Becoming Vice President, or the CEO of one of the world's largest corporations, does not mean you are very wise. Just wealthy. Perhaps Mr. Tillerson (Exxon/Mobile) can sell / buy their credits from Mr. Gore's company.
17 Jan 2009
The Gazette
HENRY AUBIN
New life for carbon tax
EXXON CEO’S ENDORSEMENTshould prompt politicians to take a fresh look at the idea
Shocking news on the environmental front has gone almost unnoticed in Canada’s news media. The boss of Exxon Mobil Corp. last week aligned himself with Al Gore, David Suzuki and Michael Ignatieff in urging Washington to adopt a carbon tax. That’s right, Exxon Mobil – the company that Greenpeace once dubbed Climate Criminal No. 1.
Rex Tillerson, chief executive of the company that puts a CO2belching tiger in your tank, said that a carbon tax – that is, a tax on products that cause greenhouse-gas emissions – would be far more effective against global warming than the alternative cap-and-trade approach. The world’s largest oil company has thus abandoned the fossil-fuel industry’s united front for cap and trade. The industry sees cap and trade as the lesser of two evils.
The question now is whether more companies will rally to Exxon Mobil’s heresy. And, if so, whether they will be able to provoke an urgently needed public debate on the two approaches.
Why urgent? Because the horse has almost left the barn. Barack Obama, who takes over the White House next week, favours cap and trade and says putting it in place will be a priority.
Canada is poised to follow: Prime Minister Stephen Harper supports the same approach, as do the New Democrats and the Bloc Québécois.
Some Montrealers can hardly wait. They set up the Montreal Climate Exchange last spring in anticipation of Harper’s launch of a cap-and-trade system. Under such a system, government regulators would give a company a permit allowing it to emit a certain amount of greenhouse gas. Any company that exceeded that limit, or cap, would have to buy emission allowances from a company whose emissions are below its cap. The Montreal exchange would be the only place in Canada for such buying and selling.
Given the support that cap and trade enjoys across the political spectrum, you might wonder why it needs a review. The answer is that this approval is less a sign of cap and trade’s environmental virtues than of its political advantages.
Many politicians fear the carbon tax because they don’t want the stigma of imposing a new tax on consumers. Cap and trade could increase prices to consumers just as much, but it would do so more subtly, imposing the cost upstream on the producers. Voters would never hear that toxic word, tax.
The case for cap and trade has weakened since Obama espoused it a year ago. Cap and trade would require a vast regulatory apparatus. Bureaucrats would have to decide emission limits for industries, deal with lobbyists and politicians pleading for exceptions, check to see whether companies are falsely reporting their emissions, and so on. The potential for laxity and corruption is great. Last fall’s economic crisis has shown the inherent limits of regulatory institutions.
Stéphane Dion tried to sell the carbon tax when he led the Liberals in last fall’s federal election. The idea bombed even though – like Exxon Mobil’s Tillerson – he said the tax should be revenue neutral. Dion failed because – curiously for a veteran teacher – he lacked the pedagogical skills. He couldn’t articulate the carbon tax’s obvious virtues.
A carbon tax could be slapped on with hardly any extra personnel. There’d be no loopholes: It would be as hard to avoid as today’s GST. And it could be imposed overnight, unlike cap and trade which could take years to set up. The worrisome rate of emission increases makes speed an important criterion.
Tillerson’s version of a carbon tax is tougher than Dion’s version – it would, unlike the Green Shift, include gasoline. He’s also a better salesman than the Liberal. “As a businessman,” he said in a speech in Washington, “it is hard to speak favourably about any new tax. But a carbon tax strikes me as a more direct, a more transparent and a more effective approach. It avoids the costs and complexity of having to build a new market for securities traders or the necessity of adding a new layer of regulators and administrators to police companies and consumers.”
There’s still time to reconsider North America’s climate-change strategy. The carbon tax has new, well-placed allies in Washington, including Obama’s economic adviser Lawrence Summers and energy secretary-designate Steven Chu. Note, too, that Canada’s new Liberal leader, Michael Ignatieff, came out in favour of a carbon tax in 2006, well before Dion. Maybe the fight is not over. The Montreal Climate Exchange would lose from a carbon tax, but so what? The planet would gain.
global warming
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