Council of Canada, the Ministère des Relations et de la Francophonie, EcoAnalytics, the Public Policy Forum, Smart Prosperity Institute, Canada 2020, l'Institut de l'énergie Trottier, and la Chaire d'études politiques et économiques américaines. </span></em></p>Climate change could take centre stage during Canada’s federal election.Matto Mildenberger, Assistant Professor of Political Science, University of California, Santa BarbaraErick Lachapelle, Associate professor, Département de science politique, Université de MontréalLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1167102019-05-07T23:21:40Z2019-05-07T23:21:40ZWork on climate, not weaponizing the Constitution<figure><img src="https://images.theconversation.com/files/273178/original/file-20190507-103060-1wznbe6.jpg?ixlib=rb-1.1.0&rect=361%2C104%2C3133%2C2226&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Trudeau government's federal price on carbon survived Saskatchewan Premier Scott Moe's challenge.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Matt Smith</span></span></figcaption></figure><p>Last week, the <a href="https://www.cbc.ca/news/canada/saskatchewan/the-carbon-tax-is-constitutional-sask-court-of-appeal-1.5121414">Saskatchewan Court of Appeal issued its opinion on the constitutionality of the federal government’s carbon-pricing framework</a>. A 3-2 majority of the court agreed Ottawa can impose a gradually rising floor price on greenhouse gas emissions across the country, confirming the consensus view of Canada’s legal experts.</p>
<p>While the Saskatchewan Court of Appeal’s word won’t be the last — the Ontario Court of Appeal’s decision is next and appeals to the Supreme Court of Canada from the province are inevitable — its recognition of climate change as a major threat to the planet is welcome. </p>
<p>And while the court’s opinion is only an advisory one and is confined to Saskatchewan, its recognition of climate change as a major threat helps to bring Canada in line with the growing number of countries <a href="https://www.theguardian.com/environment/2018/mar/20/can-climate-litigation-save-the-world">whose courts are acting as vital legal bulwarks</a> supporting the urgent political action required to mitigate climate change.</p>
<h2>The carbon price “backstop” as good governance</h2>
<p>Ottawa’s carbon-pricing legislation operates as nothing more than a backstop with two key parts. Part one imposes a charge on a broad range of greenhouse gas-emitting fuels, while part two establishes what the federal government calls an “output-based performance system,” whereby industrial facilities pay for the portion of their emissions that exceed an annual limit.</p>
<p>Crucially, this backstop only applies in those provinces that have failed to price greenhouse gas emissions through a direct price or cap-and-trade system at the minimum level established by the federal government. Provinces are otherwise free to regulate emissions within their territorial boundaries.</p>
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Read more:
<a href="https://theconversation.com/heres-what-the-carbon-tax-means-for-you-114671">Here's what the carbon tax means for you</a>
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<p>The court concluded Ottawa has jurisdiction to impose this carbon-pricing backstop under the national concern branch of its constitutional “<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3346795">peace, order and good government” power</a>.</p>
<p>We applaud the court’s conclusion. However, as law professors we’d be remiss if we didn’t question its unduly narrow approach.</p>
<h2>An unduly narrow legal approach</h2>
<p>The first step in resolving a federal-provincial jurisdiction dispute is to determine the purpose of the law in question. The court narrowly determined the purpose of Ottawa’s legislation as establishing minimum national standards of price stringency for greenhouse gas emissions.</p>
<p>This interpretation confuses the means for the end. Carbon pricing, including a minimum-price backstop, is the federal government’s chosen means for achieving the end goal of reducing greenhouse gas emissions.</p>
<p>The court also overstates the implications of recognizing broad federal jurisdiction over greenhouse gas emissions. Provincial legislatures, the court argues, would be significantly denied the authority to deal with emissions.</p>
<p>But this is true only where provincial and federal law conflict. In matters of shared federal-provincial jurisdiction such as environmental protection, federal and provincial laws can coexist in the absence of a genuine conflict under what’s known as the “<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3346795">double aspect</a>” doctrine.</p>
<p>The dissenting judges likewise appear to have confused the absence of an explicit assignment of jurisdiction over the environment in 1867 for an absence of environmental jurisdiction altogether. Ottawa’s fuel charge, which they characterize as a tax, applies pervasively to almost all aspects of provincial economies. They argue it’s “constitutionally repugnant” for Ottawa to exercise its taxation power in a way “that controls constitutional measures taken by the province to address greenhouse gas emissions, over which the Constitution Act, 1867 has declared the provinces to be supreme.”</p>
<p>The court’s approach harkens back to a time when federal and provincial powers were understood as exclusive <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3346795">“watertight compartments.”</a> That view, however, has long been rejected by the Supreme Court of Canada in favour of a more flexible, evolutionary and cooperative approach capable of adapting to an ever-changing world.</p>
<p>But our professorial objections, while important as fine points of law, are ultimately beside the point. As the majority of the court eloquently explains, “If it is necessary to apply established doctrine in a slightly different way to ensure both levels of government have the tools essential for dealing with something as pressing as climate change, that would seem to be entirely appropriate.”</p>
<p>Hear, hear!</p>
<h2>Urgent need for ambitious climate action</h2>
<p>But this isn’t the end of the story. Political opponents of even a bare-minimum price on greenhouse gas emissions are spinning the court’s decision as fodder for their resistance. Alberta’s newly elected Premier Jason Kenney says the 3-2 split decision is far from a broad victory for Ottawa.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=413&fit=crop&dpr=1 600w, https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=413&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=413&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=519&fit=crop&dpr=1 754w, https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=519&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/273189/original/file-20190507-103085-qmh2h4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=519&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Alberta Premier Jason Kenney has vowed to eliminate the federal carbon pricing plan.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span>
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<p>Kenney is also contemplating a <a href="https://www.cbc.ca/news/politics/kenney-court-bill-c69-senate-1.5119675">constitutional challenge to Bill C-69’s Impact Assessment Act</a>, another part of Ottawa’s package of measures to address climate change. But Bill C-69 is no less constitutional than the Canadian Environmental Assessment Act enacted in 2012 by the Harper government, of which Kenney was an influential cabinet minister.</p>
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<strong>
Read more:
<a href="https://theconversation.com/cooling-the-rhetoric-on-canadas-environmental-assessment-efforts-113539">Cooling the rhetoric on Canada's environmental assessment efforts</a>
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<p>Enough <a href="https://www.theglobeandmail.com/business/commentary/article-the-carbon-tax-case-is-a-dangerous-political-game/">distraction and delay</a>. Canada is warming at a <a href="https://www.cbc.ca/news/technology/canada-warming-at-twice-the-global-rate-leaked-report-finds-1.5079765">rate twice that of the rest of the world</a>, and nearly <a href="http://www.rcinet.ca/eye-on-the-arctic/2019/04/02/climate-change-warming-canada-report-heat-global-average/">three times the global average in the Arctic</a>. As Julie Gelfand, the outgoing Environment and Sustainable Development Commissioner, reiterated in her <a href="http://www.oag-bvg.gc.ca/internet/English/parl_cesd_201904_e_43295.html">final audit</a>, Canada has for decades failed to meet its targets for reducing greenhouse gas emissions, and the government still isn’t prepared to adapt to climate change. </p>
<p>Globally, according to a new report by the U.N. Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, <a href="https://www.ipbes.net/news/ipbes-global-assessment-summary-policymakers-pdf">nature is declining at rates unprecedented in human history and the rate of species extinctions is accelerating</a>. Grave impacts on people around the world are now likely.</p>
<p>This has to change. We have to stop weaponizing the Constitution and start working together, across party lines at all levels of government, on urgent and ambitious climate action.</p>
<p><em>These writers also contributed to this article: <a href="http://www.allard.ubc.ca/faculty-staff/natasha-affolder">Natasha Affolder</a>, <a href="http://www.allard.ubc.ca/faculty-staff/jocelyn-stacey">Jocelyn Stacey</a> and <a href="http://www.allard.ubc.ca/faculty-staff/stepan-wood">Stepan Wood</a> (University of British Columbia); <a href="https://uwaterloo.ca/sustainability-assessment-project/people-profiles/robert-b-gibson">Robert B. Gibson</a> (University of Waterloo); <a href="https://www.ucalgary.ca/research/scholars/kwasniak-arlene">Arlene Kwasniak</a> and <a href="https://law.ucalgary.ca/profiles/fluker">Shaun Fluker</a> (University of Calgary); <a href="https://commonlaw.uottawa.ca/en/people/collins-lynda">Lynda Collins</a> and <a href="https://commonlaw.uottawa.ca/en/people/mcleod-kilmurray-heather">Heather McLeod-Kilmurray</a> (University of Ottawa); <a href="https://fes.yorku.ca/faculty-profile/winfield-mark-s/">Mark S. Winfield</a> and Estair Van Wagner (York University); <a href="https://www.tru.ca/law/faculty-staff/faculty/charis-kamphuis.html">Charis Kamphuis</a> (Thompson Rivers University); <a href="https://www.ualberta.ca/law/faculty-and-research/profiles/cameron-jefferies">Cameron Jefferies</a> (University of Alberta); <a href="https://www.dal.ca/faculty/law/faculty-staff/our-faculty/meinhard-doelle.html">Meinhard Doelle</a> and <a href="https://www.dal.ca/faculty/law/faculty-staff/our-faculty/sara-seck.html">Sara Seck</a> (Dalhousie University) and <a href="https://www.law.utoronto.ca/faculty-staff/full-time-faculty/andrew-green">Andrew Green</a> (University of Toronto).</em></p><img src="https://counter.theconversation.com/content/116710/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jason MacLean is affiliated with the Pacific Centre for Environmental Law and Litigation (CELL).</span></em></p><p class="fine-print"><em><span>Nathalie Chalifour receives funding from SSHRC.</span></em></p><p class="fine-print"><em><span>Sharon Mascher does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A ruling by the Saskatchewan Court of Appeal recognizes the threat of climate change, but its approach is too narrow.Jason MacLean, Assistant Professor of Law, University of SaskatchewanNathalie Chalifour, Associate Professor, Faculty of Law, L’Université d’Ottawa/University of OttawaSharon Mascher, Professor of Law, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1121442019-02-28T12:15:29Z2019-02-28T12:15:29ZThe Green New Deal is already changing the terms of the climate action debate<p>What a splendid irony it would be if the enduring legacy of Donald Trump’s presidency was the Green New Deal – a radical, government-directed plan to transition the US to a socially just society with a zero-carbon economy.</p>
<p>Of course, it isn’t Trump’s idea. The Green New Deal was <a href="https://neweconomics.org/2008/07/green-new-deal">first proposed a decade ago</a>, but has only recently captured the public imagination. Environmental activists from the “<a href="https://www.sunrisemovement.org/">Sunrise Movement</a>” protested in the office of House speaker, Nancy Pelosi, on November 13 2018, <a href="https://theintercept.com/2018/11/13/alexandria-ocasio-cortez-sunrise-activists-nancy-pelosi/">demanding the deal</a>. And they were joined by recently elected congresswoman, <a href="https://www.nytimes.com/elections/results/new-york-house-district-14">Alexandria Ocasio-Cortez</a>, who has <a href="https://www.theguardian.com/us-news/2019/feb/26/ocasio-cortez-rebukes-ivanka-trump-on-jobs-as-a-person-who-actually-worked">argued passionately on behalf of the plan</a> ever since. </p>
<p>Still, it’s partly thanks to Trump and the shock of his election that radical ideas are getting a hearing and his opponents are being forced to think bold. That’s just what is needed if the world is to get serious about tackling climate change.</p>
<p>Alongside an aim for net-zero greenhouse gas emissions and 100% renewable energy, the Green New Deal demands job creation in manufacturing, economic justice for the poor and minorities and even universal healthcare through a ten-year “national mobilisation”, which echoes President Franklin Roosevelt’s New Deal in the 1930s.</p>
<p>The UK has, for the past decade, <a href="https://theecologist.org/2019/jan/30/britains-bid-be-climate-world-leader">thought of itself as a climate leader</a>. It’s true that <a href="https://www.legislation.gov.uk/ukpga/2008/27/contents">the 2008 Climate Change Act</a>, which sets a legally-binding framework for carbon reduction, is ambitious compared to legislation in many other countries. </p>
<p>But the UK’s approach – like so many other countries – is based on quiet consensus. So far, climate politics has been a polite conversation between government, industry and researchers, not a subject of heated debate in parliament.</p>
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<img alt="" src="https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/261303/original/file-20190227-150715-1g3qgwf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Youth climate strikes highlighted the gulf between popular sentiment on climate change and government action.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-united-kingdom-2152019-youth-strike-1315615694?src=kXGwqeuBixnGL3G7LTFHww-1-28">Diana Vucane/Shutterstock</a></span>
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<p><a href="https://www.green-alliance.org.uk/resources/Building_a_political_mandate_for_climate_action.pdf">My research with UK politicians</a> shows a reluctance to speak out on climate change, as many prefer a low-key approach – dressing up climate action in the language of economic policy and market mechanisms to avoid confrontation with colleagues, the electorate or the industries that risk losing out in the shift to a low-carbon economy. </p>
<p>Some members of parliament even told me that they deliberately avoid mentioning climate change in speeches to the House of Commons or in their constituency, fearing it could backfire. One worried that he would be branded a “zealot”, and marginalised by his colleagues if he argued too vociferously in favour of climate action.</p>
<p>This approach is severely limiting. Moving to a zero-carbon society will require changing the way that people live in their homes, travel around, shop, eat and source their food. It’s impossible to do all this without people noticing and attempting to impose change from above, without social consent, may also cause a backlash.</p>
<p>The French president, Emmanuel Macron, found this to his cost when he tried to implement fuel tax rises which disproportionately affected poorer consumers. The result was the <a href="https://theconversation.com/uk/topics/gilets-jaunes-63133">Gilets Jaunes protests</a> which erupted in France in late 2018.</p>
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Read more:
<a href="https://theconversation.com/emmanuel-macrons-carbon-tax-sparked-gilets-jaunes-protests-but-popular-climate-policy-is-possible-108437">Emmanuel Macron's carbon tax sparked gilets jaunes protests, but popular climate policy is possible</a>
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<p>Climate policies should involve and excite people by addressing their concerns and aspirations. Climate policy proposals have typically centred around technically optimal solutions – trying to establish the least disruptive or costly approach, without paying attention to the question of whether people might vote for them.</p>
<p>Barack Obama’s <a href="http://large.stanford.edu/courses/2017/ph240/murphy-a1/docs/tubman.pdf">well-intentioned climate policies</a> as US president fitted this mould. His <a href="https://www.nrdc.org/stories/how-clean-power-plan-works-and-why-it-matters">Clean Power Plan</a>, which sought incremental carbon reductions from existing power stations, was a pragmatic response to a divided political scene.</p>
<p>After decades of technocratic and consensus-building climate politics, <a href="https://apps.npr.org/documents/document.html?id=5729033-Green-New-Deal-FINAL">the Green New Deal</a> swaggers onto the scene – an avowedly political and idealistic take on climate action.</p>
<h2>The Green New Deal’s first victory</h2>
<p>The Green New Deal was put forward as a <a href="https://apps.npr.org/documents/document.html?id=5729033-Green-New-Deal-FINAL">Resolution to the House of Representatives</a>, by Ocasio-Cortez and supporters from both houses on February 5 2019. It’s only a non-binding statement of intent at this stage and would require complex legislation. Bold political plans often founder on the rocks of implementation, especially when politics are as fractious as in the current Congress.</p>
<p>But the Green New Deal has already succeeded in one important aspect: it puts climate policies on the agenda that are as ambitious as the science of climate change demands. This makes it impossible for opponents to stay silent. The Green New Deal is forcing Democrats and Republicans to consider their own stance on climate change.</p>
<p>Some Democrats have branded the plan as unrealistic – a “green dream”, as Pelosi called it. Veteran senator, Diane Feinstein, was similarly dismissive, when <a href="https://www.newyorker.com/news/daily-comment/the-hard-lessons-of-dianne-feinsteins-encounter-with-the-young-green-new-deal-activists-video">young campaigners asked for her support</a>. Republicans, meanwhile, have branded it a <a href="https://eu.usatoday.com/story/news/politics/2019/02/17/green-new-deal-gop-opposes-climate-plan/2860047002/">socialist takeover</a> to rally their own supporters. But the Green New Deal’s opponents can’t simply criticise. They will need to find their own answer to the climate question.</p>
