The Sudbury Chamber of Commerce and the Ontario Chamber have released a report demanding that the Province negotiate with the Chambers to protect its members from any ill effects of the province’s promised cap and trade system.
During the provincial by-election I explained to Liberal candidate Glenn Thibeault that Cap and Trade is very hard to do well. There is a lot of pressure to make exceptions. There is a lot of back room dealing. Everyone has a story about whey they deserve more free credits. Success depends on resisting potentially endless special pleading. I asked Glenn if he was sure he and and all his cabinet colleagues would have the backbone to resist. Once you open the Pandora’s box of special treatment, the only friends you have left are the friends you buy.
That’s what is happening right now, right out in public with the Ontario Chamber of Commerce’s report. They have launched a public relations program to sabotage the cap and trade system. They don’t see it as sabotage – they see it as protecting their members. They want a study, they want to slow down implementation, they want a guarantee that no members will be hurt and that no jobs will be lost.
The government will make concessions, and the wonderful Cap and Trade system will start the long march to 2050 with a broken leg and a driver who can’t see the where we are going because he doesn’t have enough backbone to lift his head.
Even before the by-election I made speeches in which I explained that, even when they do manage to get the caps in place, governments find it almost as hard to keep reducing the caps as it was to negotiate the original levels. Any caps will help a bit, but, to affect climate change, they have to be reduced quickly. It is hard to adjust a complex system, especially when you are dealing with property rights, which is what the tradable caps really are.
After the by-election I wrote an intervention specially for the Minister of the Environment, Glen Murray, explaining in detail the problems with cap and trade and the advantages of a simple carbon tax.
If the two Glen(n)s had listened to me, they could have had a carbon tax in place by the end of August. They would have looked smart and brave.
Instead they are facing a year or two of design and negotiation before they have any effect. They have to create a costly regulatory and monitoring system. The companies that get the carbon credits will also have to create a whole system of lawyers, lobbyists and traders, as well as their own accounting systems. Some of that bureaucracy will be devoted to evading the rules. There will be fraud and constant pressure on the politicians. The waste of resources will be huge.
And the punctured and patched system they end up with will never work as reliably as a simple tax on combustion fuels coming into the province.
Cap and trade can be justified economically, although conditions have to be perfect. The real justification rests on two political realities. First, politicians want to hide behind companies rather than imposing a tax directly. Second, politicians vastly overestimate their own abilities and especially their own backbones.
The Ontario Chamber of Commerce plans to test those backbones.