The Politics of Climate
What are carbon taxes (in practice) and what is cap and trade?
–In Canada: charged to producers and passed on to consumers. Each person gets a uniform rebate.
–These are tradeable,
–incentivizes emissions reduction among producers.
–Cap and trade
–FF subsidy reduction –FF production quotas, bans, caps –Etc..
–Alternatives: auctions, non-tradeable.
Green and Denniss: Policy Options (pg. 75)
|From economic to political models: some key considerations||Supply side and demand side are complements|
of economy, etc.) –Tobacco or cannibis: licensing sales, restricting
institutions –Restrict smoking to some places
–Policies not a reflection of what we want •Past examples of supply-side: CFC bans
–They can change what we want (and can do) –International cooperation
More on shortcomings of demand side policies
–Especially problematic internationally
–Alleged “hypocrisy” of Trudeau’s policies.
–Burden on households
–Diverts effort from policies that will address CC more rapidly or directly.
More forward-looking (and dynamic) policy tool
–Increasing price doesn’t alter need to recoup these.
–Issue is how will we invest (price doesn’t always determine this – too indirect). Other risk factors, etc..
–Securities regulators: require reporting on climate
–Ford gov’t killed this idea (along with strengthened reporting of women on corporate Boards)
Other advantages of supply side
–Irony: lowers price in non-participating countries •Overcomes infrastructure lock-in.
–More salient benefit (if sold properly) than increasing price.
–Polling shows people like good ideas but usually don’t want to pay more.
–Example: youth coalition around climate activism.
|•Benefits of reduced emissions are often distant (in time and space), incremental and diffused (too abstract!)
–Consumers experience & understand costs more than the benefits.
–Concern about free riders.
–Easy for populist climate-deniers to oppose.
•Supply side policies can “mobilize” support better (identify with the cause, new types of careers, etc.)
|•Dirty coal – elimination of Ontario coal plants under Ontario Liberal government.
–Policy advocates. Divestment campaigns
(pension plans, etc..)
–Unfairness of making consumers pay (why not producers?).
–Finding supportive coalition of producers.
|What is the best policy instrument?||End Pt. 2|
–Green energy jobs.
–(more cooperation) at int’l level. –Attract investors.
|Concentrated vs. diffuse benefits||G&D: So, let’s target FF itself|
–Carbon pricing and “command and control” are complementary policies
|Federal Liberal government policies||Canadian Banks*|
•Accept Paris targets (1.5C), major reductions by 2030.
•Carbon neutrality by 2050
|•Committed to action in 2015.
•Reality: still heavily financing FF industry
•Three Cdn banks in top ten global institutions financing FF projects.
•Some small progress: TD green bonds.
•What else can be done?
–Activist shareholders could try to link CEO pay to decarbonization.
* Amir Barnea, “Big 5 banks need to take action on climate change.” Toronto Star, Jan 25, 2020.
|Some Advocates of Green New Deal policies|
|Some elements of GND||GND cont’d|
–Too many sectors to coordinate and institutions •Recent years: ratio of corp profits to to change. investment is low.
pricing –need to assist economically displaced
|Cap and Adapt||Mandates and concrete policies|
|•Transition to renewables fairly. Use nontradeable allowances.
•Fallback: rationing plan.
•Rich country targets should be higher. –But use border adjustment tariffs.
–Avoids leakage –penalize non-complying imports.
•Emphasize renewables, energy efficiency demand reduction.
|•Progressive reduction of FF extraction and use.
•Electric vehicle mandates and subsidies.
|Convergence between climate and macroeconomic policies/goals||End Pt. 3|
(like depression-era New Deal of the 1930’s) •Reverse declining rate of taxes and new investment (relative to wealth) in rich countries.
Research paper guidance video posted soon.
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