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<p>For the Republicans, denying or dismissing the science of climate change is becoming less tenable by the day. The impacts of climate change are mounting, <a href="http://climatecommunication.yale.edu/publications/americans-are-increasingly-alarmed-about-global-warming/">public concern is rising</a>, and schoolchildren are striking. </p>
<p>The Green New Deal has drawn attention to a gaping hole in right-wing politics – the confident articulation of a climate strategy. If you agree with the scientific consensus that rapid action is necessary, but you don’t like the strongly social flavour of the Green New Deal, what do you propose in its place?</p>
<p>In the UK, the fog of Brexit has <a href="https://twitter.com/jossgarman/status/1100444835205574656">clouded any serious political debate</a> on climate change, but when politicians manage to take a breath, they too will face the same challenge. <a href="https://www.climatechangenews.com/2019/02/14/labour-scrambles-develop-british-green-new-deal/%20%22%22%20and%20is%20seeing%20what%20it%20can%20learn%20from%20the%20US">The Labour Party has promised action</a> but the Conservatives have been told that their own commitments <a href="https://theconversation.com/brexit-britain-has-taken-its-eye-off-the-paris-agreement-on-climate-change-103783">aren’t compatible with the Paris Agreement</a> and so they, too, need a plan.</p>
<p>The fight is not nearly won. But the Green New Deal is already succeeding in putting climate action where it belongs, as the defining political issue of our time. How strange that we have dysfunctional US politics to thank for this huge step forward.</p><img src="https://counter.theconversation.com/content/112144/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rebecca Willis receives funding from the Economic and Social Research Council. She is an Associate of Green Alliance and a Trustee of the New Economics Foundation.</span></em></p>By making people confront the scale of the climate challenge, the Green New Deal is a great leap forward.Rebecca Willis, Researcher in Environmental Policy and Politics, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1077812018-12-20T21:37:16Z2018-12-20T21:37:16ZWant citizens to care about climate change? Write them a cheque<figure><img src="https://images.theconversation.com/files/251074/original/file-20181217-185243-10h0vgk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If citizens think they'll personally and financially benefit from a carbon tax, maybe politicians would take action. </span> <span class="attribution"><span class="source">Thomas Hafeneth/Unsplash</span></span></figcaption></figure><p>Climate scientists insist in a recent report that <a href="https://www.ipcc.ch/sr15/">fundamental changes in how energy is consumed and supplied</a> are urgently required to avoid serious damage to life and property from <a href="https://www.ucsusa.org/global-warming/science-and-impacts/science/temperature-is-rising#.XBhVmC2ZMWo">rising temperatures</a>, <a href="https://www.weforum.org/agenda/2018/10/sea-levels-could-rise-a-huge-amount-by-2300/">rising sea levels</a> and greater frequency of <a href="https://www.washingtonpost.com/opinions/its-not-rocket-science-climate-change-was-behind-this-summers-extreme-weather/2018/11/02/b8852584-dea9-11e8-b3f0-62607289efee_story.html?utm_term=.a5c9fef49d37">extreme weather events (hurricanes, drought-induced wildfires, etc.)</a>. </p>
<p>Governments worldwide <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2018/12/17/the-latest-global-climate-negotiations-just-finished-heres-what-happened">have barely managed</a> to work towards the <a href="https://www.washingtonpost.com/national/health-science/its-not-fast-enough-its-not-big-enough-theres-not-enough-action/2018/02/19/5cf0a7d4-015a-11e8-9d31-d72cf78dbeee_story.html?">modest</a> commitments under the Paris climate accord, and it’s <a href="https://news.nationalgeographic.com/2017/10/paris-agreement-climate-change-usa-nicaragua-policy-environment/">not enough</a> to address the problem.</p>
<p>Climate initiatives are currently under siege from major polluters. The United States and Australia have <a href="https://www.theguardian.com/environment/2018/dec/11/australia-only-nation-to-join-us-at-pro-coal-event-at-cop24-climate-talks">organized pro-coal events amid climate talks</a>, carbon emissions are <a href="https://www.scientificamerican.com/article/co2-emissions-reached-an-all-time-high-in-2018/">increasing again</a> while new political regimes in <a href="https://www.theguardian.com/world/2018/nov/28/brazil-reneges-on-hosting-un-climate-talks-under-bolsonaro-presidency">Brazil</a> and <a href="https://www.independent.co.uk/environment/cop24-climate-change-summit-trump-us-pollution-global-warming-poland-katowice-a8684186.html">Saudi Arabia</a> have shown worrying signs of climate skepticism. Why is it so difficult for politicians around the world to take the necessary steps to deal with the climate crisis?</p>
<p>Experts commonly offer two options to address climate change: <a href="https://www.theglobeandmail.com/opinion/article-divisive-carbon-prices-are-much-ado-about-nothing/">Flexible regulations</a> on polluting sectors like electricity and transportation, and <a href="https://read.oecd-ilibrary.org/taxation/effective-carbon-rates-2018_9789264305304-en#page1">carbon pricing</a> that reflects the indirect cost of pollution.</p>
<p>These are justified economically, since mitigating climate change can result in popular <a href="https://www.ipcc.ch/sr15/chapter/chapter-5/">sustainable development</a> opportunities, create <a href="https://www.irena.org/publications/2018/May/Renewable-Energy-and-Jobs-Annual-Review-2018">new jobs</a>, prevent loss in professions that depend on <a href="https://twitter.com/SenJeffMerkley/status/1072211153181425665">healthy ecosystems</a> and improve <a href="https://www.who.int/news-room/detail/05-12-2018-health-benefits-far-outweigh-the-costs-of-meeting-climate-change-goals">health outcomes</a> at a lower cost. But that may not be enough — there is no <a href="https://theintercept.com/2018/11/27/green-new-deal-congress-climate-change/">bold Green New Deal</a> that is even being contemplated in places like Russia or China at this time.</p>
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<strong>
Read more:
<a href="https://theconversation.com/canada-needs-its-own-green-new-deal-107784">Canada needs its own Green New Deal</a>
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<p>Political leaders need to care about climate enough to take on polluting entities like fossil fuel companies that supply or <a href="https://www.energia16.com/fossil-fuel-consumption-accounts-for-80-percent-of-the-u-s-energy-matrix/?lang=en">generate the vast majority of energy</a>, provide millions of jobs and make political contributions. </p>
<p><a href="https://www.theguardian.com/environment/cif-green/2009/oct/26/psychology-of-climate-change">Behavioural psychology</a> suggests that politicians are resistant to measures that aren’t popular with voters or donors.</p>
<p>Even moderate efforts to price carbon have sometimes faced political backlash. A prime example is the <a href="https://www.nbcnews.com/news/world/france-anti-tax-protests-leave-gas-stations-running-dry-n942871">domestic unrest in France</a> where carbon pricing on top of economic measures exacerbated economic insecurity within society.</p>
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<img alt="" src="https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/251076/original/file-20181217-185258-erfynr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A man makes his way through tear gas as demonstrators protest on the Champs-Elysees on Dec. 15, 2018 in Paris. It was the fifth straight weekend of protests by the country’s ‘yellow vest’ movement.</span>
<span class="attribution"><span class="source">(AP Photo/Kamil Zihnioglu)</span></span>
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<p>As politicians delay decisive action, what could be realistically and quickly done within political systems as diverse as those of the U.S., China, India and Russia? Together, they are the top four polluters, contributing <a href="http://www.globalcarbonatlas.org/en/CO2-emissions">53 per cent of global carbon dioxide emissions</a> in 2017.</p>
<h2>Citizens are apathetic too</h2>
<p>We argue that the apathy of political leaders reflects the apathy of their citizens. Many politicians, and the people they represent around the world, simply do not view climate change as a crisis. Even when mainstream cable channels are covering it (a rarity in itself), people seem to care more about the next sports showdown <a href="https://trends.google.com/trends/explore?date=today%201-m&q=Global%20Warming,Climate%20Change,%2Fm%2F01mpq7s">or celebrity</a> gossip for entertainment in their daily lives. </p>
<p>Some are also distrustful of the science (an effect of the recent fad of “<a href="https://www.politico.com/magazine/story/2017/09/05/how-we-killed-expertise-215531">resistance to intellectual authority</a>,” including climate scientists). </p>
<p>At the extreme are those who associate climate change and carbon pricing with <a href="http://oxfordre.com/climatescience/view/10.1093/acrefore/9780190228620.001.0001/acrefore-9780190228620-e-328">various conspiracy theories</a>. This includes everything from the supposed <a href="https://www.huffingtonpost.com.au/2017/05/25/scientists-getting-filthy-rich-on-climate-change-here-are-the-f_a_22106707/">financial gain</a> of climate scientists to socialist schemes to create a world government to destroy capitalism, and a <a href="https://www.nytimes.com/2016/11/19/world/asia/china-trump-climate-change.html">Chinese plot</a> against Western economies. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/is-climate-change-a-socialist-plot-19730">Is climate change a socialist plot?</a>
</strong>
</em>
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<p>Arguably, discussions on climate change under these conditions can sometimes deepen the political divide given proponents of such conspiracy theories are largely immune to evidence and reason. </p>
<p>So how do we get citizens to care about climate?</p>
<p>Any energy transition will need to be preceded by a transition of vocal and influential citizens, or swing voters, away from an anti-climate position. We don’t necessarily need all citizens of diverse socioeconomic and educational backgrounds to understand climate science or proactively support it (though that would be highly desirable), we just need a politically influential section of citizens to not oppose bold climate action. </p>
<p>Presenting the case for climate action on <a href="https://twitter.com/MichaelEMann/status/1050480563923095562">CNN, BBC or CBC</a> is important but leaves out the billions of people across China, Russia, India and a host of other countries with divergent political systems and their own media landscape. </p>
<p>They must also be concurrently convinced to take action. How?</p>
<h2>Appealing to citizens via their wallets</h2>
<p>If carbon pricing is going to be a significant vehicle for climate action, then the key to securing broader support is through people’s wallets. </p>
<p>We should take advantage of human nature. People care about personal gains like well-paying jobs and pay raises. And they instinctively oppose taxes. But would they oppose a tax if they directly profit from it? </p>
<p>The <a href="https://ourworldindata.org/carbon-pricing-popular">ideal approach</a> would be to <a href="https://voxeu.org/article/making-carbon-pricing-work-citizens">distribute a large portion of the carbon tax revenues</a> back to the working class families to compensate for the higher costs of energy products and services. </p>
<p>This would address real concerns that carbon pricing can disproportionately affect the economically marginalized (as seen in France). But it also dangles a real incentive for citizens to actually demand a carbon tax.</p>
<p>Higher energy prices would still encourage a shift to renewables, and any energy conservation by consumers would financially benefit them even more. This is the core of the “<a href="https://www.canada.ca/en/services/environment/weather/climatechange/technical-paper-federal-carbon-pricing-backstop.html">Canadian backstop</a>” proposal. </p>
<p>Carbon taxes could yield cash immediately — and loads of it. An estimated carbon price of <a href="https://www.carbonpricingleadership.org/report-of-the-highlevel-commission-on-carbon-prices/">US$40 to US$80 per tonne of carbon dioxide</a> is needed by 2020 to achieve the Paris accord goals. Yet, in the 48 OECD and G20 countries (accounting for 80 per cent of global carbon emissions), <a href="https://read.oecd-ilibrary.org/taxation/effective-carbon-rates-2018_9789264305304-en#page27">46 per cent</a> of emissions are not taxed, while another 13 per cent was charged less than US$6 in 2018. </p>
<h2>Science academies should take the lead</h2>
<p>If governments are unwilling to convince the public of the personal benefits, the respective <a href="http://www.interacademies.org/36173.aspx">national academies of sciences</a> should use their expertise on science and economics to take the lead. Citizens around the world should know how much <a href="https://www.cleanprosperity.ca/2018/09/21/1073/">“carbon dividend”</a> a working family could earn every month if carbon revenues are returned as a dividend. </p>
<p>Even with a modest tax of $20 a tonne, the Canadian federal backstop would return <a href="https://www.cbc.ca/news/politics/tasker-carbon-tax-plan-trudeau-1.4874258">$300 a year more to 70 per cent</a> of the households affected. A more ambitious tax, say $60 per tonne, could be combined with explicit policies to return nearly all the revenue to households with the amount depending on their income levels. </p>
<p>A modest portion from the world’s biggest economies could be earmarked for climate adaptation in the most <a href="https://thecvf.org/about/">vulnerable developing countries</a>. At minimum, this might ensure agreement with, or even widespread demands, for a carbon tax. </p>
<p>The best-case scenario is that a critical mass of citizens then starts showing interest in this extra income, and politicians respond with pragmatic carbon pricing design without alienating their core support base. If the estimated carbon dividend could be paid a year in advance, it would only sweeten the deal.</p>
<p>So let’s pressure the politicians across different political systems to act, or they risk alienating citizens who are waiting for their carbon dividend cheques.</p><img src="https://counter.theconversation.com/content/107781/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hisham Zerriffi is on the board of the Institute for Energy and Environmental Research. </span></em></p><p class="fine-print"><em><span>Abhishek Kar does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Millions of people worldwide are either indifferent to a carbon tax or opposed. If citizens were motivated by potential carbon dividends, maybe politicians would finally take action on climate change.Abhishek Kar, Ph.D Student, University of British ColumbiaHisham Zerriffi, Associate Professor, Forest Resources Management, University of British ColumbiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1057832018-11-09T11:46:28Z2018-11-09T11:46:28ZAmericans got to vote on lots of energy measures in 2018 – and mostly rejected them<figure><img src="https://images.theconversation.com/files/244660/original/file-20181108-74766-adwwou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Voters in Nevada voted to boost their state's renewable energy target.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Worlds-Largest-Solar-Plant-/eab310e2ebba43b0ae4141503e1ff3cb/42/0">AP Photo/Chris Carlson</a></span></figcaption></figure><p>Americans in at least seven states voted on <a href="https://www.scientificamerican.com/article/4-states-have-ballot-measures-that-could-shape-u-s-climate-policy/">ballot initiatives</a> during the 2018 midterm elections. These measures targeted everything from raising targets for the share of electricity drawn from renewable energy to charging a tax on carbon emissions.</p>
<p>Campaigns to defeat these <a href="https://ballotpedia.org/Energy_on_the_ballot#By_year">initiatives related to energy and climate policy</a>, financed heavily by <a href="https://www.vox.com/energy-and-environment/2018/11/7/18069940/election-results-2018-energy-carbon-fracking-ballot-initiatives">big oil and gas companies</a> and <a href="https://www.vox.com/energy-and-environment/2018/11/7/18069940/election-results-2018-energy-carbon-fracking-ballot-initiatives">utilities</a>, substantially outspent proponents. They prevailed in nearly every case. At the same time, however, voters elected many politicians who had vowed to take action to reduce the country’s carbon footprint. Those leaders could potentially bring on the same kinds of policies through other means.</p>
<p>Like most <a href="https://scholar.google.com/citations?user=TxYfplkAAAAJ&hl=en">environmental economists</a>, I believe that strong policies can help rein in climate change. And, I believe that market-based policies like a carbon tax are the best way to do that. But following the 2018 midterms, it might be the case that advocates of these policies will need to stick to backing politicians who will implement them directly rather than trying to effect change with ballot initiatives.</p>
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<h2>No national leadership</h2>
<p>Since climate change is a global issue, it may seem odd that American states, counties and cities are forging their own policies to address it. In other countries, national authorities typically take the lead on this priority.</p>
<p>But the federal government has failed to address climate change even though the Environmental Protection Agency has effectively been obligated to regulate greenhouse gases for the past decade due to the <a href="https://www.edf.org/overview-epa-endangerment-finding">Supreme Court’s “endangerment” finding</a> that those emissions are pollutants that must be regulated under the Clean Air Act.</p>
<p>After Congress failed in its attempt to pass comprehensive climate legislation during former President Barack Obama’s administration, he bypassed lawmakers and relied on an executive order to establish his <a href="https://theconversation.com/four-things-that-you-should-know-about-the-epa-clean-power-plan-45677">Clean Power Plan</a>, which would have regulated carbon dioxide. </p>
