Given that many of the LFEs need to take capital investment cycles into consideration, do you think that that some of them will not be able to efficiently use the tax taken from them within the 3-year window provided?
The scale of capital raised would provide sufficient incentive for any rational facility to, at a minimum, commence capital projects to reduce emissions. It is true that order times and installation hold-ups would not allow for everything to be deployed in the immediate term. In order to access the industrial fee, a company would have to show how the lifecycle emissions add up. Lifecycle emissions can run as long as 20-25 years and beyond. As an example, if I am Transalta, my Sundance Generating Plant with no modifcation is going to cost me $485 million per year on the carbon fee. In a four year time span, that will add up to just under $2 billion. I would prefer to not leave that $2 billion on the table for the government to scoop up. Instead I would take it and make investments in either lower carbon forms of electricity production or retrofitting my plant, both of which would produce lifecycle emissions reductions will into the future.It looks like the Conservatives are going to come out with something fairly similar to the LFE emissions trading system that the Liberal government had under development.
1.Why do you advocate your carbon tax proposal over emissions trading?
Toby provided a detailed comparison chart for his proposal versus emissions trading - summarized at the end of this post.2. If the government does go with emissions trading, what changes would you like to see happen?
I would like to see industrial facilities with a strong price signal to make domestic reductions so that clean air benefits are coupled with GHG emissions, providing more immediate term benefits to Canadians. In the event that we are falling short of Kyoto targets as a country, I would like to see the government finance international renewable energy projects, with the solar cooker (see notes about solar cooker below) being a major component.The Solar Cooker Story:-2 billion people rely on wood to cook their food
-Each solar cooker saves roughly 3.5 tonnes of CO2e per year compared to a wood burning stove.-Solar cooker can last 20 years-Alcan has innovated a special material that id ideally suited for solar cookers-Deploying 10 million family sized solar cookers a year would require 30-40 kt of aluminum-Manufacturing 10m family sized solar cookers per year in developing nations at a total cost of $100-$200 per unit would cost $1-2bn per year and be generating 140 million tonnes of CO2e by end of year four(note:presently, the CDM has a hold-up on granting credits for small scale projects on this level and they are working on ironing out the methodology--one area of ambiguity to clarify is whether the forests harvested for the wood are renewable forests of not--in most cases they're not)CDM methodology on Solar cooker: http://cdm.unfccc.int/Projects/DB/TUEV-SUED1135345789.43 /view.html
Comparison of the FoE/Corporate Knights carbon tax with emissions trading:
| CK/FoE Zero Leakage Carbon Innovation Fund (see page 2 for desc.) | | Cap and Trade | |
| Price certainty – best for business and can be coupled with emissions standards for environmental quantity goals. Redeploys sufficient capital within businesses to pave way for green industrial revolution | Pro | Quantity certainty – best for environment. Does not provide leapfrog opportunities for green industrial revolution | Pro/Con |
| No ceiling for emissions reductions | Pro | Provides a ceiling for emissions reductions | Con |
| Provides double dividend to facilities that reduce emissions w/in 3 yrs and powerful incentive to invest in immediate reductions | Pro | All money spent on immediate emission reductions | Pro |
| Fits with part of Kyoto architecture as it allows government to make up shortfall through financing international renewable energy projects | Pro/Con | Fits with Kyoto architecture and minimizes costs via international trading | Pro |
| Couples emissions reductions and cleaner air together by requiring domestic industry to make reductions in Canada | Pro | Decouples domestic clear air from GHG reductions by allowing industry to purchase international credits | Con |
| 100 per cent of money stays at facility (or corporate level in certain case). Keeps money in facility's specific account in province | Pro | Money stays in the private sector. Politically difficult to transfer money out of high emissions provinces | Pro/Con |
| Fair and firm price with flexibility to recognize energy-intensive export value-added industry's ability to pay. Does not punish early movers. Every company in a sector pays the same $ per tonne of C02e | Pro/Con | Flexibility to differentiate burdens according to ability-to-pay, but can punish early movers | Pro/Con |
| Simple, easier to explain, less vulnerable to lobbying | Pro | Complex, therefore more difficult to explain and vulnerable to being undermined by lobbying | Con |
| Requires business to take responsibility for emissions and provides them clear price to optimize around | Pro | “Requires business to take responsibility for emissions” | Pro |
| Risk of a run on stock prices of emissions intensive industry is reduced because clear price on carbon provides a number that analysts can use for discounted cash flow analysis, allowing them to place a cost ceiling on the effect of the carbon price system. Risk of run is also reduced as money paid for carbon fee is recorded on company's balance sheet as an asset. | Pro | Could spark a run on stock prices of emissions intensive industry because of uncertainty on the price of emissions | Con |
| CK/FoE Consumer Carbon Tax | |
| Consumers are less sensitive to price increases than economic theory suggests | Con |
| Taxes on carbon content of fuels reduce consumer demand for high carbon fuels and increase it for low carbon fuels | Pro |
| Higher electricity prices increases consumer demand for efficient appliances and retirement of inefficient appliances | Pro |
| Access to zero-interest financing for geothermal and retrofits spurs mass deployment of money saving and energy reducing installations | Pro |
| Carbon taxes do not go into general funds, but instead raise billions to finance rebates on efficient vehicles, home retrofits and other supportive policies | Pro |
| Raises revenue for providing tax cut/rebate to cushion blow of higher prices for low-income families | Pro |
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