Daily Score Blog

In what would be easily the world's biggest carbon tax shift, French President Sarkozy has begun advocating for robust carbon tax coupled with rebates or tax reductions:

The tax would be initially based on the market price for carbon dioxide emissions permits, which is now euro17 ($24.74) per ton of carbon dioxide, Sarkozy said. At that level, the government expects to raise euro3 billion, which will be entirely returned to households and businesses through a reduction in other taxes or repaid via a so-called "Green Check," Sarkozy said.

The result would be a shift of the tax burden from other revenue sources to energy derived from fossil fuels in an effort to discourage their use.

Gasoline, diesel fuel, coal and natural gas will be subject to the tax, but not electricity, Sarkozy said.

C'est bon. Not only is this an exceptionally good tax shift, but it's also a good demonstration that carbon taxes and cap-and-trade systems can go hand in hand.

France is a charter member of the world's largest carbon cap and trade program, the EU ETS. And while the ETS has done a fine job (despite what you may have heard), its biggest flaw is that it is limited in scope to major emitters of carbon such as power plants and industrial facilities. By applying a carbon tax to home heating fuels and transportation fuels, France can do what virtually no one else has done: price carbon comprehensively across the economy.

Wonky tangent: I'm giving extra points for setting the carbon tax rate at roughly the same price as emissions permits in the cap-and-trade program. That helps ensure that carbon pricing doesn't simply engender a shift between sources of carbon but rather engenders a shift away from carbon altogether.

The main lesson here, however, is this: carbon taxes and cap-and-trade can work together. No really, they can. You can use the different pricing systems for the same sources of carbon -- as both British Columbia and Quebec will presumably do if the Western Climate Initiative becomes operational -- or you can use the different pricing systems for different portions of the economy, as France may do. Let this be a lesson to all you one-true-way carbon pricing zealots out there.

It sounds geeky, I know, but single-system carbon pricing advocates can make religious fanatics look downright moderate. Of course, there are advantages and disadvantages to carbon taxes just as there are for cap and trade. We can and should debate the merits of these systems. But I wish everyone would acknowledge that they can be complementary and they are not mutually exclusive.

A quick refresher on carbon tax shifts: The plan literally shifts taxes, it doesn't add taxes. All revenue generated by the carbon tax in BC are returned to individuals and businesses through reductions in other taxes. But that's not always abundantly evident to consumers when they're standing at the filling station and opening their wallets. That's probably why public support has been moderate at the very least.

on carbon tax shifting:

• Almost half of B.C. residents support the tax (last July, 40 percent expressed support and 56 percent opposed it). Current support for the tax is close to, but not quite fully back to the level achieved in February 2008 soon after the measure was first announced by the BC government (but not yet implemented).
  
  
• When asked how they would feel about the introduction of a B.C.-style carbon tax in their own province, opinions remain divided in every province.
  
  
• Nonetheless, support has increased since last July in every province, most noticeably in Alberta (up 17 points) and Saskatchewan (up 13 points).
  
  
• Across the country, support approaches 50 per cent from the Atlantic provinces to Manitoba, and remains somewhat lower in Saskatchewan (41 percent) and Alberta (44 percent).

The survey was conducted by Environics, by telephone from May 21 to 26 with a representative sample of 2,003 Canadians, including 250 in British Columbia.

As a May 12 election day nears in British Columbia, the carbon-tax issue continues to cut across the electorate.

This weekend, former New Democratic premier Michael Harcourt co-signed an opinion piece in the Globe and Mail that endorses the provincial carbon tax, effectively breaking ranks with his party’s new leaders a few days before the vote. (The piece also calls for a bigger, bolder climate action plan.)

New polling results, also reported in the Globe, show contradictory attitudes toward carbon taxes. In short, Canadian voters are deeply conflicted about carbon tax shifting.

In theory, Canadian voters are open to considering taxing carbon; in practice, their support wavers. The more specific the proposal, the less voters like it: they like the BC carbon tax (which I’ve called one of the best designed carbon taxes currently in force anywhere in the world and others have similarly praised) least of all. The appeal of the BC policy appears to decrease with proximity to the province: it fares best in Atlantic Canada and worst in Northern Cascadia. Disappointing!

Curiously, though, within the province, disapproval of the Liberals for enacting the carbon tax shift is matched by disapproval of the New Democrats for attacking it. Weird, right? And at least one political observer—pollster Jeff Walker—believes those cross currents favor the Liberals. Walker told the Globe:

“Traditional soft environment voters in British Columbia who usually go into every election vowing to vote Green, but end up going with the NDP are now considering staying Green to punish the NDP.”