<p>But <a href="https://www.cnn.com/2018/10/15/politics/trump-climate-change/index.html">President Donald Trump</a>, who recently said of climate change that he doesn’t “know that it’s manmade” and that he believes it will “change back again,” has basically ended all federal climate action by <a href="https://theconversation.com/trump-tears-down-us-climate-policy-but-america-could-lose-out-as-a-result-75391">dismantling the Clean Power Plan</a> and deciding to pull out of the Paris climate deal.</p>
<p>Many states are filling this climate leadership vacuum. California, for example, is committed to becoming <a href="https://theconversation.com/california-aims-to-become-carbon-free-by-2045-is-that-feasible-102390">completely carbon-neutral by 2045</a>.</p>
<p>But not all states are moving quickly enough in this direction, climate activists fear. Voter-driven initiatives are one solution to this problem. These measures are proliferating based on a simple premise: Perhaps giving citizens a say at the ballot box will force state policymakers and legislators to adopt regulations that can meaningfully and swiftly reduce the greenhouse gas emissions that cause climate change. </p>
<h2>Climate policies</h2>
<p>As an economist, I see pollution as a classic case of market failure. That is, unless the authorities regulate carbon pollution, the market will produce too much of it. Because that excess pollution will contribute to climate change, it will ultimately end up damaging the economy.</p>
<p>Furthermore, there is also a strong economic argument to be made in favor of policies like Washington’s carbon tax. Some economists call these types of policies “<a href="https://ieamblog.com/2017/10/06/market-based-environmental-policies-providing-incentives-that-minimize-costs/">market-based policies</a>,” in contrast to “command-and-control” policies like <a href="http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx">renewable portfolio standards</a> – state mandates that make utilities get at least a defined proportion of their electricity from renewable energy like solar and wind power.</p>
<p>For a given pollution reduction goal, a market-based policy, economists generally agree, can achieve it at a lower cost than a command-and-control policy can – as long as that the market-based policy is sufficiently strict. </p>
<p>There are two main ways that Massachusetts, New York and other states are already trying reduce their carbon footprints to correct for this problem. The first is a market-based policy: <a href="https://theconversation.com/state-cap-and-trade-systems-offer-evidence-that-carbon-pricing-can-work-101428">cap and trade</a>, otherwise known as emissions trading systems. Also known as emissions trading systems, this approach caps the total emissions allowed at a set level and then allocate emissions permits to factories, utilities and other polluters either for free or through auctions.</p>
<p>The other is through stronger renewable portfolio standards. Once states reach a benchmark, they can set more ambitious goals. When the authorities fail to do that or take other steps to deal with climate change and protect the environment from the risks tied to fossil fuels, one workaround is to have the electorate weigh in. </p>
<p>That doesn’t always work either.</p>
<p>Indeed, <a href="https://www.kgun9.com/news/political/elections-local/voters-reject-renewable-energy-requirements-in-prop-127">Arizona voters rejected</a> a measure on their 2018 ballots that would have increased their renewable energy target to 50 percent from 15 percent by <a href="https://www.kgun9.com/election-results/?_ga=2.223329051.1270665178.1541684220-1114447215.1541684220">an overwhelming margin</a>.</p>
<p>A similar measure did <a href="https://pv-magazine-usa.com/2018/11/07/duel-in-the-desert-matching-rps-initiative-passes-in-nevada-and-fails-in-arizona/">prevail in Nevada</a>. But before it can go into effect, voters will have to approve it a second time in 2020. </p>
<h2>Taxing carbon</h2>
<p>Perhaps most notably, voters in Washington declined to make their state the nation’s first to <a href="https://www.vox.com/energy-and-environment/2018/7/20/17584376/carbon-tax-congress-republicans-cost-economy">tax carbon dioxide emissions</a>. </p>
<p>This ballot initiative, which would have introduced a carbon “fee,” failed to garner support from a majority of Washington voters. Those voters had <a href="https://insideclimatenews.org/news/09112016/washington-state-carbon-tax-i-732-ballot-measure">rejected another carbon tax measure in 2016</a> as well. </p>
<p>Not all energy-related taxes flopped. Portland, Oregon’s voters chose to create a new 1 percent tax on the gross receipts of all large retailers. The revenue it raises will establish a <a href="https://www.opb.org/news/article/portland-oregon-clean-energy-gross-receipts-tax-result/">clean energy fund</a>, to be used to meet the city’s emissions reduction goals. </p>
<p>Other efforts to regulate fossil fuels at the ballot box also had <a href="https://www.greentechmedia.com/articles/read/midterms-2018-mixed-results-for-the-renewable-energy-agenda#gs.W3tKvd8">mixed results</a>. Florida voters amended their state constitution to <a href="https://www.wfla.com/news/politics/florida-passes-amendment-9-banning-both-offshore-oil-drilling-and-indoor-vaping/1577495572">ban offshore oil drilling</a>, reinforcing a prohibition already on the state’s books. And Californians bucked an effort to <a href="https://elections.calmatters.org/2018/california-ballot-measures/proposition-6-gas-tax-repeal/">repeal a gas tax hike</a>.</p>
<p>But Coloradans declined a chance to force their state to locate new <a href="https://theconversation.com/coloradans-reject-restrictions-on-drilling-distances-from-homes-and-schools-106511">oil and gas projects at least 2,500 feet</a> from occupied buildings like homes, schools and hospitals. </p>
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<h2>An alternative</h2>
<p>What can be more effective than winning specific changes at the ballot box? Electing leaders inclined to make those changes once they’re in office. And several newly elected governors have promised to support policies that will reduce carbon emissions.</p>
<p>Colorado Governor-elect Jared Polis, for example, backs shifting his state to <a href="https://insideclimatenews.org/news/27092018/election-2018-governor-races-renewable-energy-wisconsin-maine-michigan-colorado-new-mexico-nevada">100 percent reliance on renewable energy</a> for electricity by 2040. So do many of his peers, including <a href="https://twitter.com/jbpritzker/status/971796579647721474">J.B. Pritzker</a> in Illinois, <a href="https://www.vox.com/energy-and-environment/2018/11/7/18071770/midterm-election-results-governor-climate-change">Tony Evers</a> in Wisconsin, <a href="https://www.politico.com/story/2018/10/24/democrats-2018-energy-climate-change-873730">Gretchen Whitmer</a> in Michigan and <a href="https://www.youtube.com/watch?v=gAdvUVtTKB0&feature=youtu.be">Stephen Sisolak</a> in Nevada.</p>
<p><a href="https://www.janetmills.com/issues/environment">Janet Mills</a> in Maine aims to cut her state’s carbon emissions by 80 percent by 2030. <a href="http://scorecard.lcv.org/moc/michelle-lujan-grisham">Michelle Lujan Grisham</a> in New Mexico consistently voted for environmental legislation while serving in the House of Representatives.</p>
<p>Change at the federal level may remain elusive for now. But many of the new members of Congress who won their first elections in 2018, including New Yorker <a href="https://www.ocasio2018.com/issues">Alexandria Ocasio-Cortez</a>, <a href="https://castenforcongress.com/about/">Sean Casten</a> of Illinois and Virginian <a href="https://twitter.com/elaineluriava/status/1021506237362450433">Elaine Luria</a>, support phasing out oil, gas and coal consumption. And the Democratic Party plans to restore a <a href="https://www.thedailybeast.com/democrats-plan-to-reinstate-house-climate-committee">special committee focused on climate change</a> once it formally takes control of the House.</p>
<p>These new lawmakers will be poised to do more about climate change than their predecessors once there is a president who makes it a priority.</p><img src="https://counter.theconversation.com/content/105783/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Garth Heutel receives funding from Alliance for Market Solutions.</span></em></p>But many new governors and members of Congress intend to take action on climate change.Garth Heutel, Associate Professor of Economics, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1014282018-11-05T11:43:47Z2018-11-05T11:43:47ZState cap-and-trade systems offer evidence that carbon pricing can work<figure><img src="https://images.theconversation.com/files/243553/original/file-20181101-83632-i6ojbk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Valero’s Benicia Refinery, less than 40 miles from San Francisco
</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/California-Climate-Change-Q-and-A/f4b2f7c5a63a4e3285fb99d6b2326043/3/0">AP Photo/Rich Pedroncelli</a></span></figcaption></figure><p>The latest UN Intergovernmental Panel on Climate Change report argues that <a href="http://www.ipcc.ch/report/sr15/">carbon pollution must be cut to zero by 2050</a> to <a href="https://www.brookings.edu/opinions/were-almost-out-of-time-the-alarming-ipcc-climate-report-and-what-to-do-next/">avoid devastating levels of climate change</a>.</p>
<p>Achieving that goal will require swiftly transforming the energy, transportation, housing and food industries, and more. Although these tasks are daunting and the Trump administration <a href="http://environment.law.harvard.edu/policy-initiative/regulatory-rollback-tracker/">is dismantling federal regulations</a> aimed at reducing climate-changing emissions, cost-effective policy tools that could help do exist. And individual U.S. states and regions are using them to make significant progress to reduce emissions. </p>
<p>I led a <a href="http://fletcher.tufts.edu/">Fletcher School</a> <a href="https://sites.tufts.edu/cierp/research/climate-policy-lab/">Climate Policy Lab</a> team that <a href="https://scholar.google.com/citations?user=UCgFHW8AAAAJ&hl=en&oi=ao">reviewed carbon pricing policies in 15 jurisdictions</a> to see how they work in the real world, not just in theory. We found that in all cases carbon pricing seems to be a cost-effective method to cut carbon pollution.</p>
<h2>Emissions trading</h2>
<p>States including <a href="https://www.rggi.org/">New York, Delaware</a> and <a href="https://www.arb.ca.gov/cc/capandtrade/capandtrade.htm">California</a> are keeping up the experiments with carbon pricing they began as many as nine years ago.</p>
<p>Along with the results from similar efforts in Europe, Asia and Latin America in <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/29687/9781464812927.pdf?sequence=5&isAllowed=y">more than 40 countries</a>, these policies have amassed ample evidence about what works in practice, what doesn’t and why.</p>
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<p>As my team explained <a href="https://www.tandfonline.com/doi/full/10.1080/14693062.2018.1467827">in Climate Policy</a>, an academic journal, there are two basic flavors of <a href="https://theconversation.com/taxes-and-caps-on-carbon-work-differently-but-calibrating-them-poses-the-same-challenge-104898">carbon pricing</a>: cap-and-trade – otherwise known as emissions trading systems – and carbon fees or taxes. Some jurisdictions also use hybrid blends of the two approaches.</p>
<p>U.S. carbon emissions trading until now has been limited to the Northeast, some mid-Atlantic states and California. But many countries, including Canada, Mexico, China and the entire European Union, are levying carbon taxes, running emissions trading systems or using a mix of the two. Washington State’s citizens will soon vote on a <a href="https://www.sos.wa.gov/elections/research/2018-voters-pamphlet.aspx">ballot initiative</a> that would impose a carbon pollution fee on major emitters and collect revenue to be mostly spent on clean air and clean energy investments. </p>
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<p>Emissions trading systems cap the total emissions allowed at a certain level. The government then allocates emissions permits to factories, utilities and other polluters either for free or through auctions.</p>
<p>Each permit usually covers <a href="http://blogs.edf.org/climate411/2007/02/20/picturing-a-ton-of-co2/">1 metric ton of carbon dioxide</a>. Permit holders, typically, may buy and sell their permits as needed. </p>
<p>Companies capable of cutting their own emissions may choose to do so, and then sell their permits to other polluters to make money. Conversely, businesses can buy permits at the prevailing market price to avoid having to directly cut their own emissions in their business operations.</p>
<p>As you might expect in carbon markets that depend on willing buyers and sellers, the cheapest emissions reductions usually happen first.</p>
<h2>The American track record</h2>
<p>The results look promising so far.</p>
<p>In the <a href="https://www.rggi.org/program-overview-and-design/elements">Regional Greenhouse Gas Initiative</a>, which includes nine Northeastern and Mid-Atlantic states like Delaware, Massachusetts and Maine, carbon emissions from electricity generation fell by 36 percent between 2005 and 2015, the <a href="https://www.rggi.org/allowance-tracking/emissions">most recent comprehensive data available</a>. </p>
<p>More recent data shows that carbon emissions allowed under the cap imposed by regulators will have fallen from <a href="https://www.rggi.org/program-overview-and-design/elements">188 million metric tons in 2009 to 60.3 million metric tons by the end of 2018</a>, representing a 68 percent reduction in carbon dioxide emissions in the power sector in this region.</p>
<p>One reason for this progress may be that utilities operating in this region have found that pricing carbon has <a href="http://www.analysisgroup.com/news-and-events/news/latest-study-from-analysis-group-confirms-that-rggi-program-continues-to-boost-the-economy-and-create-jobs/">shifted what the industry calls the “power plant dispatch order.”</a> That is, sources of power like wind and natural gas that emit less carbon than coal are tapped first.</p>
<p>And California’s carbon emissions are <a href="http://blogs.edf.org/climatetalks/2015/11/05/cap-and-trade-under-ab-32-now-its-an-official-success/">on track</a> to fall to 1990 levels by 2020. </p>
<p>In no jurisdiction anywhere in the world that we studied did emissions increase as a result of carbon pricing.</p>
<h2>Faster improvements</h2>
<p>With subsidies, tax incentives, regulatory policies, fiscal incentives, innovation investments and other efforts to slow the pace of climate change being deployed at once, it is hard to know which of them is best at reducing emissions. </p>
<p>But it is possible to see that the two regions that have implemented carbon pricing have often reduced their emissions faster or in greater absolute terms than regions that have not. Massachusetts and New York, for example, <a href="https://www.eia.gov/environment/emissions/state/analysis/">reduced their emissions by more than 20 percent overall</a> between 2000 and 2015, about twice the U.S. average of 10.3 percent.</p>
<p>Carbon pricing policies can help governments raise money. But revenue from carbon taxes or the proceeds from permit auctions can be returned to taxpayers as well.</p>
<p>All of the states and countries using carbon pricing policies also have additional policies working alongside the carbon taxes or cap-and-trade programs to reduce emissions, ranging from performance standards for energy efficiency to tax incentives. These policies can also work well, but they can be more expensive approaches to reduce emissions, and sometimes they even undermine the carbon pricing policy.</p>
<p>The <a href="https://fas.org/sgp/crs/misc/IN10683.pdf">federal tax credits for wind and solar energy</a>, for example, cost taxpayers an estimated US$3.4 billion in 2016.</p>
<h2>No toll on growth</h2>
<p>What’s more, statewide economies do not appear to suffer from carbon pricing.</p>
<p>California’s economy expanded an average rate of 5.2 percent between 2012 and 2017, faster than the <a href="https://www.bea.gov/data/gdp/gdp-state">national annual 3.7 percent average</a>. In July 2018, <a href="https://ww2.arb.ca.gov/news/climate-pollutants-fall-below-1990-levels-first-time">California’s emissions fell below 1990 levels</a> for the first time, representing a 13 percent reduction from their 2004 peak even while the California economy grew 26 percent.</p>
<p>The Northeastern states averaged 3.2 percent annual growth between 2012 and 2017 – near the U.S. norm. But their Regional Greenhouse Gas Initiative led to <a href="http://www.analysisgroup.com/news-and-events/news/latest-study-from-analysis-group-confirms-that-rggi-program-continues-to-boost-the-economy-and-create-jobs/">$1.4 billion of net positive economic activity</a> because of the reinvestment of the auction proceeds in activities that generate economic benefits for the region between 2015 and 2017, a recent study found.</p>
<p><a href="https://www.c2es.org/2017/04/addressing-california-cap-and-trade-concerns/">Critics of emissions trading policies</a> have argued that the prices that have emerged in these systems are too low to spur emissions reductions. The evidence presented above shows that, in fact, they do cause pollution to decline. If advocates prefer steeper emissions reductions, then the emissions cap must be tightened.</p>
<p>Alternatively, governments can switch to carbon fees or taxes, which creates greater price certainty in the market – and which can also be ratcheted up as desired to achieve faster cuts in pollution. Either way, I believe that it is now clear that carbon taxes and emissions trading programs create a long-term signal for the marketplace that induces changes in consumer and firm behavior.</p>
<p>Given the strong real-world record on the effectiveness of carbon pricing policies and the fact that they don’t have to cost taxpayers or take a toll on the economy, I expect more states will adopt them in the coming years. </p>
<p>A federal approach would of course be much more efficient and effective. But it would require congressional action and a presidential signature, neither of which appear to be imminent especially when President Donald Trump says <a href="https://www.cnn.com/2018/10/15/politics/trump-climate-change-60-minutes/index.html">he is not even sure that climate change is man-made</a>.</p>
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<header>Kelly Sims Gallagher is the author of:</header>
<p><a href="https://mitpress.mit.edu/books/globalization-clean-energy-technology">The Globalization of Clean Energy Technology</a></p>
<footer>MIT Press provides funding as a member of The Conversation US.</footer>
