By Matt Paul
January 14, 2019
Putting a price on carbon to save the planet is another scheme to re-distribute wealth that may be tried because enough people believe in it. Enough people have been convinced that fires in British Columbia, California, Alberta and Flooding in other areas along with other extreme weather events are indicative of a new trend brought on by man-made issues.
Pipelines are scuttled and other resource projects are under greater scrutiny in this last ditch effort to save the planet. In infinite wisdom our government seeks to punish the consumers of certain non-environmentally friendly goods and the businesses who make these products with a tax saying that it is a way to make the world healthy and saying that it is economically sound theory.
I would like to bring up an economic concept called elastic vs inelastic demand for goods. When something like a beef hamburger is chastised in the press and throughout the world as being unhealthy people may make the switch to alternative food options. The result of the switching to alternative choices may result in a decrease in price due to the increase in supply of the materials in the beef hamburger. The ease at which it is possible to make changes in choices makes products more elastic and therefore the price is very much more closely tied to supply and variations in supply.
In the case of a substance like Gas, the choice to switch involves much more complicated factors for consumers and businesses to make. If the price of carbon creates a price increase of 30 cents per litre people will choose to consume less if they can, causing the supply to increase which would cause a price decrease if there is a viable opportunity to reduce consumption. If the supply of electric vehicles and recharging stations were adequate to meet true consumer demand this would most likely be a viable case.
The fact is people who drive often ration their trips and create efficiencies as it is currently in Canada. Canadian household reduction in consumption does not materially exist because it is really not viable unless people had rural transportation options and metropolitan transit could actual accommodate mass usage. Car-pooling with three or four others may challenge the bonds of inclusion and diversity or child care demands as people often need the flexibility of a mid-day errand or other trip. City dwellers taking public transit options do so out of necessity however many who can afford a vehicle for weekend use have one and would not opt for buses as a sole support. The other viable opportunity is to switch to an electric vehicle which requires charging at home and perhaps on the road at one of the few available stations in the metro area you live in. At this stage in the game 100 trillion dollars would need to be spent to allow the economic system to provide a viable alternative to gas and diesel.
So the government wants to put in a tax to punish emitters and says it will re-distribute the tax to mitigate the effects of this tax on average Canadians while using the revenue to do what government does best, run efficient industries and new technologies. If this was the plan why did previous governments subsidize the auto industry that generally offers gasoline or diesel cars? Why does the government buy pipelines? Seriously, what about all the materials extracted to create these wireless networks, internet networks, computer systems, cell phones and the vast amounts of energy they require. Are they too not also processed using invasive processes that emit. Instead of taxing everyone to punish a few, provide incentives to new sustainable scalable technologies to solve the old problems and ease the access to market for these so that consumers have a choice when they choose their next vehicle propulsion system to choose electric.
If that will truly save the planet how do we create consumer perception that will allow Canada’s Electric vehicle sales to creep up to 20 to 30 % from 8.3 % as of the 3rd quarter of 2018? Would there be 100’s of thousands of new jobs created by that dramatic up tick to offset the loss service station, mechanic and other related jobs? The economics of a carbon tax are to force a change in behavior. We may not be free market capitalists but for the new social justice to save our planet we will submit to another tax on our household budgets. I think a carbon tax is far from needed. More likely we need new leaders in the Environmental and Political spheres.