More on carbon taxes....
IDNUMBER 200809120001
PUBLICATION: National Post
DATE: 2008.09.12
EDITION: National
SECTION: News
PAGE: A1
BYLINE: Craig Offman
SOURCE: National Post
WORD COUNT: 630
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Carbon taxes reap mixed results in Scandinavia
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When Stephane Dion and his team trumpet the success of carbon taxes in other countries, they are usually short on specifics. Perhaps for good reason.
While every Scandinavian country has had its own version of the Green Shift in place since the early '90s, there is no direct comparison with the Liberals' plan to be found anywhere across the Nordic divide.
Equally important, the results from country to country have been mixed.
"No country other than Denmark has seen large declines in emissions," said Monica Prasad, a sociology professor at Northwestern University and an expert on taxation as a regulatory tool. "Norway has seen a 43% increase."
Mr. Dion's proposal involves a levy at the wholesale level that would apply to a broad range of such fossil fuels as coal, propane and oil, which would be taxed on the amount of offending carbon that they emit.
According to the Green Shift manual, the 700 largest emitters, mostly from heavy industry and power plants, would account for a majority of the program's estimated $15-billion revenue, money that would eventually be funnelled back to Canadians through tax cuts and perhaps social programs.
Generally speaking, however, the countries Mr. Dion cites -- such as Sweden -- use a different approach.
They levy carbon taxes on consumers, not on heavy manufacturers. So those modest-to-respectable reductions in emissions could be attributed to changes in consumer behaviour, as well as massive shifts to cleaner forms of energy -- not necessarily to manufacturers cleaning up their act.
"Most of the success comes from those countries who have invested heavily in alternative sources, such as wind power," Ms. Prasad said.
Experts say Denmark, for example, weaned itself off coal, one of the dirtiest forms of energy, embracing wind power as an alternative. Percapita emissions there fell 15% from 1990 to 2005.
Impressive as that model might be, it is not entirely analogous to Canada's situation.
Canadian consumers already rely on other, cleaner forms of traditional energy such as nuclear or hydroelectric power, so they might not see such quick, dramatic reductions if they flipped to alternative forms. And while wind farms, for instance, are a promising source of clean-tech, they are not as ubiquitous on the Canadian landscape as they are in Denmark.
Though the Liberals have floated Norway as another model country, it, too, is not comparable, and many insist its own program has, if anything, had a negative effect.
For many years, natural gas, aviation and shipping companies were only some of the companies to which the Norwegian government gave partial or full exemptions, but that program has since been extended to almost all polluters.
According to Ms. Prasad, the government was initially reluctant to raise tax rates, which might have pushed companies to seek alternative energy forms -- and put a hole in national coffers. "If you raise the tax, you kill the goose that lays the golden egg," she said.
After examining the country's huge spike in emissions -- perhaps attributable in part to a robust oil and gas exploration industry -- a Statistics Norway study found that "despite considerable taxes and price increases for some fuel types, the carbon tax effect has been modest," says the report. "The carbon taxes contributed to only [a] 2% reduction."
With its impressive 9% reduction in carbon emissions, Sweden exceeded the Kyoto Protocol targets, but its program also is not an apples-to-apples comparison with the Green Shift, which hopes to grab a big chunk of change from Big Oil, not from its consumers' pocketbooks.
"Oil companies there pay a low carbon tax," said Peter Berck, an expert on the Swedish experience who teaches agricultural and resource economics at the University of California, Berkeley.
And unlike the Swedish model, the Liberal plan hints, however vaguely, at creating social programs with an unspecified amount of the windfall.
When asked if he thought the Green Shift would fly, Mr. Berck hedged. "I'd rather see my energy bills go up and my taxes go down than see the government embark on some new project. But I'm an American."
