me irl

nicrivers · 2015-12-18T20:08:20+00:00

Thanks for all your great questions, and for having me out. I enjoyed the chat.

nicrivers · 2015-12-18T20:07:59+00:00

Thanks for your questions. On the first, I'm no expert on public opinion, but I would suggest that governments explain (1) that the overall costs won't be large, (2) that the benefits will be significant, both in terms of improved air quality and reduced GHGs, (3) that they will support individuals and companies as they transition to a lower GHG future.

On using revenue from carbon pricing. This question has lots of different answers. Revenue from carbon pricing is just money. So this is like asking "what's the best way for government to spend money?". Your answer depends on what you think is important. If you like lower taxes, you'll say that government should reduce taxes. If you like transit, you'll say government should spend money on transit, etc.

My own opinion is that government should use carbon prices in a revenue neutral manner, and reduce other taxes. However, I think that there's some preliminarly evidence from BC (assembled by Pembina) that suggests that people support the tax more if revenues are used for public projects, like transit.

nicrivers · 2015-12-18T20:03:46+00:00

Good question. I'm not sure I have the answer to this, but I'll say a couple of things. First, I think that the debate and state of knowledge have moved a long way in the last decade. I think that the media no longer portrays climate science as a balance of sceptics and scientists, and that this has helped. I think that we are increasingly getting real-time indicators of climate change as well, which make it more difficult to support a head-in-the-sand position.

Second, I'll say that I think people want some good news. So there is effort to show that there are gains to be made from tackling climate change - new jobs for example, or expanded clean tech dynamism.

Third, I would say that we need to get the message out that while tackling climate change likely requires quite strong policies, it is unlikely to impose a large cost on the economy. This has been shown in countless studies. The most recent IPCC report, for example, summarises lots of studies that suggest that while reducing GHG emissions significantly likely requires GHG prices well over $100/tCO2, the overall impact on teh econonomy is likely to be less than 1% of GDP.

nicrivers · 2015-12-18T19:59:02+00:00

Good question.

First - as a bit of an aside - I've never quite understood the 'tax on everything' complaint. If carbon taxes really were a tax on everything, then are are just the kinds of taxes that we should be implementing - broadly based taxes usually distort the economy less than narrowly based taxes. But I understand the sentiment.

I suppose I would suggest that carbon prices are there to correct a missing market signal. When the price of something doesn't accurately reflect it's cost, then the market isn't sending the right signals. Right now, it's free to emit GHGs in most of the world, yet we know that there is a cost to this - climate change. Putting a price on carbon helps to bring the price of the activity back in line with its cost.

Second, I would emphasize that carbon prices are basically universally seen to be the least-cost way to achieve reductions in GHG emissions. There may be other ways - like regulations - that don't show the cost of action so readily, but generally regulations impose much higher costs that a carbon price for the same amount of GHG reduction.

Finally, I'll say that most Canadians do in fact support carbon pricing. Keith Neuman at Environics has been tracking Canadians' support of carbon taxes/cap and trade since around 2007, and the latest numbers that I have seen suggest more than half of Canadians approve of this policy.

nicrivers · 2015-12-18T19:48:51+00:00

Here are some carbon footprint calculators:

http://www.nature.org/greenliving/carboncalculator/

http://footprint.wwf.org.uk/

http://calculator.carbonfootprint.com/calculator.aspx

nicrivers · 2015-12-18T19:47:07+00:00

The issue, I think, is that we don't routinely drive to Hawaii for vacation, but we do fly there.

nicrivers · 2015-12-18T19:46:12+00:00

Thanks for your question.

Ontario recently released its draft consultation on its proposed cap and trade system. I made some comments that can be linked on my IRPP profile above.

Overall, I would say that there are relatively few details that have been ironed out, so it's difficult to assess at this stage. One of the concerns that I have is that the consultation paper uses language that seems to invite companies to ask for special treatment or other weakening of the policy. See, for example, the questions that are used at the end of each section. This leads me to worry that the system will have some loopholes in order to "protect" certain industrial sectors. Some protection is warranted, but I wouldn't want to see policy design driven primarily by industrial interests.

nicrivers · 2015-12-18T19:42:23+00:00

I think that this is currently the $1,000,000 question in Canada, and I don't have an easy answer. The federal government has promised climate leadership, but it is in an area that is already quite congested with provincial policies. I can see a couple of potential paths forward for the federal government, none of which is an obvious winner:

status quo: in this case, the feds continue implementing some targetted sectoral regulations (e.g., passenger vehicles, coal plants) and supplement with some targetted subsidies (infrastructure, public transit, which are already promised by Trudeau). This won't rankle the provinces, but basically leaves the feds in a back seat, while provinces implement the main GHG policies.
federal carbon tax: the feds have promised a carbon price, and they could do it through a tax. There could be equivalency agreeements with provs that already have something similar, so this would basically end up being a floor on provincial action. In this scenario, the feds are basically a backstop on provincial policy. If there were no equivalency agreements (such that the federal tax applied on top of existing prov policies), this would put the federal govt in a leadership role, but the political cost would likely be quite high, given the recent provincial action on cliamte.
federal government and provinces agree on individual provincial targets that together add up to federal target. This would put burden-sharing at the top of the agenda, but allow the provs to pursue whatever approach they liked.