Which is essentially what I predicted would happen way back in October: “The New Democrats’ frontal assault on the carbon tax, while it may have gained them support in some circles (especially rural voters, I understand), has undoubtedly lost them support among environment-minded voters. Many greens will likely peal off to the Liberals or the Green Party. Splitting the left helps Gordon Campbell stay in office, and helps preserve the carbon tax shift as provincial policy.” Tomorrow and in the days beyond, we’ll see if this prediction holds up.

Last week, BC’s New Democratic Party put a misleading attack on the province’s world-leading carbon tax shift at the center of its long-shot campaign to regain control of the province's government in the May 12 elections. The campaign officially kicked off today.

As I said in October, I hope this argument won't work.  The NDP—a party Sightline proudly advised and collaborated with during its last term in power—is playing fast and loose with the facts. Some people I respect in the province are steaming mad. Here’s BC conservation advocate Tzeporah Berman in today’s Globe and Mail: "There is no question that environmentalists should be punishing the NDP for their regressive position on climate change. . . . Many environmentalists, like me, feel betrayed by Carole James." Berman campaigned for the NDP four years ago. Why the enmity?

Because the NDP has taken aim at what is perhaps the single most progressive and environmentally responsible climate policy in the province--and one of the best in the world. The first specific complaint the party  platform levels against the governing Liberal Party’s policies (on page 3) is the assertion that they “increase taxes for average families by tripling the gas tax.” This claim is demonstrably false, as I'll show.

“Gas tax?!” Hmmph. NDP leaders surely understand that BC’s climate policy is a carbon tax, not a "gas tax." A carbon tax covers gasoline, it’s true, along with all other fossil fuels. A gas tax only covers gasoline. By the NDP’s logic, a retail sales tax would also be a gas tax if it covered gasoline (along with other things). The party is using "gas tax" to unfairly incite voters to opposea a smart policy.

In fact, the first legislative priority listed in the platform--also given pride of place in party leader Carole James's op-ed in today’s Vancouver Sun--is to scrap the carbon tax shift: “Gordon Campbell’s gas tax is unfair and it doesn’t work. Working people pay, while big polluters are let off the hook and greenhouse gas emissions continue to rise. The NDP will scrap the tax.”  .

Let’s pull that apart:

The headlines read something like this: Obama Backs Off 100 Percent Auctioning. One element of the story is sure to follow: Environmentalists aren't going to be happy! The question of 100 percent auctioning at the beginning of a national cap and trade system is one thing. But what I can't abide is the pervasive notion that "environmentalists" are the only ones who should care. The fact is, the decision to auction permits or give them away for free affects every single citizen in the country.

The White House science adviser should know better. Here he is paraphrased in the Washington Post (emphasis mine):

The Obama administration might agree to postpone auctioning off 100 percent of emissions allowances under a cap-and-trade system to limit greenhouse gas pollution, White House science adviser John P. Holdren said today, a move that would please electricity providers and manufacturers but could anger environmentalists.

Ah, yes, the "angry environmentalist."  It's such a tired, old stereotype -- but apparently an easy one even for the Post to blithely reinforce. But, leaving aside all the baggage that comes with the very term "environmentalist," the thing is that in strictly environmental terms, the cap works the same way whether or not permits are free or auctioned.  If environmentalists are angry, it's for the same reason everyone should be:  free permits are an unnecessary giveaway to big business, at the expense of ordinary families.

Washington state Representative Hans Dunshee has proposed a $3 billion issue to finance a massive overhaul of school buildings in Washington State.  According to press reports, the legislation -- ambitiously called the "Washington Works Act" -- would create 90,000 jobs in Washington by employing people to implement capital projects to make “safety, health, and energy efficient improvements to public facilities in all public K-12 school districts, community and technical colleges, state universities, regional universities, [and] The Evergreen State College.”

Proponents of the legislation hail it as a green version of the Works Progress Administration, the massive New Deal job-creation effort.   Others, like the State Treasurer, have come out against the legislation, saying it would damage the states credit rating by massively increasing the states debt load.

I’m not going to step into the controversy over the bill’s specifics; I just don’t know enough to have an informed opinion. Still, there are two underlying ideas in the bill that are worth a very sympathetic hearing.

With the US economy in the tank, could it possibly make sense to increase the tax burden?

An increase in the state gas tax just might a win-win--boosting the economy while benefiting the environment.  Several states – including Oregon, California, Massachusetts, New Hampshire, and Illinois -- are considering gas tax increases.  Just consider some of the possible benefits:

Less pollution. Last year, we saw that higher gas prices encourage people to drive less, which means less pollution from cars and trucks…and the emissions reductions are long term.  Many transportation demand management tools, such as rideshare programs and telecommuting, reduce driving for a while.  But as traffic eases, the improved roadway conditions soon encourage people back to the highways.  However, increased gas prices are different.  When gas prices go up enough, people drive less for purely economic reasons, rather than congestion-related reasons, so a substantial gas tax increase would provide long-term driving reductions. 