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</section>
</p><img src="https://counter.theconversation.com/content/101428/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kelly Sims Gallagher receives funding from The William and Flora Hewlett Foundation, Rockefeller Brothers Fund, Breakthrough Energy Coalition, BP, and ClimateWorks. She is affiliated with the Belfer Center of Science & International Affairs at the Harvard Kennedy School, the Harvard University Center for Environment, The Tyler Prize, and The Energy Foundation. </span></em></p>These policies, which are designed to slow the pace of climate change, don’t have to cost taxpayers, and they do not appear to hinder economic growth.Kelly Sims Gallagher, Professor of Energy and Environmental Policy and Director of Center for International Environment and Resource Policy at The Fletcher School, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1048992018-10-22T10:41:01Z2018-10-22T10:41:01ZIt’s the economics: Red states embracing wind energy don’t do it for the climate<figure><img src="https://images.theconversation.com/files/241324/original/file-20181018-67173-tjv14b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Energy Secretary and former Texas Gov. Rick Perry checks out a wind turbine.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Perry-Earth-Day/c403f6401bf64eb1ab915143f3e2a1b7/1/0">AP Photo/LM Otero</a></span></figcaption></figure><p>The federal government has never played a leading role in restricting the carbon footprint of the nation’s power plants. But now that the <a href="https://www.eenews.net/stories/1060095133">Trump administration</a> is <a href="https://theconversation.com/trump-may-dismantle-the-epa-clean-power-plan-but-its-targets-look-resilient-68460">trying to dismantle</a> many energy regulations, that national role is even smaller.</p>
<p>Many states have been trying to fill this vacuum for years with <a href="https://www.utilitydive.com/news/virginia-regulators-approve-draft-carbon-cap-and-trade-plan/511225/">cap-and-trade systems</a>, <a href="https://www.agweb.com/article/renewable-standards-help-drive-energy-and-economic-development-/">renewable energy mandates</a> and other efforts to discourage the use of fossil fuels and encourage the deployment of renewable energy like wind and solar power.</p>
<p>These policies have mainly taken hold along the <a href="http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx">East and West Coasts</a>, where Democrats command a majority of the vote and <a href="http://climatecommunication.yale.edu/visualizations-data/partisan-maps-2016/?est=happening&group=rep&type=value&geo=cd">concern about global warming</a> is highest.</p>
<p>Yet as someone who <a href="https://scholar.google.com/citations?user=BHmUzmYAAAAJ&hl=en&oi=sra">researches these policies and incentives</a>, I’m constantly reminded that renewable energy is on the rise in not just Democratic strongholds and the “purple” states where leadership is bipartisan. It’s booming in some of the nation’s <a href="https://www.scientificamerican.com/article/red-states-rank-among-renewable-energy-leaders/">most conservative</a> bastions.</p>
<h2>Windy red states</h2>
<p>Iowa, Kansas and Oklahoma lead the nation in renewable energy generation, with more than 30 percent of the power generated in each of these states coming from wind turbines and other renewable sources. Three nearby Great Plains states, Nebraska, South Dakota and North Dakota, are also in the top 10. </p>
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<p>Yet on the political map, this swath of the country is usually marked “red,” for Republican.</p>
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<p>One reason why these states are greening their electricity is simple. <a href="https://windexchange.energy.gov/maps-data/324">They are in the nation’s windiest region</a>, which runs through the middle of the country from North Dakota down through Texas. </p>
<h2>An economic boon</h2>
<p>Another reason for this wind boom: Many communities in these states see renewable energy as an economic opportunity.</p>
<p>Landowners <a href="https://www.omaha.com/money/turning-to-turbines-as-commodity-prices-remain-low-wind-energy/article_2814e2cf-83a3-547d-a09e-f039e935f399.html">earn money</a> when they host wind turbines or solar panels on their property. This arrangement provides a <a href="https://www.aweablog.org/concrete-benefits-wind-power-farmers/">drought-proof and pest-proof</a> income stream that supplements what they make from agriculture.</p>
<p>And solar and wind developers also often pay property taxes that fund <a href="https://www.reuters.com/article/usa-municipals-windfarms/wind-farms-boost-tax-base-for-local-u-s-governments-moodys-idUSL1N1SE0WH">government services</a>, such as local public schools. </p>
<p>This revenue supplies a much-needed boost in areas that are struggling financially or <a href="https://www.ers.usda.gov/topics/rural-economy-population/population-migration/">losing population</a>, two challenges all too many rural communities face. </p>
<h2>Few renewable energy requirements</h2>
<p>As it happens, few of these wind-rich states are using the typical state-level climate policies to drive the growth of renewable energy. For example, <a href="https://www.eenews.net/stories/1060074965">none</a> are among the dozen states participating in <a href="https://www.c2es.org/content/state-climate-policy/">cap-and-trade</a> systems by 2018. In those parts of the country, quotas limit how much carbon dioxide and other greenhouse gases can be emitted and <a href="https://theconversation.com/taxes-and-caps-on-carbon-work-differently-but-calibrating-them-poses-the-same-challenge-104898">permits authorizing the emissions are traded</a>.</p>
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<p>Iowa was the <a href="http://programs.dsireusa.org/system/program/detail/265">first state in the nation</a> to adopt a <a href="http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx">renewable portfolio standard</a> – a policy requiring utilities to get a set proportion of their electricity from renewable energy. But after hitting its initial target years ago, the state has taken <a href="https://www.eenews.net/stories/1060087435">no steps</a> to raise its official goals.</p>
<p>Texas is in a similar position. It met its target well before its target date, despite a move in 2015 by state Republican lawmakers to <a href="https://www.utilitydive.com/news/mission-accomplished-inside-the-battle-over-texas-renewable-energy-incen/389444/">repeal its own renewable portfolio standard</a>.</p>
<p>And the Dakotas, Nebraska and Oklahoma never enacted a renewable energy mandate with <a href="http://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx">any teeth</a>.</p>
<p>Data from a <a href="http://closup.umich.edu/national-surveys-on-energy-and-environment/">national survey</a> that I manage shows that, though Democrats are extremely supportive of state-level mandates requiring the use of renewable energy, Republicans are significantly less enthusiastic about them. The survey finds 94 percent of Democrats say they <a href="http://closup.umich.edu/issues-in-energy-and-environmental-policy/39/solar-wind-and-state-mandates-10-years-of-renewable-energy-in-the-nsee/">support such policies</a>, compared to 69 percent of Republicans – a 25-point gap in support.</p>
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<p>The gap in support for increasing the use of wind or solar is much smaller: just 6 percentage points for solar energy and 10 percentage points for wind.</p>
<p>What that means is that conservatives like wind and solar power. They just don’t want the government to tell them that they must use renewable energy.</p>
<h2>Other policies</h2>
<p>Instead, the wind industry in the Great Plains may have taken off with help from other policies that are less explicitly linked to climate.</p>
<p>Oklahoma, for example, had offered wind developers a <a href="https://stateimpact.npr.org/oklahoma/2017/04/18/fallin-signs-bill-to-end-tax-credit-that-helped-fuel-oklahomas-wind-energy-boom/">sizable tax credit</a>. Texas managed to get more wind turbines than any other state after building extra transmission lines in its windy western region – paid for with money raised from <a href="https://www.technologyreview.com/s/602468/the-one-and-only-texas-wind-boom/">a modest fee</a> tacked onto residential electricity bills that Texan lawmakers approved.</p>
<p>While I believe state-level climate policies will undoubtedly play an important role in creating a market for renewable energy, <a href="http://closup.umich.edu/renewable-energy-policy-initiative/">ongoing research</a> at the University of Michigan is looking at some of these other state-level policies that facilitate getting renewable energy projects built – even in places where <a href="https://theconversation.com/red-state-rural-america-is-acting-on-climate-change-without-calling-it-climate-change-69866">talking about climate change</a> may be untenable.</p><img src="https://counter.theconversation.com/content/104899/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sarah Mills does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are some good explanations for the mismatch between regional support for climate action and the areas where renewable energy is making the biggest inroads.Sarah Mills, Senior Project Manager, Ford School's Center for Local, State, and Urban Policy (CLOSUP); Project Manager, National Surveys on Energy and Environment (NSEE), University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1048982018-10-19T10:36:44Z2018-10-19T10:36:44ZTaxes and caps on carbon work differently but calibrating them poses the same challenge<figure><img src="https://images.theconversation.com/files/241134/original/file-20181017-41135-xxc20s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are different kinds of policies that can curb greenhouse gases.
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pollution-smoke-industrial-chimney-old-smokestack-549272251">Climber 1959/Shutterstock.com</a></span></figcaption></figure><p>Virtually everything most people on earth do these days involves, either directly or indirectly, the combustion of oil, gas and coal. Burning these fossil fuels is generating carbon emissions, which accumulate in the atmosphere, contributing to <a href="https://theconversation.com/ipcc-1-5-report-heres-what-the-climate-science-says-104592">global warming</a>.</p>
<p>Since climate change could become catastrophic, economists argue that fossil fuel producers and companies that emit massive amounts of carbon should have to pay a fee or a tax. Economists also say that the people harmed by these emissions – basically, everyone – should be compensated for this harm.</p>
<p>My research on <a href="https://www.sciencedirect.com/science/article/pii/092180099400021M">environmental regulation</a> and the <a href="https://www.crcpress.com/The-Economics-of-International-Environmental-Agreements/Batabyal/p/book/9781138705227">design of international environmental agreements</a> looks at the two main ways to address this underlying problem: <a href="https://www.carbontax.org/">carbon taxes</a> and <a href="https://www.edf.org/climate/how-cap-and-trade-works">cap-and-trade systems</a>. As <a href="https://theconversation.com/nobel-award-recognizes-how-economic-forces-can-fight-climate-change-104520">William Nordhaus</a>, one of the two 2018 Nobel laureates in economics, has explained, the main idea behind both of these approaches to putting a price on carbon is to give people and companies an incentive to alter their behavior in ways that reduce <a href="https://www.epa.gov/ghgemissions/overview-greenhouse-gases">greenhouse gas emissions</a> and slow the pace of climate change.</p>
<h2>Carbon taxes</h2>
<p>A carbon tax makes fossil fuels more expensive, in turn encouraging utilities, businesses and consumers to use less of them. At the same time, it makes alternatives, such as wind and solar power more competitive – encouraging their use. When designed and implemented properly, carbon taxes raise the price of carbon-intensive goods and lower the prices of non-carbon-intensive goods.</p>
<p>Finland was the first country to establish a carbon tax in 1990. As of October 2018, <a href="https://carbonpricingdashboard.worldbank.org/map_data">about 25 governments</a> – including national, state, provincial and local jurisdictions – were levying them, according to the World Bank.</p>
<p>The revenue carbon taxes generate are either distributed as dividends to the public or spent on a government priority, sometimes tied to climate change. An example of this would be supporting renewable energy innovation.</p>
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<h2>Cap-and-trade systems</h2>
<p>With cap-and-trade systems, governments establish quotas that limit how much carbon dioxide and other greenhouse gases can be emitted over the course of a year or another time period. The authorities also issue permits or allowances that authorize the emissions, which can be bought and sold.</p>
<p>These permits are scarce by design. That creates demand for them and the opportunity to set up exchanges where buyers and sellers can agree on the price of the permits and then trade them.</p>
<p>The <a href="https://www.ucsusa.org/global-warming/solutions/reduce-emissions/regional-cap-and-trade.html#.W8dUOmhKhPY">European Union, several Canadian provinces and U.S. states</a> are some of the best examples of governments using these systems. Established in 2005, the European Union’s <a href="https://ec.europa.eu/clima/policies/ets_en">Emissions Trading System</a> operates in 31 countries. </p>
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<h2>The same challenge</h2>
<p>The <a href="https://doi.org/10.1016/j.enpol.2016.05.023">track records</a> to date of both carbon taxes and <a href="https://doi.org/10.1080/14693062.2018.1467827">cap-and-trade systems</a> indicate that they are curbing carbon emissions and encouraging investment in renewable energy, energy efficiency and other technologies that can shrink carbon footprints.</p>
<p>But three things remain unclear: by what amount are they reducing emissions, whether they are operating more efficiently than other options and who is gaining and losing the most from carbon pricing programs.</p>
<p>All told, carbon taxation and trading raised US$33 billion in 2017 across <a href="https://openknowledge.worldbank.org/handle/10986/29687">45 countries</a> and another 25 states, provinces and other jurisdictions around the world, according to the World Bank’s latest carbon pricing overview. </p>
<p>Both kinds of systems are easier to discuss in theory than to put into practice because of all the <a href="https://www.wri.org/blog/2017/03/embracing-unknown-understanding-climate-change-uncertainty">uncertainties associated with climate change</a>. </p>
<p>That is, governments that levy carbon taxes and set caps on greenhouse gas emissions must move forward <a href="https://theconversation.com/taxing-carbon-may-sound-like-a-good-idea-but-does-it-work-104871">without knowing what might be the precise level</a> at which taxes and quotas will spur the requisite changes in energy consumption and business practices.</p><img src="https://counter.theconversation.com/content/104898/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amitrajeet A. Batabyal has received research funding from the United States Department of Agriculture, the Giannini Foundation for Agricultural Economics and the Charles Koch Foundation.</span></em></p>Explaining how carbon taxes and cap-and-trade systems work is simpler than figuring out how high those taxes and caps should be.Amitrajeet A. Batabyal, Arthur J. Gosnell Professor of Economics, Rochester Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1004362018-07-26T20:54:33Z2018-07-26T20:54:33ZDoug Ford’s energy shake-up could cost Ontario<figure><img src="https://images.theconversation.com/files/229141/original/file-20180724-194158-151v8ni.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ontario Premier Doug Ford announces his plan to keep the Pickering Nuclear Generating Station in operation until 2024, in this June 2018 photo. </span> <span class="attribution"><span class="source">(THE CANADIAN PRESS/Nathan Denette)</span></span></figcaption></figure><p>Over the past two weeks, Ontario’s new Ford government made a series of high-profile actions regarding the province’s electricity system. </p>
<p>These <a href="https://www.theglobeandmail.com/canada/article-entire-ontario-hydro-one-board-to-resign-ceo-to-step-down/">included the ouster</a> of Hydro One CEO Mayo Schmidt and the subsequent resignation of the remainder of the utility’s board. The Ontario government has also announced it’s cancelling <a href="https://www.cbc.ca/news/canada/toronto/758-renewable-energy-cancelled-1.4746293">758 renewable energy projects</a>, specifically targeting the 18.5-megawatt <a href="https://ipolitics.ca/2018/07/10/cancelled-wind-farm-to-cost-ontario-ratepayers-100-million-plus-company/">White Pines wind power project in Prince Edward County for termination</a>.</p>
<p>These moves come on top of the government’s repeated statements that it <a href="https://www.cbc.ca/news/politics/ontario-federal-government-cap-trade-1.4734182">intends to terminate</a> Ontario’s cap-and-trade system, <a href="https://driving.ca/auto-news/news/ontarios-new-government-kills-ev-rebates-lowers-gas-prices">end subsidies for electric vehicles</a> and <a href="https://www.cbc.ca/news/canada/toronto/greenon-program-ends-1.4713161">cancel support for home energy efficiency retrofits</a>.</p>
<p>The government’s intent is to “lower electricity bills.” Whether these actions will offer consumers any significant benefits remains an open question at best. </p>
<h2>Executive pay doesn’t drive electricity costs</h2>
<p>The specific merits of former Hydro One CEO’s $6 million annual salary notwithstanding, <a href="https://nationalpost.com/news/fords-pcs-are-fixated-on-hydro-one-executive-pay-but-experts-say-it-has-nothing-to-do-with-ontarios-electricity-mess">executive compensation</a> constitutes a tiny portion of the overall costs of Ontario’s electricity system, amounting to pennies per month on the average residential hydro bill.</p>
<p>The cancelled renewable energy projects were mostly <a href="https://www.theglobeandmail.com/business/article-municipalities-school-boards-others-hit-by-ontario-cancellation-of/">small community-based projects</a>, and represented the province’s last round of intended renewable energy procurements. The costs of litigation from their cancellation may far exceed whatever amount the province thought it might save. </p>
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Read more:
<a href="https://theconversation.com/taxpayers-will-back-a-carbon-tax-if-they-get-a-cheque-in-the-mail-99825">Taxpayers will back a carbon tax if they get a cheque in the mail</a>