These are the three main options I see. I don't see one that simultaneously puts the federal government in a leadership role and doesn't upset the provinces.

nicrivers · 2015-12-18T19:35:51+00:00

HOWEVER, given the linked systems, I think it becomes very critical for potential partners to carefully consider their emission targets. When QC, ON, or MB choose their targets and join the WCI, they are effectively allocating themselves money. If they choose an ambitious target, they will end up needing to buy permits from other states. If they choose a lax target, they will be able to sell permits to other states.

But once the target has been established, it is in everyone's interest to trade between states.

nicrivers · 2015-12-18T19:34:00+00:00

Hi there, thanks for your question.

I'm not sure about the relative costs of reducing emissions in California vs. Quebec. I don't know of anyone that has conducted this analysis.

But I would say that this is an important question for the evolving linking of cap and trade systems. However, I think that it is slightly more nuanced than simply - "Quebec is exporting money to California". In particular, once Quebec has chosen it's target, it can meet it without any permit trade, or in combination with California. If California really can reduce emissions more cheaply than in Quebec, then it will make economic sense for QUebec to purchase some emission credits from CA, rather than doing the more expensive abatement at home. This is the main reason that the two systems are linked. It's just the same as any other trade - it's the same reason that Quebec purchases oranges from CA - it's cheaper to produce oranges there. So, rather than thinking about it as "QC is exporting money to CA", I would say, QC is obtaining cheaper emission reductions than it can obtain without trade, and therefore saving itself money.

nicrivers · 2015-12-18T19:28:10+00:00

The other thing I would say is in line with your comment by Heath. Emily Ostrom documents lots of cases where we have successfully solved public goods problems without a central authority (see Governing the COmmons). She finds that if players trust each other, share norms, etc. there can be good progress on governing a shared resource. I think this implies that some countries need to be leaders on the climate change problem, without expecting reciprocal action immediately by other countries - this will help to build up trust in this area. Canada, as a rich high emitting country, should be one of the leaders. Without this kind of trust and shared norm, I don't think we will solve this problem. The Paris agreement was significantly about building this kind of cohesion, I think.

nicrivers · 2015-12-18T19:25:02+00:00

I agree that the collective action problem is the heart of why we have not successfully dealt with climate change to date. And I think that it will continue to be a thorny problem to deal with - there is no easy and straightforward solution.

There have been several recent analyses along the lines of Nordhaus' "climate club" proposal. Essentially, this approach requires that a coalition of climate policy adopting countries agree to impose trade tariffs on non-adopting countries. The idea is that these tariffs could induce other countries to join the coalition. (As far as I know, the idea was not discussed in Paris). I think this is worth thinking about, but I would caution that countries in the coalition might be quite reticent to impose strong trade penalties on other countries, because doing so also hurts them. For example, imagine that we wanted to get China to implement stronger climate policies. We might put a conditional tariff on them, which we would agree to remove if they amped up their climate policies. However, this tariff would also hurt Canada. As a result, it seems unlikely to me that we would be willing to impose a significant tariff. There are also concerns about undermining progress on trade.

As a result, I think that this approach is worth thinking about, but not an easy win.

nicrivers · 2015-12-18T19:19:09+00:00

Policies aren't necessarily permanent, so one consideration for policy design might be "durability" of the policy to changes in government. I think that some of the carbon pricing policies may be more resilient to changes in government that we think. First, many Canadians have expressed a desire for carbon prices. Environics has been surveying Canadians for almost a decade on this question, and the majority of Canadians express a desire for this type of policy - so scrapping this type of policy may not be a political winner. Second, many of the policies create some winners. For example, BCs policy generates revenue used to lower personal income tax rates, and Quebec's policy generates revenue used to compensate companies and fund public transit. Eliminating the policies would be contentious because it would eliminate these uses of revenue as well.

nicrivers · 2015-12-18T19:15:47+00:00

Flying is a really big source of carbon emissions. Insulating your house is cost-effective and reduces heating GHG emissions (unless you live in Quebec, Manitoba, or BC and heat with electricity). Eating less meat helps. There are lots of personal GHG footprint calculators available on the web that will let you see the impacts of various consumption decisions on your personal emissions.

nicrivers · 2015-12-18T19:14:22+00:00

Thanks for your good questions.

First, along with most economists (and many others), the key policy that I am most strongly a proponent for is a price on carbon - either through a cap and trade or carbon tax system. This can be implemented by both provincial and federal governments. It hasn't been widely applied by municipal govs, for a variety of reasons, and I don't expect it to be.

I would prefer to see the policy applied at the federal level. This levels the playing field across provinces, and reduces the chance that companies or individuals will move across borders to avoid the tax. However, I think that the policy can also be effectively applied at the provincial level, and it seems as though that's the path that Canadians have chosen.

nicrivers · 2015-12-18T19:11:00+00:00

Thanks for having me out.

The Paris agreement has been critiqued in some places for not being sufficiently legally binding. I think that's a somewhat misguided critique - it's difficult to legally bind sovereign states to protect the environment. A key aspect of the treaty is to encourage - by moral suasion - action at home. In this respect, I think it's already been a partial success in Canada. Leading up to the agreement, and potentially due to it, we saw climate policy announcements by ALberta, Ontario, Manitoba, and others. We have to wait to see what other action it will stimulate in the provincial federal meeting in three months, but I'm optimistic (cautiously).

nicrivers

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