Fewer car crashes.  If people drive less, they crash less.  This is a bigger deal than you may think, since car crashes take a surprising toll on public health and the economy.

In an earlier version of this post, the comments thread degenerated into an overheated argument between me and Charles Komanoff, who's a noted expert in carbon taxes. Mea culpa. I've rewritten the post slightly to improve the clarity and, I hope, forestall the antagonism, if not the disagreement...

This is surprising: to date, state gas taxes appear to have had very little effect on either driving habits or fuel consumption. Or, more precisely, there’s been no correlation between a state’s gasoline tax and the amount of fuel its residents use or the amount of driving they do.

Don't believe me? Then feast your eyes on these babies:

And:

Those are big, fat, and completely uncorrelated blobs. What you're seeing is all 50 states plus DC plotted to show a relationship between state gas tax rates and per capita fuel consumption (in the first chart) and per capita miles driven (in the second chart). You can see that there is essentially no relationship whatsoever.

Maybe this shouldn't be surprising. We know that raising the price of gas reduces its consumption. That’s something we all saw clearly during the 2008 price run-up. But there are at least two very good reasons why state gas taxes don't appear to reduce consumption. For one, the tax revenues are dedicated to boosting consumption. In fact, in most states, gas taxes are set aside especially for building and maintaining roads.

So state gas taxes are sort of like tobacco taxes… if the tobacco revenue were funneled into advertising cigarettes. The tax slightly reduces consumption, but the use of revenue slightly increases consumption.

And for another thing, state gas taxes are pretty small.

One of the problems with carbon taxes is that they're static. Let's say you set a tax at $20 per ton of CO-2. It's going to stay at $20 when the economy is hot, even if the tax rate doesn't do much to reduce emissions. Conversely, when the economy goes south, the carbon tax will persist at $20, even though emissions may be dropping fast on their own -- and companies may need some breathing room.

The first scenario is bad for the climate. The second scenario is bad for the economy.

If only there were a way for carbon pricing to respond to changing economic conditions in real time without any intervention from policymakers. If only. That would be like magic.

But I have good news for you: magic exists! There is such a thing as a magical self-adjusting carbon tax. It tracks economic conditions precisely and it always ensures the right amount of reductions. It's called "cap and trade."

Starting next year, Seattle will have a new 20 cent fee on grocery sacks. Portland is thinking about following suit. So is the Vancouver, BC region.

But as the Seattle P-I reported this morning, the American Chemistry Council (aka the plastics industry) has spent more than $180,000 to put Seattle's measure before voters. Clearly, they want to kill these bag fees before they spread. So much so, in fact, that they dropped about $8 per signature to gather enough signatures to put the thing on the ballot.

Personally, I don't think the whole grocery bag debate is worth anywhere near the heat that's expended on it. The paper or plastic question is pretty far down my list of things to worry about. But this opposition campaign is just silly. And over at the Seattlest blog, Katelyn nails it:

Just for comparison's sake, the group could have purchased 903,125 plastic grocery bags with that money. 903,125 bags they could have then distributed to the unfairly burdened poor folk whose cause they are championing, as a sign of good faith that plastic will never fade away in the hearts and ecosystems of America. It's also worth noting that if the ACC had taken their dollars to Safeway, they could have purchased 180,625 cans of nourishing, environmentally friendly beans or 126,311 bags of Safeway yellow cornmeal. Or hell, some of each. They could have wrapped all of those bags and cans up in saran wrap, packaged the saran wrap bundles in flimsy beige plastic bags, and given that food to poor people.

Dear Seattle, buy your $1 canvas totes online here or just pick up a couple at your nearest grocery store. This whole anti-bag fee campaign is nigh unto ridiculous.

Really, I can't improve on that.

Photo is by Seattle resident Chris Jordan.

British Columbia's recent carbon tax made waves in the US. (Sightline's written about it here, here, and here.) But it's not terribly popular in BC, as economist Marc Lee of the Canadian Centre for Policy Alternatives explains:

While there are plenty of good reasons why the Liberals should get beaten up at the polls, one of the key reasons for the change is the carbon tax, due to an aggressive (if questionable) campaign by the NDP and poor communications by the government.

In some public opinion work I’ve seen, two messages about BC’s carbon tax come out loud and clear. The first is that revenue neutrality is a bust — people may be willing to live with a new tax on carbon but think that giving the money back is a dumb idea; they would rather have revenues spent on public transit or anything else that would reinforce climate action. Second, they want tough action on industry.

