Carbon Tax-Shaky Science and Bad Example

When a lot of people jump on a bandwagon without fully using facts to explain the reasons for such a move one should be suspicious. Often the jump just seems to be popular ; what every one else is doing . Be with the crowd. I suspect it is a normal human trait to some degree.

Such has been the case with those alarmists on climate change. Not long ago they called it global warming but when ‘a pause ‘ happened in the warming they changed the words. And the extreme predictions of IPCC ( UN sponsored ‘ International Panel on Climate Change) have not materialized . You see the models had assumptions, and often the assumptions were so structured so as to get a higher temperature result . The hockey stick graph , so important to the early catastrophic predictions , for example, was exposed as problematic by none other than two Canadians : Stephen McIntyre and Ross McKitrick.

On McKitrick’s website there is an excellent review of the hockey stick controversy entitled ‘ A Brief Reconstruction of the Hockey Stick’.

Now the new fad is the carbon tax, following ‘naturally’ on the heels of the climate alarmists and the IPCC.

Two points :

1. The BC carbon tax is often referenced as a good model by those who favour such a tax here in Canada.

Well , There are some who see the BC tax as not a model and/ or has its own problems. For example , the Auditor General of BC .

Here is what the AG said of the tax’s supposed neutrality

For release: Mar. 26, 2013
Auditor General finds lack of credibility in carbon offset purchases

VICTORIA — According to Auditor General John Doyle’s latest report, titled An Audit of Carbon Neutral Government, the majority of offsets purchased to meet government’s carbon neutral goal in 2010 were not credible. The audit examined two projects which accounted for nearly 70 percent of the offsets purchased by government to achieve their claim of carbon neutrality: the Darkwoods Forest Carbon project in southeastern B.C. and the Encana Underbalanced Drilling project near Fort Nelson.

“Offsets can only be credible in British Columbia if, among other things, the revenue from their sale is the tipping point in moving forward on a project. It must be an incentive, not a subsidy, for the reduction of GHGs,” said Doyle. “However, neither project was able to demonstrate that the sale of offsets was needed for the project to be implemented.”

Encana’s project was projected to be more financially beneficial to the company than its previous practices, regardless of offset revenue, while the Darkwoods property was acquired without offsets being a critical factor in the decision.

“In industry terms, these projects would be known as ‘free riders’,” said Doyle. “Together, they received $6 million in revenue for something that would have happened anyway.”

Doyle also commented on the unprecedented level of interference by an audited organization and industry in the audit.

“Of all the reports I have issued, never has one been targeted in such an overt manner by vested interests,” he stated. “Nor has an audited organization ever broken my confidence as did the senior managers at the Pacific Carbon Trust by disclosing confidential information to carbon market developers and brokers.”

“I was astonished to have to expend my Office’s limited resources responding to an orchestrated campaign of delay and interference, led by a public sector entity on behalf of market interests.”

After that report a self assessment by the Climate Secretariat of the Government responded by saying T hat actions have been taken. The problem , of course , is that the Government is assessing itself . I could not find another AG review of the matter.

Secondly, a university of Ottawa study , through a Sustainable Prosperity initiative , said this about the BC tax:

‘In other words, the impact of the carbon tax package on low-income households has shifted from an initially positive economic impact to a negative economic impact. This analysis suggests that income tax reductions and tax credits should be indexed to any future increases in the carbon tax rate, to continue to mitigate potential regressive impacts of the carbon tax. ‘

Thirdly, there is Phillip Cross , former chief economist for Statistics Canada , now with McDonald Laurier Institute , writing in the National Post :

‘There are several problems with using B.C.’s carbon tax as a model for other provinces. The structure of B.C.’s economy is unique, with no large oil refinery and no petrochemical industry (fuel is trucked from elsewhere). The main use B.C. industry has for petroleum products is diesel fuel for transportation. So the carbon tax had much less impact in B.C. than it would in Alberta, Ontario or Quebec, all of which have large industries that rely on petroleum inputs. These producers in central Canada already are at disadvantage with competitors in Indiana and Illinois, who have access to low-cost feedstock from Alberta’s oilsands (denied to central Canada by their foot-dragging over new pipelines). Adding a carbon tax would further hurt the competitiveness of these industries.’

Cross also states that the BC tax did not reduce gasoline consumption, obviously a critical component to the success of the tax.

So , this much celebrated wonderful tax looks like it has problems and should not be used as a great example for elsewhere.

2. More importantly is the the way in which the supporters of a tax have tried to show the social cost of carbon to justify the tax . A paper by Professor By Ross McKitrick ( same hockey stick man) has showed ,with other researchers from the Heritage Foundation in the US , that the models used to demonstrate the negative impacts of carbon are seriously flawed .

Quoting from the article based on the report :

‘To emphasize, we only changed one thing: we replaced a guesstimate of the ECS ( equalized climate sensitivity ) parameter with a recent estimate based on long-term observational data. And the results were dramatic. The SCC ( social cost of carbon) falls, and in the most detailed of the economic models, it is no longer clear that CO2 is even a net social cost.’

Of course, here in Canada our Prime Minister has already made commitments on our behalf at the Paris conference for millions of dollars

He is in a rush , therefore, to meet these commitments , promising a carbon tax. And if the Provinces do not concur, his Government will impose it .

Surely there should be more certainty before we all embark on the Government taking more of our money. Using shaky science and examples that are irrelevant do not make good public policy

For more information on references above one a can go to the the BC Auditor General website , the Frontier Institute for Professor McKitrick or his own website , and the McDonald Laurier Institute for Mr. Cross.


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