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<p>The <a href="https://ipolitics.ca/2018/07/10/cancelled-wind-farm-to-cost-ontario-ratepayers-100-million-plus-company/">company heading up the White Pines project has already signalled</a> its intention to seek $100 million in damages. </p>
<p>Echoes of the <a href="https://www.theglobeandmail.com/news/politics/ontario-liberals-gas-plants-scandal-everything-you-need-to-know/article23668386/">gas plant cancellation</a> scandal that destroyed Dalton McGuinty’s premiership loom large already.</p>
<h2>International consequences</h2>
<p>The government appears to believe that it can protect itself from such lawsuits through legislation. That remains to be seen. </p>
<p>But it won’t shield Ontario from investors in countries that have signed trade agreements with Canada that include provisions that allow them to seek compensation for measures taken by host governments that reduce the value of their investments, like <a href="https://lop.parl.ca/Content/LOP/ResearchPublications/2015-115-e.html?cat=economics">NAFTA’s notorious Chapter 11</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/229494/original/file-20180726-106499-4j3pmd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Wind turbines at the White Pine Wind project in Prince Edward County.</span>
<span class="attribution"><span class="source">(THE CANADIAN PRESS/Lars Hagberg)</span></span>
</figcaption>
</figure>
<p>Canada has entered into dozens of such agreements over the past two decades.</p>
<p>Yet the new government remains steadfast in its obstinate refusal to examine the <a href="https://www.ontario.ca/document/2017-long-term-energy-plan">key drivers of future increases in electricity costs in Ontario</a>. Namely, the planned refurbishments of the Darlington and Bruce nuclear power plants, and the proposed — and potentially perilous — “life extension” of the aged Pickering facility. The Liberals foresaw hydro rate increases in excess of 50 per cent over the next 20 years, in large part due to these projects.</p>
<h2>A risky pathway</h2>
<p>The government’s approach carries with it other major risks. </p>
<p>In addition to deepening the already extraordinary extent to which <a href="http://sei.info.yorku.ca/files/2013/03/CompetingParadigms-03-12-2013.pdf">decision-making around electricity matters in Ontario have become politicized</a>, the government’s moves send very clear signals that Ontario may not be a stable location for major energy investments. </p>
<p>More specifically, the government’s energy strategy, such as it is, seems to target technological developments that are widely seen as constituting the leading edge <a href="https://www.theglobeandmail.com/report-on-business/rob-commentary/electricity-policy-is-falling-behind-the-energy-revolution/article34996377/">of the energy sector</a>. </p>
<p>These include renewable energy technologies, whose <a href="http://www.irena.org/costs">technical and economic performance</a> has improved dramatically over the past decade towards near parity with conventional energy sources; energy storage, central to the growing adoption of electric and hybrid-electric vehicles, advanced electronics and the modernization of electricity systems; and smart grids, which allow the integration of distributed, and potentially more reliable, cost-effective and resilient energy sources. </p>
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Read more:
<a href="https://theconversation.com/how-to-get-more-electric-vehicles-on-the-road-88755">How to get more electric vehicles on the road</a>
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<p>In effect, Ontario seems to be announcing that it has no interest in being part of these technical and operational developments. </p>
<h2>Reducing real long-term costs</h2>
<p>If the Ford government is serious about reducing electricity costs in the long-term, the most sensible course would be to pause and take stock of the full range of options available to the province to meet its future electricity needs. </p>
<p>It must not only consider nuclear refurbishments, but also <a href="http://www.cleanairalliance.org/save/">importing electricity from Quebec</a>, implementing <a href="https://eco.on.ca/our-reports/energy/">conservation initiatives</a> and adding more <a href="http://www.100reontario.org/">renewable energy</a> to the grid. </p>
<p>The province should then choose its path forward based on the options that offer the lowest long-term economic and environmental costs and risks, and the greatest flexibility to respond to changing economic and environmental conditions.</p>
<p>Whether the Ford government can move beyond its current fixation on dismantling the previous government’s climate change strategy — and its apparently profound loathing of anything to do with renewable energy — to articulate a viable energy and hydro strategy that will protect Ontario consumers from future cost increases remains to be seen.</p><img src="https://counter.theconversation.com/content/100436/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Winfield receives funding from SSHRC, NSERC, George Cedric Metcalf Foundation, IESO.</span></em></p>Ontario Premier Doug Ford seems intent on dismantling the previous government’s energy strategy. But that may not protect consumers.Mark Winfield, Professor of Environmental Studies, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/998252018-07-12T20:17:02Z2018-07-12T20:17:02ZTaxpayers will back a carbon tax if they get a cheque in the mail<figure><img src="https://images.theconversation.com/files/227243/original/file-20180711-27036-1nytxjo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ontario Premier Doug Ford, seen here walking on the front lawn of the Ontario Legislature in June, is vowing to deliver on his campaign promise to scrap the "disastrous" cap-and-trade system and fight a federal carbon tax.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Frank Gunn</span></span></figcaption></figure><p>Ontario’s new premier, Doug Ford, is scrapping the province’s <a href="https://www.ontario.ca/page/cap-and-trade">cap-and-trade</a> program, designed to reward businesses that reduce their greenhouse gas emissions, as part of his promise to make gasoline more affordable. </p>
<p>Where does carbon policy in Canada’s most populous province go from here?</p>
<p>Climate change isn’t going away by ignoring it and doing nothing. While Ford, Saskatchewan Premier Scott Moe and federal Conservative leader Andrew Scheer all oppose carbon pricing, they do not offer any coherent alternative policies for mitigating climate change.</p>
<p>Under the current federal mandate, with no provincial policy in place, the federal government will enforce a <a href="https://www.canada.ca/content/dam/eccc/documents/pdf/20170518-2-en.pdf">backstop carbon levy</a> on recalcitrant provinces. This levy, charged on all fuels that emit greenhouse gases, is due to rise to $50 a tonne by 2022, a carbon price almost twice the predicted price of carbon permits in 2022 under Ontario’s cap-and-trade system, linked with <a href="https://www.arb.ca.gov/cc/capandtrade/capandtrade.htm">California</a> and <a href="http://www.mddep.gouv.qc.ca/changements/carbone/Systeme-plafonnement-droits-GES-en.htm">Québec</a>.</p>
<p>The federal government accepted Ontario’s cap-and-trade system because the predicted carbon reductions under it were at least as large as those under a unilateral carbon backstop. </p>
<p>The theory is that California, with its older energy infrastructure and a larger industrial base, would supply a large number of cheap permits, allowing Ontario and Québec to reduce global emissions at a lower cost than if they instituted a provincial carbon tax.</p>
<p>But there’s uncertainty if the national carbon policy will succeed against populist politicians like Doug Ford, who has vilified carbon pricing as <a href="https://torontosun.com/news/provincial/cap-and-trade-pumping-ontarians-dry-pc-leader-ford-says">“the biggest rip-off I’ve ever seen.”</a></p>
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<img alt="" src="https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=447&fit=crop&dpr=1 600w, https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=447&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=447&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=562&fit=crop&dpr=1 754w, https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=562&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/227245/original/file-20180711-27042-1yd656r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=562&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Jason Kenney is anti-carbon tax.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
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<p>Jason Kenney promises to rid Alberta of its broad-based carbon tax if elected premier of Alberta. If that happens, there will be very little provincial support for the federal plan. </p>
<p>This political challenge is probably larger than the legal challenge launched by Saskatchewan against the federal carbon price. The federal government has broad powers to institute nationwide taxation under the Constitution.</p>
<h2>Implementing a carbon tax differently</h2>
<p>If the Justin Trudeau government wishes to reassert its green credentials, it will have to implement its backstop policy even in the face of vociferous opposition from Ontario and Saskatchewan. But to keep broad support for the plan, it might also have to change the way it implements it.</p>
<p>British Columbia’s carbon tax survived political changes because it was conceived as revenue-neutral: Tax revenue is returned through low-income climate action tax credits and other reductions of personal and corporate income taxes. </p>
<p>As currently written in the legislation, all revenue generated from the backstop should remain in the province. However, instead of returning it to the provincial government, the federal government should return it directly to taxpayers (<a href="https://globalnews.ca/news/4315244/trudeau-carbon-tax-proceeds-ontario/">Trudeau also hinted at this after his first meeting with Ford</a>).</p>
<p>Each person, young or old, could receive an annual “carbon dividend” cheque. It would be impossible to denounce such a policy as “yet another tax grab.” </p>
<p>A carbon dividend also mitigates the most significant economic objection: That a carbon levy burdens poorer households disproportionately. Returning the revenue on a per-capita basis will correct this undesirable distributional effect. It is also a family-friendly policy, if children receive the same amount as their parents.</p>
<h2>Family of four could get big dividend</h2>
<p>In 2016, Ontario emitted 160 million tonnes of carbon dioxide. If a carbon price of $20 a tonne was applied to those emissions, the $3.2 billion revenue could be divided equally among Ontario’s 14.2 million residents. An Ontario family of four would receive an annual $900 cheque that could climb to over $2,000 in 2022 when the levy reaches $50 a tonne - an approximation because as the tax rises the tax base will shrink over time.</p>
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<img alt="" src="https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=423&fit=crop&dpr=1 600w, https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=423&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=423&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=531&fit=crop&dpr=1 754w, https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=531&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/227244/original/file-20180711-27045-7sphcx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=531&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Saskatchewan Premier Scott Moe is also opposed to a carbon tax.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Mark Taylor</span></span>
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<p>Canada has committed, through the Paris Agreement, to reduce carbon emissions to limit the increase of the global average temperature to 1.5°C above pre-industrial levels. That is a highly ambitious goal, and to meet Canada’s pledge, all provinces have to do their fair share to reduce carbon dioxide emissions. </p>
<p>Carbon pricing works, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2778868">as our own research shows</a>. Per-capita fuel consumption decreases in response to permanent increases in fuel and carbon taxes. Much of the traction comes from purchasing more fuel-efficient vehicles, and some from driving less or switching to other modes of transportation. Industry and households adjust likewise. </p>
<p>But the economic logic of carbon pricing is lost on voters if they only see what they will pay and not what they will get in return. A “carbon dividend” is Canada’s best hope to defend a much-needed climate change policy against resistance from antagonistic provincial governments.</p><img src="https://counter.theconversation.com/content/99825/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Werner Antweiler receives funding from the Social Sciences and Humanities Research Council of Canada (SSHRC). Professor Antweiler is also a director of the Canadian Economics Association.</span></em></p><p class="fine-print"><em><span>Sumeet Gulati receives funding from the Social Sciences and Humanities Research Council of Canada. </span></em></p>Ontario and Saskatchewan are vociferously fighting the federal government’s carbon tax efforts. But rather than back down, Ottawa should embrace a simple, fair and transparent “carbon dividend.”Werner Antweiler, Associate Professor, University of British ColumbiaSumeet Gulati, Professor, University of British ColumbiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/938502018-04-03T22:56:04Z2018-04-03T22:56:04ZWant a richer pension? Divest of fossil fuels<figure><img src="https://images.theconversation.com/files/214765/original/file-20180413-47416-1moyodf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Suncor's plant in the oilsands in Fort McMurray Alta. Divesting in fossil fuels can not only help combat climate change, but can also increase investors’ returns, according to a new analysis. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jason Franson</span></span></figcaption></figure><p>After several years without an increase in greenhouse gas emissions, <a href="https://www.nature.com/news/world-s-carbon-emissions-set-to-spike-by-2-in-2017-1.22995">the world experienced a spike in 2017</a> even though many governments had promised to cut their emissions. </p>
<p>Some NGOs, including <a href="https://350.org/">350.org</a> and <a href="https://www.divestinvest.org/">DivestInvest</a>, promote divestment from the fossil fuel sector as a way to reduce carbon emissions. Furthermore, some investors like Quebec’s <a href="https://www.theglobeandmail.com/report-on-business/caisse-targets-climate-change-with-new-investment-plan/article36642583/">Caisse Depot</a> and <a href="https://cop23.unfccc.int/news/new-york-city-to-divest-pension-funds-of-fossil-fuels">The New York City Pension Funds</a> have announced that they plan to reduce their fossil fuel investments or divest totally from the sector.</p>
<p>This movement is also part of private and <a href="https://ec.europa.eu/clima/news/sustainable-finance-commissions-action-plan-greener-and-cleaner-economy_en">governmental efforts to connect the financial sector with climate finance</a> by both divesting from fossil fuels and reinvesting in a low-carbon economy.</p>
<p><a href="https://doi.org/10.1177/1086026617744278">Though the divestment movement’s outreach goes beyond direct financial impacts</a>, questions remain about the financial and carbon-related consequences of divestment. </p>
<h2>Pensions in danger?</h2>
<p>Without knowing the answers to these questions, institutional investors, such as pension funds, are at risk with regard to fiduciary duty. Some beneficiaries will rightfully ask whether they’ll lose parts of their pension if their pension fund divests from fossil fuels.</p>
<p>What’s more, it’s still unclear what types of investment strategies are able to significantly reduce the <a href="https://www.carbonfootprint.com/">carbon footprint</a> of financial portfolios. </p>
<p>Finally, it’s important to understand the consequences of divestment in a fossil fuel-heavy market like Canada. Many argue that divestment in a small and concentrated market increases financial risks.</p>
<p>In a <a href="https://uwspace.uwaterloo.ca/handle/10012/13043">recent study at the University of Waterloo</a>, we analyzed what happens if different divestment strategies are applied to the Canadian stock index <a href="https://www.tsx.com">TSX 260</a>. Other studies addressing the U.S. market have had similar results.</p>
<p>We simulated six different divestment strategies presented in the table below, and assessed the financial and carbon-related consequences. The strategies in the table are ranked from low to high by the number of stock divested.</p>
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<img alt="" src="https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=318&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=318&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=318&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=400&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=400&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212273/original/file-20180327-109190-fhr81h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=400&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption"></span>
<span class="attribution"><span class="source">Author provided</span></span>
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</figure>
<p>In our simulation, we took the divested funds and distributed them into the remaining sectors. We then used a <a href="https://en.wikipedia.org/wiki/Carhart_four-factor_model">commonly used stock-market model</a> that predicts whether prices for individual stocks are likely to move up or down. Our simulation showed that after divestment, the value of the portfolio continued to grow, and performed better than the TSX 260.</p>
<p>The following graph compares the financial returns of the different divestment strategies and the original benchmark TSX 260. The black line represents the TSX 260. The other lines show the financial performance of the different investment strategies. The divestment portfolios out-perform the Canadian benchmark with regard to risk-adjusted financial returns.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=329&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=329&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=329&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=413&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=413&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212270/original/file-20180327-109204-1txt1xz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=413&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Risk-adjusted returns of the divestment portfolios and the benchmark TSX 260 (black line)</span>
