Isra-Mart srl : So, what about carbon emissions?

www.isra-mart.com

Isra-Mart srl news:

Stephen Harper is warning that the NDP's plan to reduce carbon emissions would increase gasoline prices. But the reality is that Canadians would likely feel more pain at the pumps under any of the main political parties.

Harper said Thursday that an NDP government would have a "devastating effect on consumers' pockets." The Conservatives say the NDP's proposal to regulate emissions would raise gas prices by at least 10 cents per litre.

Invoking a price hike at the pumps is a smart political ploy by the Conservatives. Perhaps no issue provokes more outrage among consumers than gas prices.

But Harper neglected to mention that the Conservatives also plan to limit the amount of emissions that companies can release — an approach experts say would also raise consumer prices.

What is the NDP plan?

The NDP has promised to impose "hard emissions limits" on Canada's biggest industrial polluters. If a company exceeds those limits, it would have to buy emissions "credits" auctioned by the federal government. The credits would be traded on an exchange, like other commodities. Such a system is known as "cap and trade."

The idea is to put a "price" on emitting the greenhouse gases that cause climate change, giving companies an economic incentive to reduce their emissions.

The NDP would set the initial price of permits at $45 per tonne of carbon emissions. At that level, Canada should meet its target of cutting emissions by 17 per cent from 2005 levels by 2020.

The NDP plan doesn't cover the transportation sector or consumer sources of emissions such as home-heating oil.

Would the NDP system increase gas prices?

Layton rejects the notion that gas prices will rise under his plan, saying oil companies shouldn't pass on the cost of carbon regulations to consumers.

"I don't accept this analysis that's being offered that the big polluters should be justified to raise prices just as we're telling them that they're going to have to deal with the cost of pollution," he said.

But experts say it's all but certain gas prices would rise under the NDP proposal.

The Conservative figure of a 10-cent-per-litre increase is based on an estimate by University of Calgary economist Jack Mintz.

Canadians already pay a federal excise tax of 10 cents on each litre of gasoline they purchase. In a 2008 paper he co-authored, Mintz proposed restructuring the excise tax so it would be proportional to the amount of carbon consumed throughout the life cycle of gasoline, from extraction to refining and consumption. At the rough level of carbon price the NDP is proposing, the additional cost per litre at the pumps would be 10 cents, according to Mintz.

However, University of Alberta business professor Andrew Leach estimates the price of gas likely only would rise by about three to four cents per litre under the NDP plan. He says the impact wouldn't be as great as Mintz estimates, because the NDP is only proposing at this point, to regulate the production portion of the gasoline life cycle.

What are the other parties proposing?

The Liberals are also proposing a cap-and-trade system on "large industrial facilities." But unlike the NDP, they're not saying how steep a carbon price they will charge.

The Conservatives offer even less detail. The party's platform cites Canada's current emissions-reduction target, and declares that a re-elected Conservative government "would continue taking action on climate change."

The Tories have proposed carbon targets for coal-fired power plants, and they say they'll continue to regulate industrial emissions on a sector-by-sector basis. But they caution that any Canadian rules must be "harmonized" with whatever approach is adopted by the United States, which has yet to establish regulations.

"If you put in place regulations, and they actually reduce emissions, chances are they're going to raise the cost of that product," said Leach.

Which system works best?

A 2002 discussion paper prepared by the federal government concluded that a broad cap-and-trade system would be cheaper and more effective than a "targeted" sector-by-sector approach. "This is because, once the overall target has been set, market forces have free rein to find the lowest-cost means of meeting it," the paper states.

The Conservatives often cite Mintz's work to bolster their case for various policies, including corporate tax cuts. But like many economists, such as former U.S. Federal Reserve chairman Paul Volcker and Nobel laureate Joseph Stiglitz, Mintz believes a carbon tax levied broadly across the economy would be a more efficient way of pricing carbon than putting caps on industrial emitters. Former Liberal leader Stephane Dion was skewered by the Conservatives in the 2008 election for proposing a carbon tax known as the Green Shift.

"If you really want to curtail consumption of carbon, everybody has to be engaged in that," said Mintz. "If you are going to price carbon, I've always felt a carbon tax is a good approach."