Campbell's carbon tax may go way of dodo

Michael Smyth
The Province
May 21, 2009

U.S. likely to go for cap-and-trade, just as NDP proposed

The front page of last Sunday's New York Times contained a story sure to
annoy anyone who thinks Gordon Campbell's carbon tax is a bold stroke of
environmental genius.

The article looked at President Barack Obama's policy approach to global
warming and how his administration plans to curb the emission of
greenhouse gases that cause it. (Here's a hint: It's not with a carbon
tax.) Obama favours the "cap-and-trade" model, where the government places
a ceiling on emissions and allows polluting industries to buy and sell
permits to meet it.

"Cap-and-trade has been embraced by President Obama, Democratic leaders in
Congress, mainstream environmental groups and a growing number of business
interests, including energy-consuming industries like autos, steel and
aluminum," the Times reported.

And while cap-and-trade rules the White House, the Obama administration
has effectively ruled out a carbon tax for the U. S., the article said.

Why? Politics, mainly. When then-president Bill Clinton proposed a
national energy tax back in the 1990s, the idea went down in flames and
the Democrats lost control of Congress. Cap-and-trade, by contrast, is
more politically salable. It has a proven U.S. track record, too, helping
stop the environmental scourge of acid rain.

So where does all this leave little old British Columbia and Campbell's
precious carbon tax? Out in the cold. The carbon tax is now effectively
dead, south of the border. And if cap-and-trade becomes a reality in the
U.S., Canada will surely follow suit, snuffing out any more carbon-tax
brainstorms here as well.

In other words, British Columbia will be going it alone with a carbon tax,
while the rest of North America takes a different path in the fight
against global warming.

Is it any wonder Campbell now says he might strangle his own carbon-tax
baby in the cradle? In one of the great under-reported stories of the B.C.
election, Campbell revealed the carbon tax will be reviewed in 2012 and
might be frozen in place at 7.24 cents per litre of gas and not rise any
further.

"A lot of environmentalists want it to keep going up," Campbell told me on
the campaign trail. "I think you have to find a balance. It could go up or
you could leave it as it is." But wait: Isn't the whole point of a carbon
tax to keep jacking it up every year until people stop burning those evil
fossil fuels? Even Campbell's own climate-change adviser, economist Mark
Jaccard, says the tax must rise to 24 cents a litre and higher over a
decade and beyond to be effective.

But Campbell told me that may not be necessary, if cap-and-trade does the
same job anyway. (Read more of the premier's comments at my blog, address
listed below.) The irony here is that this is exactly what NDP Leader
Carole James was arguing when she promised to scrap the carbon tax in
favour of cap-and-trade. She was vilified for doing it while Campbell was
hailed as some kind of visionary.

My prediction: As cap-and-trade becomes the standard for North America,
Campbell's carbon tax will be frozen and forgotten, though it will have
served its political purpose of softening his hard-edged image.

msmyth@theprovince.com

Learn Victoria's Secrets at www.theprovince.com/smyth