</figcaption>
</figure>
<p>After demonstrating that divestment portfolios out-perform the Canadian benchmark financially, we present the effect of divestment on the actual carbon footprint of the various divestment strategies. </p>
<p>The carbon footprint consists of the carbon equivalent emissions (CO₂e) of the invested firms per millions of dollars in sales. For instance, if an investor invests money in a high carbon-emitting industry, such as fossil fuels, the carbon footprint of the portfolio is also high. Investing in low-emitting industries results in a portfolio with a low carbon footprint.</p>
<p>The carbon footprint chart below shows the CO₂e emissions of the different divestment strategies, and the benchmark. It demonstrates that excluding all fossil fuel-related industries, including utilities, creates the biggest reduction of the carbon footprint at 77 per cent.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=463&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=463&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212271/original/file-20180327-109207-14io7os.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=463&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">CO₂e footprint of the benchmark TSX 260 and different divestment strategies.</span>
</figcaption>
</figure>
<p>Though this study addressed the Canadian market, similar studies exist for the U.S. market that suggest similar results. <a href="https://doi.org/10.1016/j.ecolecon.2017.11.036">One analysis used data</a> on all listed and delisted U.S. common stocks between 1927 and 2017 found a moderate outperformance of divested portfolios compared to conventional benchmarks. </p>
<p><a href="https://doi.org/10.1016/j.gfj.2017.10.004">Another 2017 study</a> using a range of measures based on S&P 500 industry sectors found that portfolios that divest from fossil fuels and utilities and invest in clean energy perform better than those with fossil fuels and utilities.</p>
<p>The results of our study suggest the following: Divestment increases risk-adjusted financial returns even in a fossil fuel-heavy financial market such as Canada. </p>
<p>And so the <a href="https://www.riacanada.ca">socially responsible investment</a> strategy that is mainly ethically driven also happens to be beneficial from a financial point of view. </p>
<p>Therefore, it can also be applied by investors that are bound to <a href="http://www.thecanadianencyclopedia.ca/en/article/law-of-fiduciary-obligation/">fiduciary duty</a>. Pensioners don’t need to fear their pension income will be reduced if their pension fund managers opt to divest from the fossil fuel sector.</p>
<p>In addition, divestment helps to reduce the carbon footprint of investment portfolios. This reduction <a href="http://www.corporateknights.com/reports/2016-eco-fund-rating/digging-into-the-eco-fund-ratings-14530788/">lessens the exposure to carbon- related financial risks</a>, such as the risk of being exposed to costly carbon-related regulations, taxes or mandatory cap-and-trade markets.</p>
<p>Furthermore, divestment strategies create portfolios that attract ethical investors. These types of investors want to reduce their participation in the fossil-fuel industry because of climate change concerns.</p>
<p>Though divestment should not be the only way for investors to <a href="https://www.investmentexecutive.com/inside-track_/dustyn-lanz/making-sense-of-the-debate-on-fossil-fuel-divestment/">address climate change</a>, it seems effective in reducing financial risks, in helping people to invest ethically — and even to increase financial returns.</p><img src="https://counter.theconversation.com/content/93850/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Olaf Weber receives funding from Social Science and Humanities Research Council (SSHRC). </span></em></p><p class="fine-print"><em><span>Chelsie Hunt receives funding from Social Science and Humanities Research Council (SSHRC)</span></em></p>A recent study suggests that divesting in fossil fuels not only allows investors to address their climate change concerns, it also reduces financial risks and increases financial returns.Olaf Weber, Professor of Sustainable Finance and Banking, University of WaterlooChelsie Hunt, Project Manager, Monitoring and Impact Measurement, University of WaterlooLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/878032017-11-20T14:06:17Z2017-11-20T14:06:17ZSetting the right price for carbon: five questions for economist Nicholas Stern<figure><img src="https://images.theconversation.com/files/195462/original/file-20171120-18566-173yw99.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Map of the world's CO₂ emissions for 2016. China, the United States, tne European Union, and India are the largest emitters. </span> <span class="attribution"><a class="source" href="http://www.globalcarbonatlas.org/en/CO2-emissions">World Carbon Atlas</a></span></figcaption></figure><p><em>The economist Nicholas Stern, who became world famous for his <a href="http://www.lse.ac.uk/GranthamInstitute/publication/the-economics-of-climate-change-the-stern-review/">2006 report</a> on the dramatic but foreseeable consequences of climate change, spoke on November 2 at the Veolia Institute’s 10th conference in Oxford, England, <a href="https://www.institut.veolia.org/en/what-we-do/international-conferences/resource-availability-low-carbon-world">“Resource Availability in a Low-Carbon World”</a>. The Conversation France asked him about recent developments in the transition of the world toward an economy adapted to climate change.</em></p>
<hr>
<p><strong>Two years after the Paris Agreement, what do you see as key issues – positive or negative – in the fight against climate change?</strong></p>
<p>Over the past two years, we have seen a continuation of the remarkable changes in the technology relating to energy generation and storage and transport, such as further falls in the costs of renewables. Strong action is being undertaken in the emerging market countries, including China and India. These countries are now at centre stage in the global economy and are demonstrating that strong and inclusive growth and the transition to a low-carbon economy go hand-in-hand. There has also been strong leadership from many cities where the transition to a low-carbon economy and concerns about air pollution have together led to a vision for more attractive and productive places to live and work. Vacillation in Washington, DC, has not deterred action around the world. Indeed President Trump’s announcement in June that he intends to <a href="https://theconversation.com/why-trumps-decision-to-leave-paris-accord-hurts-the-us-and-the-world-78707">withdraw the United States from the Paris Agreement</a> appears to have reinforced the commitments by other countries, as well as American states and cities, to get on with the job of implementation.</p>
<p><strong>Carbon pricing has become central to this fight. Can you explain why?</strong></p>
<p>It is crucial that markets provide a signal about costs if they are to guide economic action in positive ways, leading to the efficient allocation of resources. This means that the prices of goods, services and activities should reflect their real costs, including the costs they impose on others through the damages that they cause. By ensuring that the prices of fossil fuels reflect their true costs, policymakers help markets to operate more effectively. Carbon pricing is a pro-market action, and those who oppose it are anti-markets. The costs of climate change are potentially very large, and calculations of the social cost of carbon should reflect impacts across the world and on future generations, who could be impoverished by our failure to act.</p>
<p><strong>In your last report, published in May 2017, you argue that a carbon price should be set between 40 and 80 dollars per tonne in 2020 and between 50 and 100 dollars per tonne in 2030. How did you arrive with these specific price ranges?</strong></p>
<p>The <a href="https://static1.squarespace.com/static/54ff9c5ce4b0a53decccfb4c/t/59244eed17bffc0ac256cf16/1495551740633/CarbonPricing_Final_May29.pdf">High-Level Commission on Carbon Prices</a>, which I co-chaired with Professor Joseph Stiglitz, was convened by the Carbon Pricing Leadership Coalition in November 2016 at the United Nations climate-change summit in Marrakech. The Commission was set the task of examining the role of carbon pricing in achieving the goals of the Paris Agreement. The Commission identified these prices, together with other supporting incentives and policies, which could deliver the Agreement’s targets. These ranges were based on our survey of industry and policy experience, and of the expert literature. We considered data and information from companies in relation to what prices would change their decisions. We also examined models of switching technologies, as well as more aggregated models. The Commission recognised that the appropriate levels of carbon pricing will vary across countries. For instance, in lower-income countries carbon prices may be lower than the ranges identified by our report, partly because complementary actions may be less costly and the distributional and ethical issues may be more complex.</p>
<p><strong>Carbon pricing is today most commonly thought of as taking place ether through carbon taxes or a market-based quota system. Why are you in favour of carbon taxes?</strong></p>
<p>There are good arguments in favour of using either taxes or carbon markets to create an explicit price on carbon. Taxes are probably simpler to administer by policy-makers. Cap-and-trade systems allow emissions cuts to be specified, but the associated carbon prices that result are uncertain. On the other hand, carbon taxes allow prices to be directly implemented, but the resulting emissions reductions are uncertain. In some cases, policy-makers have to consider the different perceptions among households and businesses of market-based systems and taxes. The Commission’s report also pointed out that carbon pricing can be implemented by embedding notional carbon prices in, among other things, financial instruments and incentives that foster low-carbon programmes and projects. Explicit carbon pricing can be usefully complemented by shadow pricing in public sector activities and internal pricing in firms. Fossil fuel subsidies should also be taken into account because they are equivalent to a negative carbon price.</p>
<p><strong>Currently more than 85% of CO<sub>2</sub> emissions are unconstrained by any specific pricing. How can we explain such a situation? Why has it taken so long to establish and implement a price for carbon emissions?</strong></p>
<p>The Commission acknowledged that 85% of global emissions of greenhouse gases are currently not priced, and about three-quarters of the emissions that are covered by a carbon price are priced below 10 dollars per tonne of carbon-dioxide-equivalent. However, the coverage of carbon prices is increasing, but it is not the only policy that needs to be considered. Many countries have regulation in place too and are planning ahead, for example, about when to phase out automobiles fuelled by hydrocarbons. As countries raise the ambition of their nationally determined contributions to the Paris Agreement, and implement them, we will see more carbon pricing schemes introduced.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/7XQ-M7MXmjU?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Presentation by Nicholas Stern at the Veolia Institute’s international conference (November 2, 2017).</span></figcaption>
</figure><img src="https://counter.theconversation.com/content/87803/count.gif" alt="The Conversation" width="1" height="1" />
Consistent carbon pricing is a key element in the fight against climate change.Jennifer Gallé, Cheffe de rubrique Environnement + Énergie, The Conversation FranceLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/713142017-01-31T02:24:12Z2017-01-31T02:24:12ZHere’s a better way to regulate carbon – and change the tired environment-versus-economy debate<figure><img src="https://images.theconversation.com/files/154668/original/image-20170130-29594-1d1r2oc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If carbon regulations restrict how much a company can pollute where it's located, it could move operations (and jobs) to another country – with no reduction in emissions. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/billy_wilson/3301803046/in/photolist-62LB1J-646xUq-5ZUDyw-66FWem-pXJEje-63euTz-646uyJ-642itx-2EhiU6-7C1sqe-8QDgL7-8QAbv8-dAsUGY-642eeH-8dbc9w-dAsUSQ-7C1ss2-2Kyafz-bGE88-8QAbb6-8QAb4M-dAsUR1-5jR5UN-ApgcSM-A3Trar-ACySzQ-wsCkQ8-A42vdR-A42uDe-AXBLYb-AmWVPk-AXBN8f-AYJsXN-AmXcQE-AmX8ZJ-A3Tr71-AHitgS-A42wbn-AYJrYo-AZVbSB-AZV9CX-B1U8ur-AHisVm-34f78e-34f6F4-a1eFx7-8LvGss-6jVVFJ-AXBJNu-AHiprY">billy_wilson/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Is it possible to reduce carbon emissions without hurting economic growth and destroying jobs? </p>
<p>The recent <a href="http://www.pbs.org/newshour/rundown/10-executive-actions-trump-signed-far/">spate of executive orders</a>, including one to pause current environmental reviews for infrastructure projects and another to <a href="http://thehill.com/homenews/administration/316839-trump-to-sign-order-reducing-regulations">revoke two regulations for every new one requested</a>, suggests the White House sees regulations as job killers. </p>
<p>And indeed, some regulatory approaches are problematic. For example, if companies are required to reduce the greenhouse gases they generate in a given territory, a company could simply relocate its emission-intensive activities to countries with less stringent rules. Consequently, emission-reducing regulations get branded as job killers, and emissions won’t necessarily go down anyway.</p>
<p>Others argue that regulations that impose limits on carbon emissions can actually benefit the economy by spurring clean technology innovations and creating green jobs. Jobs in coal mining might decline, but <a href="http://www.eesi.org/papers/view/fact-sheet-jobs-in-renewable-energy-and-energy-efficiency-2015">new jobs</a> will be created in solar and wind energy, the reasoning goes. </p>
<p>The problem is that the new jobs may <a href="https://www.thesolutionsjournal.com/article/we-feel-your-pain-environmentalists-coal-miners-and-embedded-environmentalism/">not be located around coal fields</a>. And even if they are, coal miners may not have the skills, or may find it difficult to acquire them quickly, <a href="https://theconversation.com/as-coal-mining-declines-community-mental-health-problems-linger-60094">to effectively tap into the opportunities created by solar and wind energy industries</a>. </p>
<p>Is there a way out of this economy-versus-environment debate? Yes: <a href="https://mitpress.mit.edu/books/confronting-consumption">consumption-based policies</a>. These policies are designed to discourage the consumption of carbon-intensive products and services. </p>
<p>They can take different forms. Governments can enact carbon consumption taxes, which tax products on their carbon intensity, irrespective of where they were produced. This would require a carbon tax at home, and border adjustment tax on imports. To mobilize the support of the business community, the carbon tax might be designed to be <a href="https://yeson732.org/">revenue-neutral</a>: that is, accompanied by tax cuts elsewhere. In the private sphere, firms could join programs that require them to display carbon labels that indicate the amount of carbon emitted in the production of consumer products. </p>
<p>Politically, a consumption-based approach will level the playing field between domestic and foreign producers, and move us away from the unproductive debate on the relationship between environmental regulations and economic growth. Ecologically, it can help us reduce our carbon footprint.</p>
<h2>Environmental regulations and economic cost</h2>
<p>Since the 1970s, politicians – typically Republicans – have been alleging that environmental regulations <a href="http://www.thenewatlantis.com/publications/the-conservative-record-on-environmental-policy">kill jobs and hurt economic growth</a>. On Jan. 11, 2017, the U.S. House of Representatives passed the most recent incarnation of a bill, <a href="https://www.congress.gov/bill/115th-congress/house-bill/5">Regulatory Accountability Act of 2017</a>, to reform how federal regulatory agencies create and enforce new rules. This bill seeks to streamline the regulatory process, which the Congress believes is inefficient, high-cost, and run by an unelected bureaucracy. </p>
<p>Alongside, President Trump has nominated several individuals who are deeply skeptical of regulations, specifically <a href="https://theconversation.com/can-legal-activist-scott-pruitt-undo-clean-air-and-water-protections-as-head-of-epa-70127">environmental regulations</a>. Trump views his choice to head the EPA, Scott Pruitt, as “<a href="http://www.usatoday.com/story/news/nation-now/2016/12/09/trumps-epa-pick-rejects-climate-science-fights-fossil-fuels/95231986/">a national leader against the EPA’s job-killing war on coal</a>.”</p>
<p>One of the <a href="https://www.researchgate.net/publication/259418659_Trade_Competition_and_Environmental_Regulations_Domestic_Political_Constraints_and_Issue_Visibility">arguments</a> for this type of antiregulatory stance is that environmental regulations encourage pollution-intensive industries to move to lightly regulated developing countries, the so-called <a href="https://www.researchgate.net/publication/222401625_Moving_to_Greener_Pastures_Multinationals_and_the_Pollution_Haven_Hypothesis">pollution haven hypothesis</a>. Critics also suggest that regulations stifle innovation and harm productivity, and consequently make American firms uncompetitive in global markets.</p>
<p>In contrast, supporters of regulations allege that critics exaggerate compliance costs and underemphasize <a href="https://theconversation.com/are-tighter-epa-controls-on-mercury-pollution-worth-it-53551">health and other benefits of clean air</a> and water. For example, the industry’s estimates of the cost of <a href="http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1997030700">1990 sulfur dioxide regulation</a> was 15 times the actual cost. </p>
<p>Also, some suggest that properly designed regulations can actually spur innovation, the so-called <a href="http://www.jstor.org/stable/2138392?origin=JSTOR-pdf&seq=1#page_scan_tab_contents">Porter-Linde</a> hypothesis. Because pollution represents resource waste issue, any policy to reduce waste will increase profits. Regulatory limits on the amount of <a href="http://www.ibtimes.com/energy-companies-seek-ways-capture-natural-gas-north-dakota-oil-boom-1557877">methane gas leakage</a> from the oil and gas operations, for example, would benefit both the environment and the industry since it helps conserve a valuable commodity.</p>