Quick aside for American readers who may not follow Canadian politics: the Liberals are the right-of-center party that is currently in power in BC; they're the ones responsible for the provincial carbon tax. The NDP -- the New Democratic Party -- is the left-of-center opposition party, which has criticized the carbon tax. And yes, you heard that correctly: the right is proposing a carbon tax and the left is attacking it.

Confusingly, although the BC Liberals and the federal Canadian Liberals are different parties with different orientations and platforms, their fates may be wedded in the next election -- because the national party has also proposed a carbon tax. At the federal level, however, the Canadian Liberals are the opposition party; the national government is controlled by the Conservative Party.

Got that? Okay, so here's what Canada's carbon taxes may mean for the rest of North America...

Taking a page out of BC's playbook, the Canadian opposition leader is proposing an audacious and well-structured carbon tax shift.

And in a continuation of the scrambling of left and right about tax shifting, the proposal comes from Canada's center-left party as an election platform to distinguish it from the governing center-right party (which immediately critized the proposal).

This dynamic exactly reverses the situation in British Columbia, where the carbon tax shift has come from the center-right governing party and the left party is attacking it in its election campaign. (See, for example, this article.)

(In my view, BC's left party is behaving badly. They're deceiving voters about the effects of the provincial tax shift on working families and rural residents, and they're playing on citizens' fears about taxation. It's disappointing, especially considering that the same party proudly introduced North America's first tax shift ever almost a decade ago, with Sightline's help.)

We've pointed out that grocery bags aren't nearly as important as what goes inside the bag. That's true from an energy perspective, but it doesn't account for the ecological harm of plastics. Consider this slightly terrifying article in the Globe and Mail:

...Captain Charles Moore stood at the bow of his 50-foot catamaran and looked toward the horizon. But instead of gliding along calm, sapphire-coloured waters glistening in the afternoon sun, his aluminum-hulled Alguita carved through a sea of shiny, modern-day refuse.

And:

What he discovered at the heart of the deep swirls were miles upon miles of water bottles, plastic tarpaulins, dolls and furniture that have been collecting there for as long as 60 years.

This plastic soup, with billions of tiny shards of the synthetic material floating just below the surface of the water, is estimated to span an area 11/2 times the size of the continental United States.

And:

The United Nations Environment Program says plastic accounts for the deaths of more than a million seabirds and more than 100,000 marine mammals such as whales, dolphins and seals every year. Countless fish, it says, die either from mistakenly eating the plastic or from becoming entangled in it and drowning.

It's useful context, I think, for debates like the one that Seattle is having about whether to levy a 20 cent charge on plastic grocery sacks, and to ban styrofoam food packaging.

Now obviously, it's not as if the city's conservation, by itself, will restore the Pacific to ecological health. But needless consumption is, well, needless. And limitless free plastic sacks are truly unnecessary, as pretty much anyone outside of North America can attest. So I get a little weary of the squeals of protestation at even the mildest efforts to make our economy a little lighter on the land.

The more often I see the same vacuous cant about "social engineering" and "nanny states" applied to recycling and conservation, the more I want to get self-righteous. There are consequences to our consumption, and there's a moral dimension to waste.

(4/25/2008: Updated by correcting two errors)

One of Washington State’s conservative think tanks has just proposed a carbon tax shift. Interesting. (Read it here.)

The Washington Policy Center has garbed its tax shift proposal in anti-government clothing. Some of the rhetoric makes my skin crawl.

But the proposal itself is sensible if modest. It includes a starter carbon tax that pays for a small sales tax reduction. As a bonus, it throws in a business and occupations tax reduction on all capital investment. It’s not goofy. It’s the kind of thing I was hoping we might get about a decade ago, when energy and climate issues weren't front-page news.

Today, I hope we can do better: a comprehensive, auctioned, regional Cap and Trade system with built-in buffers for working families.

I’m guessing that the political chances of WPC’s proposal are somewhat slimmer than the odds for my preferred climate pricing policy. So rather than engage in a fight over the rhetoric, I’ll use it as a springboard to answering four questions that I’ve had from readers and from people at my speeches on climate policy.

British Columbia will exempt car sharing from car-rental tax—a decision announced in the same provincial budget that introduced the world’s most comprehensive carbon tax shift.

Washington, however, will not. Discussion in Olympia on the issue stalled this year. So Washington car-share members are still paying double taxes: sales tax and car-rental tax. It’s disappointing, considering that the legislature passed a law requiring steep reductions in both greenhouse gas emissions and driving overall. Car-sharing does both of those things quite effectively.

Revenue authorities in Oregon and California, meanwhile, haven’t moved to collect rental-car tax from car-sharing companies, as far as I’ve been able to tell. Oregon and California readers, please speak up if I’m mistaken!

So, only Washington is penalizing car sharing among Cascadian jurisdictions. And Olympia’s disappointing decision comes with a silver lining—more on that in a moment.