The
Globe & a Draft Climate Change
Action Plan
May 2016
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On May 17th
the editors of the Globe
and Mail did
what can only be described as a dump job
on a Draft Climate Change Action Plan
for Ontario that they had somehow
obtained. This was followed May 21st
with a commentary by the Globe’s own
Jeffrey Simpson – a commentary that is
principally
a character dump job on the Minister
responsible. On
May 24th the Globe’s Margaret
Wente mainly repeated the irrational
passion against the Plan adding the
profound
thoughts that the plan would promote
electric cars that nobody wants and
create
a “gravy train.” Well, Margaret, people
are lining up to buy the new more
affordable
Tesla electric car and I bought a hybrid
at a viable cost without any subsidy. On
May 25 the Globe business section
featured Christopher Ragan, economics
professor, essentially saying economists
are special, they don’t go with things
that normal people find plausible, they
know that market pricing is the most
efficient way to go. We should put a
serious price on Greenhouse Gas
Emissions
– end of story. I think he is not
speaking for all economists. Economist
and Nobel
prizewinner Joseph Stiglitz tells how
the “market” is a package of rules and
regulations. He questions faith in the
market. Given a number of conditions
nearly
always present “… there is in fact
little presumption that markets are in
general efficient. This means that there
is an enormous potential role for
government to correct these market
failures.” His experience within the
Clinton
administration and with the World Bank
was practical as well as academic –
wider
than that of most economists. (See
article October 2013 The Price of Inequality.)
The good news
is that the Globe’s editors are at pains
to reassure us that the Globe’s recent
conversion to recognizing a need to take
action on climate change is indeed real.
Action must be taken, they agree. The
editors say they love transparency and
indeed they are transparent: they have a
doctrinaire solution - the BC approach.
Set a price on carbon and let the
invisible hand of the marketplace solve
the
problem. It sounds attractive and
plausible, but it also has the worrisome
sound of a passé fanfare promoting the
supposed free market come hell or high
water. And it doesn’t stand up to
reflection.
For starters,
let’s remind the editors of supply and
demand. As the world moves away from its
use of oil and gas the price of these
will inevitably fall. And the timing of
this is uncertain. That might make the
simple carbon tax method tricky and less
transparent than the Globe presumes.
It’s hard to believe Margaret Wente is
naïve enough to think that there is no
gravy train already around the oil and
gas industry. The vested interests of
those industries would add to the
difficulty of setting taxes or removing
subsidies around fossil fuels. As
Stiglitz reminded us, the so-called
“free” market place is replete with
rules
and regulations already.
I noted
Rubin’s cautions earlier (See article
July 2012): “The link between the cost
of
oil, the viability of tar sand oil
processing and the condition of the
Chinese
economy is a delicate balance. If demand
from China’s economy falls, so will
oil prices and the viability of
extracting Alberta’s oil.” The
world price
of oil can change from any number of
other factors, such as global economic
growth rate or a treaty with Iran
freeing up Iranian oil production. In
our own
experience, oil and gasoline has had
price reduction. I recently paid $0.96 a
litre compared with the $1.37 I paid18
months ago.
Then there is
the assumption that taxing has a simple
direct effect on gasoline consumption.
In
an earlier essay (January 2011) I noted
that during the 1999 Kosovo crisis, when
black market prices reached $8 a litre,
people in Serbia left their cars at
home.
Turned on its end, this fact is
suggesting that it takes a sudden
whopping wartime
gasoline price increase to seriously
impact car usage. This is not a simple
practical step for a sensible government
to take.
Then there is
a quite different problem – the fact
that natural gas is available at a low
price. Reducing the large dependence on
low cost gas heating for homes is
necessary. That too will be difficult
and appears to require a different tack
from that relating to oil/gasoline. Now
let’s recall that the Paris
international agreement is really about
reducing the use of fossil fuels and
put some of these simple thoughts
together.
The editors
claim to be transparent and want
transparency, but it is far from clear
how the
magic wand of a carbon tax will
translate into any clear predictable
reduction
in fossil fuel usage. Relying on price
and an invisible hand alone seems unwise
as a response to a commitment to reduce
use of these fuels. The Globe wants to
rely on a carbon tax and then all our
little individual decisions that it
supposes will magically produce a
reduction in greenhouse gases. But
democratic
debate on measures that will directly
result in less greenhouse gas seems a
more predictable and transparent way
forward.
