BC's carbon tax and the alternatives

Mark Jaccard on the need to do something

Mark Jaccard considers the impacts of BC’s carbon tax and explains his willingness to support possible alternatives.

But does this new study make me a devotee of the carbon tax? No. While my position on many things has changed over the last 20 years, the repeated evidence – including from the BC experience – has only reinforced my opinion on the strengths and weakness of the carbon tax. Yes, it is the most economically efficient way of reducing emissions. Yes, I will desperately support any elected politician who implements one – or who wants my help to design one.

But I have never, and never will, tell politicians that they must implement a carbon tax to reduce greenhouse gas emissions. If they ask me to assess their climate policy options, I always say that other compulsory policies, like cap-and-trade or regulations on technologies and fuels, can reduce emissions as effectively as a carbon tax, not as cost-effectively as a carbon tax, but just as effectively. If a committed politician prefers one of these, because he or she fears the political difficulty of succeeding with the carbon tax, I tell them I can design these with enough market flexibility to almost (!) approximate the economic efficiency of the carbon tax.

We humans have amply demonstrated over the last 20 years that we are incapable of acting effectively on global warming. Why on earth would we worsen bad odds by insisting that politicians do a carbon tax when there are less-politically-difficult ways of achieving the same, already-incredibly-difficult objective?

Brad Plumer compared the options last month, at least in the American context. Laura D’Andrea Tyson argues for a carbon tax. William L. Holahan and Charles O. Kroncke argue for cap-and-trade.

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