Study
| EST. READ TIME 1 MIN.Practical realities of carbon taxes and cap-and-trade systems across Canada undermine potential benefits
Poor Implementation Undermines Carbon Tax Efficiency in Canada
Summary
- Provinces across Canada have implemented some form of carbon pricing, either through carbon taxes or emission-trading schemes.
- These taxes are touted as being the most “efficient” way to control greenhouse gas emissions, yet be economically benign.
- But in the real world, Canada’s carbon taxes fall far short of the textbook ideal that would justify claims of efficiency. They fail on three key requirements.
- First, to be efficient, carbon taxes must displace regulations, not be added to them. Second, the taxes must be fully rebated in reducing distortionary taxes such as income taxes, and third, the revenues from the tax should not be used to further distort energy markets with subsidies to substitute forms of energy.
- Canada’s experience with carbon taxes shows that governments have little interest in ideal implementation. Instead, rather than simply addressing greenhouse gas emissions efficiently, they prefer to create revenue streams for pet projects and retain the ability to transfer wealth.
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Kenneth P. Green
Senior Fellow, Fraser Institute
Kenneth P. Green is a Fraser Institute senior fellow and author of over 800 essays and articles on public policy,published by think tanks, major newspapers, and technical and trade journals in North America. Mr. Green holds a doctoral degree in environmental science and engineering from UCLA, a master’s degree in molecular genetics from San Diego State University, and a bachelors degree in general biology from UCLA.Mr. Green’s policy analysis has centered on evaluating the pros and cons of government management of environmental, health, and safety risk. More often than not, his research has shown that governments are poor managers of risk, promulgating policies that often do more harm than good both socially and individually, are wasteful of limited regulatory resources, often benefit special interests (in government and industry) at the expense of the general public, and are almost universally violative of individual rights and personal autonomy. Mr. Green has also focused on government’s misuse of probabilistic risk models in the defining and regulating of EHS risks, ranging from air pollution to chemical exposure, to climate change, and most recently, to biological threats such as COVID-19.Mr. Green's longer publications include two supplementary text books on environmental science issues, numerous studies of environment, health, and safety policies and regulations across North America, as well as a broad range of derivative articles and opinion columns. Mr. Green has appeared frequently in major media and has testified before legislative bodies in both the United States and Canada.… Read more Read Less…
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