Carbon taxes at the heart of FoE climate plan

Friends of the Earth Canada and Corporate Knights released a climate change plan today centred on carbon taxes. It takes the large final emitter carbon tax/carbon subsidy they proposed a month ago and adds a general carbon tax on fuels. Overall cost to an average family - 450-900$/year.

Zero Leakage Carbon Investment Fund

• 30$/tonne CO2e tax on LFE emissions (15$/tonne for manufacturing initially, and possibility of exemptions for businesses in dire straits)
• starting in 2008
  
• revenues from the tax held by the arms-length Carbon Innovation Fund
• Each LFE has 3 years to spend the tax revenue taken from it on CIF-approved reductions at its own facility.
• Use of unused revenue - not specified
• Anticipated earnings - $9.5 billion/year
• Increases to electricity costs: 1-3 cents/kWh
  

Transportation Fuel Carbon Tax

• $50/tonne CO2e on transportation fuels
• starting in 2008
• increases cost of gasoline 10 cents/litre
• annual revenues - $9 billion/year
• 50% used to reduce income taxes for households under $80 000 annual income
• 33% for transit pass subsidies and rail and transit infrastructure
• 17% for international Clean Development Mechanism credits

Heating Fuel Carbon Tax

• $50/tonne CO2e
• starting in 2008
• annual revenue of $4 billion/year
• funds used for a "Green Building Fund" providing zero-interest loans for efficiency/conservation measures

Link to FoE press release
Link to Globe coverage
Link to full FoE plan (10 pages)

My comments: Looks interesting, and I'm happy to see comprehensive new proposals, especially ones that include a carbon tax, complete with double dividend. I'm less sure of the carbon investment fund since I imagine it would be hard for many industries to use it effectively within a 3-year window. Re the carbon tax, I can see using some of it for CDM and infrastructure projects, but I would recycle as much of it as possible into the income tax reductions. Overall, it will be interesting to see what reaction they get.