<h2>Consumption and emissions</h2>
<p>Meanwhile, some scholars have suggested the entire regulation-growth debate is less relevant anyway because of what economists call “decoupling.” While higher energy use has historically translated into higher growth for a nation’s economy, there are signs this close correlation, or coupling, is weakening. This decoupling suggests economies can continue to grow even as the amount of energy needed declines – a point even President Obama echoed in a <a href="http://science.sciencemag.org/content/early/2017/01/06/science.aam6284">recent article</a> on clean energy. </p>
<p>A recent <a href="https://www.brookings.edu/research/growth-carbon-and-trump-state-progress-and-drift-on-economic-growth-and-emissions-decoupling/#fullreport">Brookings</a> study, for example, found that in the U.S. between 2000-2014, more than 30 states have delinked their growth and carbon emissions. Regulatory efforts such as renewable portfolio standards, which require electricity companies to use renewable energy, as well as natural gas replacing coal for power generation, have contributed to the decoupling. </p>
<p>But this emphasis on decoupling ignores how regulations influence the carbon footprint of our consumption patterns. <a href="http://www.oecd.org/sti/ind/carbondioxideemissionsembodiedininternationaltrade.htm">Scholars</a> have found the emissions from consumption of products in developed countries exceed the emissions generated in production and transportation of those products. In other words, emissions from burning gasoline are attributed to me when I drive a car. But emissions generated in the process of manufacturing this car abroad are not attributed to me. This sort of carbon fudging does not help the cause of mitigation.</p>
<p>And suppose regulations lead firms to relocate their emission-causing activities abroad, and we begin to import their products instead of producing them at home. In this case our carbon footprint has not come down. Scholars call these “<a href="http://www.mdpi.com/2071-1050/6/6/3722/htm">carbon leakages</a>.” </p>
<p>We saw this occur with the United Nations’ <a href="http://unfccc.int/kyoto_protocol/items/2830.php">Kyoto Protocol</a> to reduce greenhouse gases. Because it established mandatory territorial-based emission reduction targets for developed countries only, it created an incentive for businesses to move their emission-intensive activities to countries with no mandatory targets. This supports the “regulations as job killers” argument.</p>
<h2>Confronting carbon in consumption</h2>
<p>Consumption-focused policies such as carbon taxes and carbon labels can help in reducing carbon leakages – if the market system allows consumers to make informed choices and creates incentives for producers to respond to these choices. </p>
<p>Suppose, for example, the U.S. imposed a carbon tariff on steel imported from China because the Chinese steel mills use obsolete, energy-intensive blast furnaces. Would global trade treaties and the <a href="http://www.climateadvisers.com/wp-content/uploads/2014/01/2013-07-Changing-Climate-for-Carbon-Taxes.pdf">World Trade Organization</a> allow tariffs (or border tax adjustments) on imported products made with different production technologies? While the legality of carbon tariffs is a complex issue, some suggest that as long as such carbon taxes maintain a level playing field between domestic and foreign producers, they <a href="http://www.rff.org/files/document/file/RFF-PB-16-02.pdf">might be</a> compatible with existing trade regimes. </p>
<p><a href="http://www.cambridge.org/gb/knowledge/isbn/item1162832/?site_locale=en_GB">Company-led regulatory efforts</a> such as <a href="http://www.rff.org/files/sharepoint/WorkImages/Download/RFF-DP-12-09.pdf">labels</a> that indicate the carbon footprint of consumer products can succeed if consumers have accurate information and act on it. This is an area where the environmental movement could make great impact. Even if a small subset of consumers can begin to take environmentally responsible action, instead of expecting the government to do so, it could motivate corporate action. Think of organic food, which initially appealed to a small section of population only. But the organic movement has now spread beyond Whole Foods; <a href="https://www.thebalance.com/organic-retailers-in-north-america-2011-2538129">Wal-Mart</a> is now the biggest organic retailer in the U.S. </p>
<p>This is not to say that environmentalists should no longer push for regulations such as the EPA Clean Power Plan to reduce carbon emissions from power plants. Yet, advocacy strategies must be tempered with political realities. </p>
<p>Furthermore, carbon labels are often voluntary efforts by private companies that do not need regulatory approval, and a consumption-based carbon tax can be enacted at the state level, even at the city level. For example, the province of British Columbia enacted its own revenue-neutral <a href="http://www.sciencedirect.com/science/article/pii/S0928765515000317">carbon tax</a>, which was offset by tax cuts in other parts of the economy. This local or regional approach can be especially important in the Trump era, where the federal government is expected to be hostile to mitigation efforts. </p>
<p>The decoupling argument misleads us into believing that we can continue with our carbon-profligate lifestyle and yet enjoy economic growth. A carbon consumption tax, by contrast, will discourage the use of carbon-intensive goods irrespective of whether they are manufactured at home or abroad. If it is made revenue-neutral, then the political opposition to this tax will be lower. Importantly, this tax can move us away from the unproductive debate that pits the economy against the environment.</p><img src="https://counter.theconversation.com/content/71314/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two environmental policy experts offer a more politically palatable way to lower carbon emissions – based on consumption, not conventional regulation.Nives Dolsak, Professor of Environmental Policy, University of WashingtonAseem Prakash, Walker Family Professor and Founding Director, Center for Environmental Politics, University of WashingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/609302016-06-15T20:10:22Z2016-06-15T20:10:22ZCould ‘nitrogen trading’ help the Great Barrier Reef?<figure><img src="https://images.theconversation.com/files/126669/original/image-20160615-22404-19ouodq.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A market that lets sugar cane farmers trade 'nitrogen permits' could help keep a cap on fertiliser use.</span> <span class="attribution"><span class="source">iStock</span>, <span class="license">Author provided</span></span></figcaption></figure><p>Among the increasing sums of money being pledged to help save the Great Barrier Reef is a federal government pledge to spend <a href="http://www.malcolmturnbull.com.au/media/coalition-to-deliver-1-billion-boost-to-protect-great-barrier-reef">A$40 million</a> on improving water quality. The Queensland government has promised another <a href="http://statements.qld.gov.au/Statement/2016/5/25/reef-water-science-taskforce-report-guides-90m-investment">A$33.5 million</a> for the same purpose. </p>
<p>One of the biggest water-quality concerns is <a href="http://www.gbr.qld.gov.au/taskforce/">nitrogen runoff</a> from fertiliser use. It is a concern all along the reef coast, and particularly in the sugar-cane regions of the Wet Tropics and the Burdekin. The government’s <a href="https://www.environment.gov.au/marine/gbr/long-term-sustainability-plan">Reef 2050 Long Term Sustainability Plan</a> calls for an 80% reduction in dissolved inorganic nitrogen flowing out onto the reef by 2025. </p>
<p>Our recent <a href="http://nesptropical.edu.au/index.php/round-1-projects/project-2-2/">research</a> suggests that “nitrogen trading” might be worth considering as a flexible economic mechanism to help farmers deliver these much-needed reductions in fertiliser use.</p>
<h2>What is nitrogen trading?</h2>
<p>You probably already know about <a href="https://theconversation.com/au/topics/emissions-trading-scheme">carbon trading</a>, which allows polluters to buy the right to emit greenhouse gases from those with spare carbon credits. Nitrogen trading would work in a similar way, but for fertiliser use.</p>
<p>A nitrogen market could offer a flexible way of encouraging farmers to use fertiliser more efficiently, as well as rewarding innovations in farming practice. It could be a useful addition to existing fertiliser-reduction schemes such as the industry-led <a href="https://www.smartcane.com.au/LatestNews/LatestNews.aspx">Smart Cane Best Management Practice</a>. These are making headway but <a href="http://www.gbr.qld.gov.au/documents/gbrwst-interim-report-highres.pdf">evidently not enough</a>.</p>
<p>A nitrogen market isn’t going to happen tomorrow, but it could be part of <a href="http://www.gbr.qld.gov.au/documents/gbrwst-finalreport-2016.pdf">a future in which an annual limit</a> (called a cap) is set on the total amount of nitrogen flowing out from river catchments to the reef. </p>
<p>One way to enforce this cap would be to set a limit on fertiliser applications per hectare. Cane farmers would have to manage the best they could with that fixed amount of nitrogen.</p>
<p>But nitrogen trading would offer more flexibility, while still staying under the same total nitrogen cap. Instead of a fixed limit, farmers would receive a certain number of “nitrogen permits” per hectare of cane. Then, if they wanted or needed to, they could buy or sell these permits through a centralised online “<a href="https://en.wikipedia.org/wiki/Smart_market">smart market</a>”.</p>
<h2>How would it work?</h2>
<p>Imagine you’re a farmer with a property that sits on good soil. The amount of fertiliser you can apply to your crop must match the number of nitrogen permits you hold. But you know that, on your good land, you would get more profits if you could apply more fertiliser. </p>
<p>To do this you would have to buy extra permits through the nitrogen market. These extra permits would be worth buying as long as they deliver more than enough extra profit to cover the cost.</p>
<p>The total number of permits is limited by the cap – so buyers can only buy extra permits if other farmers are selling them. So who’s selling?</p>
<p>Putting fertiliser onto a field with poor soil won’t increase your profits as much, because a lot of that fertiliser will just run off before the crop can use it. On a bad paddock, nitrogen permits aren’t worth much in terms of extra crop yield, so you might make more money by just selling them to other farmers with good paddocks. That is why trading happens.</p>
<p>The overall effect of this trading would be to switch a significant amount of nitrogen fertiliser away from less profitable, leaky soils, and onto more profitable, less leaky land. As a result, the total nitrogen cap would be distributed more efficiently across the farming landscape. </p>
<p>For individual farmers, the reward for low-nitrogen farming practice is the opportunity to sell unused permits at a profit. This incentive will help to drive ongoing improvement and innovation. </p>
<p><a href="http://nesptropical.edu.au/index.php/round-1-projects/project-2-2/">Our simulations</a> suggest that overall sugar cane profits and production would be higher with trading than they would under a fixed per-hectare nitrogen limit – with the same overall cap on the amount of nitrogen hitting the Great Barrier Reef.</p>
<h2>Opportunity for the future?</h2>
<p>Will it just mean more expensive regulation, green tape and hassle for farmers? Farmers are already signing up to calculate and <a href="https://www.smartcane.com.au/LatestNews/LatestNews.aspx">record actual fertiliser applications paddock by paddock</a> under the <a href="http://www.sugarresearch.com.au/icms_docs/158108_Six_Easy_Steps_nutrient_management_completed.pdf">Six Easy Steps</a> nutrient management program. </p>
<p>If we’re in a future where the government is monitoring and managing a fixed nitrogen cap anyway, then not much extra work is needed to set up an online trading market.</p>
<p>So could nitrogen trading help the Great Barrier Reef? Maybe. There’s more thinking still to be done, but nitrogen trading schemes are already operating in <a href="http://www.waikatoregion.govt.nz/Community/Your-community/For-Farmers/Taupo/Nitrogen-management-in-the-Lake-Taupo-catchment/">New Zealand</a> and the <a href="http://www.mdnutrienttrading.com/">United States</a>. </p>
<p>A firm overall limit on fertiliser use seems to be <a href="https://theconversation.com/cloudy-issue-we-need-to-fix-the-barrier-reefs-murky-waters-39380">essential for the reef’s survival</a>. The incentives provided by a nitrogen market could give Queensland’s farmers the flexibility they need to thrive in this nitrogen-constrained future.</p>
<p><em>Graeme Curwen and
Michele Burford of the <a href="https://www.griffith.edu.au/environment-planning-architecture/australian-rivers-institute">Australian Rivers Institute</a> at Griffith University contributed to the research on which this article is based.</em></p><img src="https://counter.theconversation.com/content/60930/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jim Smart receives funding from the National Environmental Science Program - Tropical Water Quality Hub and Seqwater.</span></em></p><p class="fine-print"><em><span>Adrian Volders receives funding from the National Environmental Science Program - Tropical Water Quality Hub. </span></em></p><p class="fine-print"><em><span>Chris Fleming receives funding from the National Environmental Science Program - Tropical Water Quality Hub, the National Climate Change Adaptation Research Facility, the Australian Government Department of the Environment and the Worldwide Wildlife Fund.</span></em></p><p class="fine-print"><em><span>Syezlin Hasan receives funding from the National Environmental Science Program - Tropical Water Quality Hub.</span></em></p>You’ve heard of cap-and-trade schemes for greenhouse gases. Perhaps we also need one to limit the amount of fertiliser runoff onto the Great Barrier Reef.Jim Smart, Senior Lecturer, Griffith School of Environment, Griffith UniversityAdrian Volders, Adjunct Professor, Griffith UniversityChris Fleming, Associate Professor, Griffith UniversitySyezlin Hasan, Research Assistant, Australian Rivers Institute, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/481592015-09-26T04:29:12Z2015-09-26T04:29:12ZChina announces national emissions trading scheme – experts react<p>China has confirmed that it will launch its <a href="http://www.scmp.com/news/china/policies-politics/article/1861561/china-confirms-2017-launch-national-emission-trading">national emissions trading scheme</a>.</p>
<p>In a <a href="https://www.whitehouse.gov/the-press-office/2015/09/25/us-china-joint-presidential-statement-climate-change">joint US-China climate statement</a>, issued as part of President Xi Jinping’s state visit to the United States, China confirmed that its new trading sytem will cover “key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making, and nonferrous metals”.</p>
<p>Below, our experts react to the development.</p>
<hr>
<p><strong>John Mathews, Professor of Strategic Management, Macquarie Graduate School of Management, Macquarie University</strong></p>
<p>Xi Jinping is scoring a propaganda coup by announcing China’s intention to introduce a national cap-and-trade scheme in 2017, while he is a guest of Obama at the White House. It will not be lost on observers that China will be introducing the very kind of scheme that failed to get through the US Congress, passing the House but being <a href="http://www.theguardian.com/environment/2010/jul/23/us-senate-climate-change-bill">defeated in the Senate</a>. </p>
<p>How interesting that China the communist country is introducing the kind of market-based emissions trading scheme that the United States was unable to launch.</p>
<p>There are two further points to make. The first is that China is introducing its national scheme after trying out various options as local and city-level experimental schemes over the past couple of years. In 2012, pilot programs were initiated in seven provinces, and have been closely monitored since. Here China is teaching the world a lesson in how to introduce reform: first try it out at a small scale in a variety of forms, and then scale up the most successful. </p>
<p>Second, China is not relying on these market-led cap-and-trade initiatives alone. It is also reducing coal consumption in its power sector through direct state intervention, and has been actively promoting solar photovoltaic and wind power through state-guided targeted investment, national planning, and local promotion programs. So the new scheme will take its place as an initiative that helps to solidify China’s trajectory towards greening its energy systems – after direct state action has done the heavy lifting.</p>
<p><strong>Anita Talberg, PhD candidate, Australian-German Climate and Energy College, University of Melbourne</strong></p>
<p>China’s greenhouse gas emissions represent a quarter of the global total. For this reason alone, any tangible progress on Chinese climate action is encouraging. However, what is more promising is what a Chinese emissions trading scheme could mean for the world. </p>
<p>To date we have only seen pockets of <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/2012-2013/EmissionsTradingSchemes#_Toc358272223">emissions trading across the globe</a>; most notably the EU has had a scheme since 2004 and a Californian system has been operating since 2013. Despite concerted efforts, there has been very little headway in linking regional emissions trading schemes. This is because carbon credits would become fungible. </p>
<p>So if one market crashes, so do the connected markets. The entire system is only as strong as the safeguards in the weakest market. The environmental effectiveness of the entire system is only as credible as the monitoring and verification in the least stringent scheme. </p>
<p>The EU and the rest of the world will be looking closely at the integrity and robustness of the Chinese market’s design. If China gets it right, and can elicit enough buy-in, it could represent a turning point for climate change.</p>
<p><strong>Peter Christoff, Associate Professor, School of Geography at University of Melbourne</strong></p>
<p>The announced introduction of China’s national emissions trading scheme in 2017 places irresistible pressure on Malcolm Turnbull to revisit the issue of an Australian ETS.</p>
