Showing posts with label countervailing duty. Show all posts
Showing posts with label countervailing duty. Show all posts

Thursday, October 24, 2019

Climate Panic: Economics, Ignorance and Mental Illness

Speaking at the One Young World conference in London on Wednesday, BP chief executive Bob Dudley said:
“unless you put a price on something, you can’t control how it’s consumed.” He then called for a “united effort to put a price on carbon.

“One of the things we talk most about doesn’t have a price,” he said. “There’s got to be a united effort to put a price on carbon, so when you click a switch on the wall for electricity you’re going to pay a higher price.”

“Getting a price on carbon,” he said, will “change the (emissions) situation more than ... four-year outlooks from politicians.”

The outgoing BP boss noted that while emissions were stagnating in Europe and North America, other parts of the world were falling behind in addressing the climate crisis.

“There are big coal-fired power plants opening in other parts of the world” he said “and that’s the epicenter of the problem.”
But carbon taxes are seriously harmful if applied only on a local basis. They handicap local industry by promoting the transfer of carbon-intensive industries to jurisdictions without a carbon tax.

The solution?

A countervailing import tariff on goods and services from jurisdictions without a carbon tax.

In Canada, where the re-elected Liberal Government plans the introduction of a carbon tax, the countervailing duty is absent, which is one reason that Canadian oil and gas companies are moving south of the Canada:US border — to avoid the million dollars in carbon tax on the diesel fuel consumed in drilling a gas or oil well.

The same incentive to off-shore or out-source to carbon-tax-free jurisdictions will undermine the Canadian steel, lumber, mining and manufacturing industries, which are precisely the industries where Canada has comparative advantage relative to her trading partners.

But apparently such simplistic logic is beyond the grasp of our rulers, let alone the majority of the public for whom Climate Panic seems more closely akin to neurotic illness than an environmental  problem requiring a rational solution (cf, E. Michael Jones: The Religion of Greta Thunberg).

Friday, November 13, 2015

Rising Atmospheric Carbon Dioxide Concentration, Part IV: Reversing the Trend

Atmospheric carbon dioxide concentration has risen over the last 250 years by just over 40%, from 275 parts per million (ppm) by volume to almost 400 ppm, and is currently rising at the rate of 2.11 ppm per year, which if sustained means a doubling of the pre-industrial concentration within 70 years.

This change in the chemical composition of the atmosphere has at least three consequences of major concern:

First, by absorbing heat radiated by the Earth to outer space, the carbon dioxide added to the atmosphere warms the planet, though by what amount is highly uncertain due to the complex interactions among climate variables. 

Second, by increasing the efficiency with which plants use water in photosynthesis, it has increased global primary production by, according to some estimates, as much as ten billion tons per year. But not all plants respond to an increase in atmospheric carbon dioxide concentration in the same way, so that some species will increase in range and habitat dominance, while others will be at a competitive disadvantage. The net result will be the loss of many species both of plants and of the animals that depend on those plants for food or shelter. 

Third, it appears from current research that rather small increases in atmospheric carbon dioxide concentration may severely impair certain important human cognitive capacities.

The chief causes of rising atmospheric carbon dioxide are: 

Combustion of fossil fuel (65-85% of total change).

Conversion of old-growth forests to short-rotation plantations or bare land with the resultant atmospheric release of carbon fixed in both trees and forest soils (10-25% of total change). 

and the manufacture of cement, which involves the conversion of calcium carbonate to calcium oxide with the release of carbon dioxide (5% of total change).

Cooking with wood. Image source
As the Third World modernizes, scope for reducing worldwide cement usage looks slight to non-existent. There is, however, considerable scope for reducing forest destruction. Approximately half of the timber harvested worldwide is used for fuel wood, and that mainly for cooking over an open fire. Cooking over an open wood fire is highly inefficient. Converting two-thirds of the World's population from the use of fuel wood for cooking to the use of naturqal gas would massively reduce the associated carbon emissions, while also reducing the emission of climate-warming and health-damaging soot and volatile organic compounds. Substantial reduction in timber use as a structural material will be more difficult to achieve, although increasing substitution of oil-based plastics for wood is likely to occur.

Old growth stump versus spindly second growth forest, British
Columbia. Source
Large near-term reductions in carbon emissions can only come through reductions in the use of fossil fuel. Such reduction during a period of Third World modernization may be difficult to achieve, but is essential if a catastrophic poisoning of Earth's environment is to be avoided. For this, three developments are required. 

First, the upgrading of industrial processes to achieve higher energy-use efficiencies. Gas turbine electricity generators, for example, can have an energy-use-efficiency at least 50% higher than most existing coal-fired plants. 

Second, the redesign of the human environment, including residential architecture and transportation systems, to eliminate the massive expenditures of time, capital and energy necessitated  by the suburban/commuter life-style. 

Third, the redirection of consumption from energy intensive goods and services, such as airline travel, SUV's, and monster homes, to low-energy-content goods and services, including bicycles, and health, fitness, educational and religious services.

The efficient commuter. Image source
The challenge is to devise a way of driving the necessary changes in methods of production, life-styles and thinking. But central to any effective change in course will be to tax what we don't want, i.e., carbon dioxide emissions to the atmosphere, and to avoid taxing all the low-carbon goods and services that we do want. This means a carbon tax is essential. All that is needed is for governments to adjust their budgets to raise revenue from carbon emissions while reducing taxes on income. This will automatically adjust consumption preferences and reduce overall carbon emissions.

Beside its direct effect on carbon emissions, the carbon tax has two other important features. 

First, it will drive increases in carbon-use efficiency in the most cost effective way. Those who can reduce their emissions for less than the cost of the carbon tax will do so, whereas those who cannot reduce their emissions for less than the cost of the carbon tax will pay the tax and continue emitting, though at a reduced rate as the cost of what they sell is raised as a consequence of the carbon tax. Thus will be achieved a reduction in emissions at the lowest overall cost to the economy, with scope for increasing the reduction indefinitely by increases in the carbon tax rate. 

Second, the effective application of a carbon tax can be undertaken by any jurisdiction without consultation or agreement with any other jurisdiction. There is no need for international agreement. All that is needed is a countervailing import tax on goods or services from countries without a carbon tax of comparable severity to one's own. Such a provision not only protects the home industry from unfair foreign competition, but provides other countries with an incentive to introduce their own carbon tax.

Sadly, the beauty of the carbon tax mechanism, which we spelled out eighteen years ago, has yet to be recognized by any national government. It is encouraging, however, that the new government of Canada has promised a national carbon tax, although the value of such a measure will depend upon the details. There must be no exemptions for favored industries or regions and it must be accompanied by a countervailing import tax to protect Canadian jobs from unfair competition.

Related: 

CanSpeccy: Rising Atmospheric Carbon Dioxide Concentration, Part III: Induced Stupidity and the Decline of the West

CanSpeccy: Rising Atmospheric Carbon Dioxide Concentration, Part II: Ecosystem Disruption

CanSpeccy: Rising Atmospheric Carbon Dioxide Concentration, Part I: Carbon Dioxide Is Not a Greenhouse Gas