Carbon Tax Controversy

Stewart Elgie, a University of Ottawa law and economics professor and chair of the green economy think-tank Sustainable Prosperity suggests that British Columbia’s per-capita fuel usage had fallen more than 4 per cent compared with the rest of Canada and its economy (Ebner, McCarthy, 2011) Evidently it is reducing the amount of green house gasses emitted by fossil fuel use. However this is not the concern many had with the introduction of the tax, but the concerns were focused upon the externalities caused by this and the effects it would have on the economy. Three years since the carbon tax introduction and the Provincial level of GDP has remained approximately the same, (Greenery in Canada: We have a winner) With the provincial level of GDP remaining around the same, this suggests that at the very worst the carbon tax has had no negative effects to the provincial economy. Furthermore the tax also promised to remain carbon neutral and promised to cut corporate and private income tax. British Columbia has become the province with the lowest income tax regime and the lowest corporate tax regime (Greenery in Canada: We have a winner). Although the carbon tax is being praised by many, it still faces concerns as many still argue the ineffectiveness of the tax and what that means for the province.

For the last two decades, the increased use of fossil energy caused the environmental problems. The evidence of global warming, like drying rivers, extinction of species, melting of glaciers, became more often around the planet. The climate change became a threat to healthy environment and prosperity of humanity and wildlife, and the world community started searching for solution to combat climate change. In 2008 British Columbia introduced carbon tax on greenhouse gas (GHG) emissions to reduce global warming. Starting from $10 per tonne of CO2, the price was increasing annually till it reached $30 per tonne in 2012. During that period British Columbia was reducing harmful emissions and improving economy comparing to the rest of Canada. However, since the price rise on carbon stopped in 2012, no improving changes in cutting emissions, economy, and overall quality of life have been noticed. In this essay I will persuade that British Columbia should continue gradually increase price on carbon tax to the level where it will significantly cut the use of dirty energy, provide enough investments into the green projects, and support low-income families.

The commentary examines the imposition of carbon taxes in Singapore. A carbon tax is a specific tax placed on fossil fuels per unit of carbon emissions. This tax acts as an incentive for producers encouraging polluting firms to reduce their carbon emissions and switch to less carbon emitting energy resources and/or technologies from 2019 onwards. Greenhouse gas (GHG) emissions are a negative production externality; an externality that is created by the producer. This is a form of market failure as the market is unable to allocate factors of production efficiently. The over production of carbon emissions has dire effects on the environment as well as all of those within the global market.

Although there isn’t a lot of cases of countries with carbon taxes yet, one success story comes from Ireland. According to the Carbon Tax Center, Ireland was one of the highest producers of greenhouse gases in Europe, with levels close to that of the United States. However, after implementing the tax that charged about $23 per ton of CO2 in 2010, emissions dropped more than 15%. Yet their economy didn’t fall along with the CO2 levels—it grew instead. I think that Ireland is a great example of the potential carbon taxes can have, and that we should factor in their case when deciding on

Climate change is becoming a major issue in Canada and in order to reduce the impact global emission needs usage to start dropping as soon as possible. Therefore, a carbon tax levy has been recently implemented in Alberta. The tax is based on greenhouse gas emission caused from burning fossil fuels. The main reason the province is enforcing Carbon tax is to potentially reduce emission which will develope a change in our climate. B.C has implemented the Carbon tax levy since 2008, and has seen a positive outcome thus far.

Climate change has been an increasing concern in today’s world and has proven to be detrimental in the coming years. With the increasing human population, the consumption of fossil fuels has been in high demand and this poses a threat in the future. After several years of political and cultural pressure to take a stand on climate change and in order to control the regulation of carbon dioxide emissions into the atmosphere, British Columbia implemented the carbon tax on July 1, 2008 (Murray and Rivers, page 3). This tax was the first to be imposed in North America and was revenue-neutral (Murray and Rivers, page 3). Due to its myriad of benefits, the carbon tax was favored by many and did has not disappointed; not only have greenhouse gas emissions dropped, but business have grown tremendously, and other energy sectors are flourishing. While counter arguments may highlight the negative effects of the taxation policy, rebuttals often overlook the long-term advantages. In this paper, I will prove that the carbon tax policy in British Columbia has had several beneficial outcomes such as the reduction of greenhouse gases and economic growth. I will then raise an opposition to my thesis by arguing that the short-term economic effects will be damaging to the lower-income classes. However, I will show that this objection is not as valid because the long-term benefits, both economically and environmentally will ultimately prove integral in the alleviating future climate change.

In the spring of 2015, the premiers of Ontario and Quebec met to discuss to possibly introduce a carbon pricing mechanism in hopes of limiting the negative externalities associated with their industries. The agreement would lead to the imposition of a limit on emission caused by fossil fuels. Similarly, British Columbia has had a long history of imposing carbon tax as a method of punishing behaviours of its industries that cause environmental harms. While there is only limited disagreements between cap-and-trade and carbon tax, the introduction of such carbon pricing regulation has led to a greater debate on the effectiveness of carbon pricing to addressing environmental issues without harming the economy. While environmental groups and supporter

The central question related to the carbon tax is how should the tax rate be designed, and one most straightforward approach is to set the price of emission per ton equals to the social cost of carbon per ton, which represents the social incremental damage of emissions. Such a Pigovian tax is ideally an economically efficient way as it would lead to the socially optimal level of emissions where marginal benefits of emission equal to the marginal costs (Kaplow, 2012 as cited in Metcalf, 2017). However, estimating the social cost of carbon is complicated because the cost represents the present value of expected environmental damages caused by one additional unit of emissions today, while the damages persist far in the future. To accurately measure