<p>When China joins the European Union (the world’s third biggest aggregate emitter) and a number of other major emitting countries and states using cap-and-trade schemes to help cut emissions, some 40% of total global emissions will be covered by carbon markets. </p>
<p>Tellingly, Chinese President Xi Jinping made his announcement at a joint White House Press Conference with President Obama. Together they emphasised how the world’s two largest emitters are now collaborating closely to tackle global warming. Pressure is building within the US to create a national integrated scheme on the foundations of its regional efforts, and other major emitters, like Brazil and Russia, are contemplating similar measures.</p>
<p>Australia’s Direct Action Plan cannot easily be linked to this growing global carbon market. Its underfunded “reverse auction” process cannot acquire sufficient emissions to meet even Australia’s 2020 target. Its “safeguard mechanism” is unlikely to require major Australian emitters to reduce their emissions significantly. Australia is now transparently out of step with global trends and, relying only on current measures, incapable of meeting the tougher mitigation targets which will be required of it in the near future. </p>
<p><strong>David Hodgkinson, Associate Professor, Faculty of Law, University of Western Australia</strong></p>
<p>The Chinese government’s announcement of a 2017 national ETS is not surprising. Since 2011 China has been piloting seven trading schemes in cities including Beijing and Shanghai, albeit with varying success, and has been planning for and had foreshadowed a national scheme. </p>
<p>The announcement also builds on last year’s <a href="https://theconversation.com/landmark-us-china-pledge-is-a-step-towards-2c-climate-goal-34140">US-China bilateral agreement</a>, which included a pledge from China (for the first time) that its emissions would peak no later than 2030 – although no mention was made of the level at which they would peak.</p>
<p>What is surprising is the speed with which the divide between developed and developing states enshrined in both the UNFCCC and its Kyoto Protocol has now crumbled. Both developed and developing countries in Paris in December will now state their climate pledges, or “intended nationally determined contributions”, including China. These contributions won’t be negotiated by all the parties – that approach has long gone. And the legal character of these contributions is uncertain. But China’s announcement on Friday certainly works in favour of a more robust agreement.</p>
<p>The climate change problem can’t be addressed without China, the world’s largest emitter (or indeed India, the third largest). China now joins the other 75 countries (and the European Union) with frameworks for limiting emissions, and the 47 countries (plus the EU) that have carbon pricing.</p><img src="https://counter.theconversation.com/content/48159/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anita Talberg is on an Australian Postgraduate Award PhD scholarship.</span></em></p><p class="fine-print"><em><span>David Hodgkinson, John Mathews, and Peter Christoff do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>China, the world’s biggest greenhouse emitter, will set up a national emissions trading scheme beginning in 2017. Our experts react to the announcement, made during President Xi Jinping’s US state visit.John Mathews, Professor of Strategic Management, Macquarie Graduate School of Management, Macquarie UniversityDavid Hodgkinson, Associate Professor, The University of Western AustraliaDr Anita Talberg, PhD student in the Australian German Climate and Energy College, The University of MelbournePeter Christoff, Associate Professor, School of Geography, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/318762014-12-05T10:44:55Z2014-12-05T10:44:55ZCap and trade could be the answer to state budget crises<p>So-called cap and trade may be a solution to a problem it was not intended to solve: state budget crises. </p>
<p>Cap-and-trade policy was designed to address climate change by putting a “cap” on carbon dioxide emissions – issuing a fixed number of permits – and then allowing firms to “trade” those permits. Since they pay a market price per ton of CO2 emissions, firms have an incentive to find all the cheapest possible ways to cut emissions. </p>
<p>But the suggestion to implement cap-and-trade in any one state within the US has almost nothing to do with global warming. Given huge emissions from the rest of the world, cutting emissions in one state will have no perceptible effect on global emissions and climate change. So, for policy options within your own state, it’s about the money.</p>
<p>In June, President Barack Obama <a href="http://www.latimes.com/nation/la-na-epa-emissions-rule-20140601-story.html">announced a proposal</a> to impose greenhouse gas emission restrictions on electricity generators in each state that will achieve an average reduction of 30% below 2005 levels. Comments are welcome until the executive order is issued in June 2015.</p>
<p>The federal plan allows a lot of flexibility, as each state can choose how to comply. Each can impose energy efficiency mandates, switch production from coal to low-carbon natural gas, reduce demand for electricity, increase renewable production or use any combination of such methods. One allowable method is for a state to impose its own cap-and-trade system, or join a regional cap-and-trade system. </p>
<p>Historically, such permits are <a href="http://www.c2es.org/us-states-regions/key-legislation">handed out</a> to existing electricity generators, so that each plant can emit 70% of a previous year’s level, or sell those rights, or buy more. Unfortunately, the California plan started by handing out these valuable pieces of paper to existing polluters. After all, the price of electricity is going to increase in any case, which will cover those firms’ added cost of compliance. </p>
<p>If they get free permits and sell electricity at a higher price, those firms make profits. A simple alternative is for the state not to hand out the permits, but to sell them at auction. Then the state can capture those profits as state revenue.</p>
<h2>The Illinois example</h2>
<p>Take my own state as a mere example of the budget pressures faced by virtually every state. Illinois has <a href="http://www.huffingtonpost.com/2012/06/22/illinois-budget-deficit-w_n_1618469.html">huge budget deficits</a>: the Institute of Government and Public Affairs at the University of Illinois estimates the state’s annual budget deficit will be US$4 billion next year (and will rise within ten years to about <a href="http://igpa.uillinois.edu/content/fiscal-futures-project">US$14 billion per year</a>). Cap-and-trade could be a partial remedy.</p>
<p>If Illinois sells permits for carbon dioxide emissions at about US$20 per ton — similar to the program <a href="http://calcarbondash.org/">already in place in California</a> — the state could <a href="http://igpa.uillinois.edu/node/2154">raise</a> US$1.5 billion per year. That number is over a third of the US$4.1 billion deficit projected for next year. The number of permits would be limited in order to enforce the cap, and the firms could sell the permits to each other.</p>
<p>How would consumers be affected? Coal is used to generate <a href="http://www.eia.gov/state/analysis.cfm?sid=IL">just under half</a> of the electricity used in Illinois, and the emission reduction would increase the cost of that production by about a penny per kilowatt hour, or about 10%. </p>
<p>But that would occur regardless of how Illinois complies with the federal mandate. Many such plans restrict production and generate profits to firms. Only if the state sells the permits can those profits be captured by the state and used to help low-income families cover the extra cost of their needed electricity. </p>
<h2>The threat of job losses</h2>
<p>Critics complain that a cap-and-trade plan could <a href="http://www.politico.com/morningenergy/1014/morningenergy15669.html">put some people out of work</a>. These disadvantages are real. Yet any alternative way of raising US$1.5 billion per year would place similar burdens on state taxpayers. Any income or sales tax would also raise production costs and reduce economic activity.</p>
<p>In contrast, cap-and-trade could raise those funds while placing more of the burden on those who live outside the state: the owners of coal-fired power plants and their stockholders. A coal-fired power plant is a long-lived investment with a <a href="http://igpa.uillinois.edu/budget-toolbox/content/tax-waste-not-work">huge sunk cost</a> (about US$3 billion). These plants are owned by large national corporations that can afford to build them.</p>
<p>A 10% increase in the cost of coal-fired electricity will not prompt these companies to shut down and throw away their US$3 billion investment. Instead, they likely will continue to operate, to employ workers and to buy coal from mines that also continue to operate. </p>
<h2>Consumers win in the end</h2>
<p>Meanwhile, the price of electricity in the state is determined in competitive markets that include natural gas plants with much smaller carbon content and renewables with no carbon content, such as wind power.</p>
<p>This competition will not allow coal-fired power plants to pass all the costs of cap-and-trade on to their customers. The main effect of making electricity more expensive to produce will be to reduce the profits to the out-of-state stockholders of the national firms that own the coal-fired plants.</p>
<p>Must state legislators heed lobbyists from those national corporations rather than the interests of their own residents and taxpayers? Consumers might pay a bit more for electricity, but the burden from cap-and-trade likely is much less than the burden from collecting the same revenue using an income tax or sales tax.</p>
<p>While it would have a negligible effect on global carbon dioxide emissions, any state’s cap-and-trade plan would also reduce other local pollutants that cause urban smog and local health problems. And it might give technology a jump on other states preparing for a possible worldwide agreement that requires cap-and-trade at the national level — one that might actually affect worldwide carbon emissions and climate change.</p><img src="https://counter.theconversation.com/content/31876/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Don Fullerton does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>So-called cap and trade may be a solution to a problem it was not intended to solve: state budget crises. Cap-and-trade policy was designed to address climate change by putting a “cap” on carbon dioxide…Don Fullerton, Gutsgell Professor of Finance, University of Illinois at Urbana-ChampaignLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/128322013-03-17T19:40:50Z2013-03-17T19:40:50ZGlobal business responses to climate change: Where to now?<figure><img src="https://images.theconversation.com/files/21294/original/3n2m95xd-1363304382.jpg?ixlib=rb-1.1.0&rect=12%2C165%2C1002%2C596&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Despite regulatory uncertainty, business in the US and Australia is responding to climate change.</span> <span class="attribution"><span class="source">Flickr/KateAusburn</span></span></figcaption></figure><p>Despite the widespread scientific consensus regarding anthropogenic climate change, ideological rhetoric dominates the global political discourse. This is preventing the development of clear policy frameworks that companies need for long-term investments. In spite of this, there are signs of progress at the international, national and corporate levels.</p>
<p>A growing number of countries, or states within them, are instituting measures to price carbon emissions. By the end of 2013 an estimated <a href="http://climatecommission.gov.au/report/the-critical-decade-international-action-climate-change/">850 million people will be covered by a carbon price</a>, including China and US states such as California (the ninth largest economy in the world). Further, associated policies like automobile, appliance and building efficiency standards and <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=4850">Renewable Portfolio Standards</a> are proliferating.</p>
<p>There has also been a recent increase in political attention to climate change. For example, in response to the unprecedented flooding of New York City by Hurricane Sandy last October, elected officials such as New York City Mayor Michael Bloomberg, publicly pronounced the need <a href="http://www.bloomberg.com/news/2012-11-02/listening-to-hurricane-sandy-climate-change-is-here.html">to get serious about climate change</a>, a sentiment echoed more recently by President Obama in his inauguration and <a href="http://www.politico.com/story/2013/02/obama-to-congress-act-on-climate-or-i-will-87555.html">State of the Union</a> addresses.</p>
<p>Yet, despite having endured the <a href="https://theconversation.com/the-hottest-summer-on-record-experts-react-12559">hottest summers on record</a>, more bush and forest fires and record floods, climate change remains a “wedge issue” on both sides of the Pacific. In Australia, while the Gillard government succeeded in introducing a price on carbon through the recent Clean Energy legislation, there is considerable uncertainty as to the longevity of this reform, given Opposition leader Tony Abbott’s “<a href="http://www.theage.com.au/national/abbotts-blood-oath-to-repeal-carbon-tax-20111012-1ll80.html">blood oath</a>” to repeal the “carbon tax”.</p>
<p>This mixed political landscape in the US and Australia all adds up to continued regulatory uncertainty for businesses over the pricing of carbon emissions and energy policy more broadly. This is a critical issue for business, particularly those in the energy, resources and manufacturing sectors looking to make infrastructure investments that can last decades.</p>
<p>However, despite the regulatory uncertainty, research into business responses to climate change in the US and Australia suggests there is reason for hope. This will be explored during a symposium on ‘Climate Change: Generating Business Responses’ to be held at the University of Sydney on March 21, which shows that many of the world’s major companies actively engage with this issue by seeking to mitigate emissions and adapt to the changing market and physical consequences of our changing climate.</p>
<p>Examples include global manufacturers which have profitably developed <a href="http://www.ecomagination.com/">new ‘green’ products and services</a> (e.g. hybrid and electric cars, high capacity batteries, wind turbines, solar cells and more efficient jet engines). Major financial institutions now include ‘<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1762562">carbon risk</a>’ in their lending practices and mark down enterprises that fail to manage these risks. Virtually every company in the <a href="http://www.gbca.org.au/">construction sector</a> offers green construction materials and supplies. Energy companies are diversifying into <a href="http://thinkprogress.org/climate/2012/08/09/663261/as-coal-sinks-renewables-soar-emissions-report-shows-start-of-clean-energy-transition/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+climateprogress%2FlCrX+%28Climate+Progress%29">renewable electricity generation</a> such as wind, solar and geothermal. And perhaps most directly impacted, <a href="http://bas.sagepub.com/content/51/1/121.abstract">insurance companies</a> now focus explicitly on the physical and financial risks of more frequent and intense storms, floods and fires. </p>
<p>Taken together, these responses represent a future for a more sustainable and prosperous global economy no longer tied to last century’s out-dated fossil-fuel dependence. The fact is that markets are shifting, leading us through an energy renaissance where we are beginning to think about energy and our impact on the global climate in an entirely new way.</p>
<p>While important, such corporate innovation also requires a clear regulatory structure to thrive and prosper. Changing markets and corporate action on their own will be insufficient to generate the type of economic transformation needed to meet the challenges of climate change. The accelerating Arctic melt and projections of <a href="http://rsta.royalsocietypublishing.org/content/366/1882/3863.abstract">4-6 degrees Celsius average temperature increases</a> this century highlight that this is a crisis of an unparalleled kind. As has been the case historically, in times of crisis, governments and regulation, developed in cooperation with the market, are essential in creating the policy infrastructure for fundamental economic and social change.</p>
<p>Government must continue to set the conditions that will advance the energy renaissance already underway. Companies need sound energy policy to secure stable, long term energy supplies; they need sound and predictable technology policies to plan investment; they need clear and coherent industrial policies that recognise we operate in a globalised marketplace competing against countries that heavily subsidise their domestic industries; and they need a knowledgeable consuming public that can make informed purchasing decisions. </p>
<p>The current political scrabble fails to do justice to what we are truly capable of. Building a platform for policy clarity and greater business innovation is crucial if we are to meaningfully rise to this challenge.</p>
<p><em>Andy Hoffman is in Australia as a guest of the University of Sydney Business School and the United States Studies Centre.</em></p>
<p><strong>The symposium ‘<a href="http://sydney.edu.au/business/events/2013/climate_change_generating_business_and_organisational_responses">Climate Change: Generating Business Responses</a>’ will be held at the University of Sydney on Thursday, 21 March.</strong></p>
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<p><a href="http://aom.org/">Christopher Wright is a member of the Academy of Management</a></p>
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<p class="fine-print"><em><span>Christopher Wright receives funding from the Australian Research Council to research business responses to climate change. Christopher Wright is an Academy of Management scholar.</span></em></p><p class="fine-print"><em><span>Andrew J. Hoffman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite the widespread scientific consensus regarding anthropogenic climate change, ideological rhetoric dominates the global political discourse. This is preventing the development of clear policy frameworks…Christopher Wright, Professor of Organisational Studies, University of SydneyAndrew J. Hoffman, Holcim (US) Professor at the Ross School of Business and School of Environment and Sustainability, University of MichiganLicensed as Creative Commons – attribution, no derivatives.