Yesterday was the big day, where Justin Trudeau unveiled the final details of his carbon pricing plan, and how the rebates would work for the provinces subject to the carbon backstop, which are going to be Ontario, Manitoba, Saskatchewan and New Brunswick, with the Yukon and Nunavut also kicking in slightly later. (You can find breakdowns here). The Conservatives and their provincial premier allies immediately chimed in to predictably call this some kind of scam, and that nobody believed the rebates would happen, and so on, and so on. Also of note is that Trudeau’s nominal ally, Brian Gallant in New Brunswick, has also grumbled about the carbon price (but if he loses and Blaine Higgs forms government, he too is opposed to it). Manufacturers and small businesses are grumbling, despite the fact that there will be rebates for small and medium-sized businesses under the scheme. Also getting larger rebates will be people in rural communities, given that they have higher carbon costs (and it’s no secret that the Liberals have a harder time winning votes there).
https://twitter.com/davidakin/status/1054753060336078848
With this in mind, here are some noted climate economists who can put some of yesterday’s announcement into proper perspective. (Additional thread from Kevin Milligan here, and Nic Rivers here).
Today's federal announcement is interesting. The federal approach is *simple* and transparent: flat, universal transfers that for a majority of households exceed exp. CTax costs. Provinces that prefer spending or PIT/CIT rate reductions can do so if they want. #cdnecon #cdnpoli
— Trevor Tombe (@trevortombe) October 23, 2018
It's a big day for environmental policy in Canada. Remember, demand curves slope downward and all policies have distributive impacts. If you want to reduce GHG emissions, spur innovative solutions, and mitigate regressive impacts, best choice is a carbon price w a broad rebate.
— Andrew Leach (@andrew_leach) October 23, 2018
Another bit you'll hear a lot today is that we don't need taxes, we need technology. Decades of economic research has shown that carbon pricing programs are the best spur for emissions-reducing technology because they reinforce/complement market demand https://t.co/JMbVsWv34o pic.twitter.com/Oiebpt1Aru
— Andrew Leach (@andrew_leach) October 23, 2018
It's almost as if firms respond to prices by changing their behaviour. Lots of other stuff going on in AB, of course, but electricity demand is growing, and emissions are way down. pic.twitter.com/pkcM40hq7J
— Andrew Leach (@andrew_leach) October 23, 2018
In case you're wondering, this quote isn't from today's announcement. It's from the Turning the Corner Plan which was introduced by the government of Stephen Harper in 2008. #cdnpoli cc @AndrewScheer https://t.co/2GB3H95SOv
— Andrew Leach (@andrew_leach) October 23, 2018
Meanwhile, here’s a look at whether Trudeau can escape the problems of Stéphane Dion’s Green Shift, with points to Trudeau being a better communicator (but I’d argue that journalists prefacing every explanation of the Green Shift with “it’s complicated” didn’t help either). Chris Selley notes that this is the issue that could make or break Trudeau in the next election, which is why he needs to get it right. Paul Wells drops a bit of reality on the language that Scheer and Ford are using, and wonders whether the carbon backstop rebates will start catching on with other provinces.