Greenhouse gas regulation (GHG) is one of the ways that eases climate change while keeping Canadian economy. They must consider mitigating greenhouse emission under the condition of rising energy production and greenhouse gas consistently (Tarnoczi & Driver, 2014). In addition, Canada is a third largest oil reserves, as well as ninth largest emitter in the world and approximately 25% of greenhouse gas is attributed to transportation (Figures, 2015). Therefore, the effort of people is needed for significant reduction. Canadian governments try to achieve it through the stringent regulation for the transportation and electricity sectors (N.A, 2015). However, advantage and disadvantage for both people and industry exist at least. Forum (2013) indicates

Having to pay for Smog Check and paying an extra amount of dollars to refill a certain type of gasoline for the car are few of the many expenses that does not make sense for many of us, but this is the price we pay for our actions that carried negative outcomes on our climate. Yes, its the global warming problem that all the countries are bragging about its effects; they are the effects that made our summers hotter and warmed our winters, and to prove its seriousness Levitt and Dubner, in their Super freakonomics book had their own way of approaching this problem economically, quoted “that climate change ‘would force economic and social adjustments on a world wide scale’”(160). As a part of the world, the state of California had been effected by global warming in various ways due to many reasons that will be covered in this paper. In California, the increase in temperatures were noticeable when compared to the last decades which incentivized the state to implement laws and legislations that control the main cause of our climate change, greenhouse gases. While many sectors of the state are emitting greenhouse gases non-stop, the government of California took a big effort in issuing regulations to reduce and stop greenhouse gases emissions in the contributing sectors as a plan for a cleaner and suitable environment.

Up to 2013, successive Australian governments have lobbied for an emissions trading scheme (ETS) to curb national emissions. One such legislative measure is the carbon tax law passed in Parliament in July 2012 through Acts such as the Clean Energy Act. Using a fixed taxation price of $A23 per tonne which will increase by 2.5% per annum, the carbon tax law applies to the company operations and facilities of Australia’s top 500 polluters which exceed the annual direct emissions limit (Foran, 2011; Guglyuvatyy, 2012). These high polluting industries range from electrical power plants to the mining sector. The carbon tax law will subsequently transit into a cap-and-trade ETS managed by the Climate Change Authority in 2015. Also known as the Carbon Pricing Mechanism, this statutory institution will supervise carbon prices on an auction market, making the prices of greenhouse gases flexible (Guglyuvatyy, 2012; Adams, 2014). The aim of the ETS is to create economic incentives to entice industries to take environmentally-friendly measures without negatively affecting the national job market and economic growth (AuGov, 2012; Adams, 2014). At that point, the Australian government also projected future aims of linking the national ETS with that of the European Union (AuGov, 2012; Watkins, 2014).

Since the government regulates how much emissions are allowed, emissions will never rise past their cap. Contrary to that, the carbon tax has a chance to incentivize emissions even lower than a set goal, but, there is no guarantee. Lower emissions mean cheaper everything, allowing for greater profit margins. Also, carbon taxes provide a broader scope in terms of emission reductions (Carbon Tax, Baumert). On the other hand, emissions trading systems would be more suited for all six GHG included in the Kyoto Protocol. Such systems have been already applied and have achieved success in low-cost SO2 emissions. Phase I units reduced SO¬¬¬2 by 57%, while phase II reduced the by 14% after 2000

It will set up the economy for deeper cuts down the track, and can be easily boosted if global action increases. Just as for individuals, the cost for most businesses will be quite light, cushioned by compensation packages aimed at easing the initial pain. So it’s a gradual start, with a fixed carbon price from July 2012, then from July 2015 there’ll be a market – an emissions trading scheme with a floor and a ceiling price for carbon. This hybrid approach is a way of achieving long-term stability of the carbon price, encouraging investment in new technologies. This gradual start (due to industry and political opposition) means that the biggest short term impact should come through ambitious spending programs driven by revenue from the tax. A $2 billion a year Clean Energy Finance Corporation, run by an independent board of energy and investment experts, should kick-start investment in large scale clean technologies, and in improving our substandard industry energy efficiency and ‘clean’ goods manufacturing. Some revenue will be spent buying out and shutting down about 2000 megawatts of the dirtiest coal power, including Hazelwood or Yallourn power stations in the Latrobe Valley. A Climate Change Authority, run by former Reserve Bank chairman Bernie Fraser, will make annual recommendations on Australia’s greenhouse targets, based on assessment of what is happening

This paper examined the macroeconomic impact in the case of the carbon tax. In order to quantify its impact, this study divides key economic agents (firms and consumers) and analyzes their economic activities. I find that firms and consumers will respond to the carbon tax ($40/ton) by decreasing their economic activities at 2% and 0.7% respectively. As a result, a decrease in GDP is expected due to decreased production and consumption. To avoid this, tax dividends should be allocated to consumers non-uniformly depending on the income level and renewable energy subsidy should be invested to firms to maintain their production level.

Since the beginning of the industrial revolution machinery and surface temperatures have been on the rise. Some may argue that the increasing temperatures are strictly due to the rise of machinery and less strict efficiency standards. The U.S has been debating what methods are efficient for combating increasing emissions some argue that a carbon tax has many positive impacts some say if one were to be adopted they would need reforms. This paper will dive deep into the the effects of climate of change and whether or not a carbon tax can fully help to decrease these emissions.