Finally, as
noted above, a friend told me the BC
carbon tax scheme has not reduced carbon
dioxide
production there. And Simpson begins his
diatribe by implicitly conceding this
may be true, when he says the carbon tax
in BC is too low. But the problem
isn’t about a tax or its level. The aim
is to cut reliance on fossil fuels –
not to preserve the imaginary freedom of
the imaginary marketplace.
In addition
to his attack on the Ontario Minister
responsible for the Draft Plan for being
a
big spender and a visionary during his
career so far, Simpson manages to repeat
himself in his attack on actions that
might in fact reduce the burning of
fossil fuels. The attack is more about
rhetoric than thought content:
“ … the
Ontario approach breaks almost every
rule of sound administration and will
therefore quite likely prove to be a
disaster. It is complicated, not
straightforward; opaque, not
transparent; top down, not bottom up;
bureaucratic, not flexible; reliant on
the most costly economic approach,
namely regulations and subsidies, but
wide open to political manipulation; a
feast for lobbyists and interest groups
lusting for subsidies; a
definition-in-waiting for a boondoggle.”
Presumably this
description of a real world democracy in
action and the reference to interest
groups lusting for subsidies is not
meant to refer to the oil industry and
the subsidies
and tax breaks already in place for the
oil, gas and nuclear industries.
If carbon tax
and the invisible hand are questionable,
what is the experience of what has
worked? During over a decade of
corporate denials about the problem of
fossil
fuel use and global warming there has
been legislation about cars, largely
coming from California.There
has been
legislation on emissions and legislation
requiring hybrid vehicles and electric
vehicles to be built by car
manufactures. Initially there were
incentives for
people to buy them. By 2016 this has
given us viable electric cars like
Nissan’s
and the affordable Tesla that people are
lining up to pay $1000 just to order. People
are now buying hybrids at market
prices. There seems to be the beginning
of a new market. In Ontario efforts to
promote solar and wind energy have
developed alternative economies around
solar
installations and maintenance. As I
drive through rural Southeastern Ontario
I
am amazed by the increasing arrays of
solar panels. Storage sheds are built
with panels on their huge inclined
roofs. Arrays are mounted at the edges
of
fields. This is a new rural industry.
Then, there are now panels on the roofs
of public buildings in Toronto.
All this was the
result of legislation by public
representatives in public places with
public
documentation. I call that transparent.
And, with a yes to Simpson, all the
usual visible political machinations
were there. The Globe editors claim this
was done badly in Ontario mainly because
it was done by increasing electricity
prices. History has yet to have the say
on all of that. But it was done.
So what do we
expect if we want to take action to
reduce the use of fossil fuels – not
just
the gasoline for our cars but also the
natural gas heating our homes and
workplaces? All the kinds of measures
that seem to have provoked the hair
tearing for the editors of the Globe and
Jeffrey Simpson! They
are inevitably measures pushing us
towards
use of electric cars, solar and wind
electricity generation, towards the use
of
geothermal energy for heating and
towards reducing use of natural gas for
heating. Perhaps the most dramatic and
politically difficult of the necessary
changes is moving the heating and
cooling habits of a large percentage of
the urban
population away from using gas that is
now a cheap option. There is little
choice about what has to be promoted.
And if I want to believe we can meet our
targets in reducing fossil fuel use, I
want some concrete transparent measures
that offer a chance to do that – like an
electric car as opposed to a gasoline
car.
I’m grateful
to the Globe for getting me to think
about this. Their carbon tax alone is
not
the answer. Relying on the invisible
hand of the marketplace from Adam
Smith’s 18th century Scottish caring
community town market doesn’t cut it in
today’s market dominated
by relatively few huge international
corporations. Of course micro-management
of an economy is not desirable either.
What is needed is some clear agreed
public directions and then incentives
like a tax to manage them. So I have no
problem with legislation around electric
cars and car emissions or with
incentives for geothermal energy and
electrical energy and against natural
gas
usage. And, yes, in a democracy, all
that will have to be watched carefully.
The Globe has shown it can do that. The
editors
would be better spending their time
helping us reflect on specifics
rather than issuing vague doctrinaire
diatribes against a package aiming to
promote plausible measures. Legislating
standards and using sticks and carrots
are the only tools a democratic
government has. The Globe should expect
them. Keep
working on this Ontario.
