The Climate Change Discussion Thread

[acottawa]

Originally Posted by Innsertnamehere

Carbon taxes have actually been pretty extensively researched and are proven to be effective over time. There is lots of research out there if you want to dig.

I'm not sure why it should be a surprise that making a good more expensive (carbon) causes people to consume less of it. It would be far more surprising if carbon consumption worked unlike literally any other market good. Carbon behaves like literally everthing else in a market economy:



Right now, carbon is mostly subsidized and cheap.. It sits at the bottom right of that graph. Low cost, high supply, high demand. Introducing the carbon tax moves it up the demand curve by increasing costs, reducing demand. The more expensive you make it, the further to the right it goes and the less that is consumed. It's literally economics 101 and basically every market good in the history of the planet has operated on some version of this graph. The graph looks a bit different of course depending on the good and how elastic demand is, but all goods nonetheless operate on this curve in some capacity.

Like other market goods though, the market reaction will be proportionate to the scale of cost increase. Right now Canada's carbon taxes are still relatively low, despite all the hoopla they get about them. And since they are low, they offer a low amount of incentive for the market to shift demand away.

By 2030 when the Carbon Tax would be at $170/tonne (minus the fact that it will be exceedingly unlikely to last until then), the market cost on the good will actually be significant and which should start to create significant market incentives for markets to minimize exposure to those costs.

Carbon Taxes work like literally any other market incentive/disincentive provided by the government. Just like sin taxes, etc.

Like sin taxes, I suspect that conservatives don't like the carbon tax as it exposes how high-carbon many conservative's lifestyles are. Many rural residents believe city-dwellers are the "polluters" but the reality is usually the dead opposite. Economic models for ye and not for me, so to speak.

That isn’t a demand curve for an inelastic good.

[Truenorth00]

Originally Posted by acottawa

That isn’t a demand curve for an inelastic good.

Elasticity of fossil fuels is time dependent. It's inelastic in the short term and elastic in the long term. We know this by how car purchasing behaviour changes with gas prices. If gas jumped to $2/L tomorrow and stayed there for months, what do you think would happen to F150 and Corolla sales?

[YOWetal]

Originally Posted by Innsertnamehere

By 2030 when the Carbon Tax would be at $170/tonne (minus the fact that it will be exceedingly unlikely to last until then), the market cost on the good will actually be significant and which should start to create significant market incentives for markets to minimize exposure to those costs.

Carbon Taxes work like literally any other market incentive/disincentive provided by the government. Just like sin taxes, etc.
.

Yes a $170/ton carbon tax would see less consumption. I don't understand how BuildIt thinks Carbon is some weird counterfactual. Yes you get a rebate but you don't suddenly spend that all on gas. As you say gas consumption is fairly inelastic. A poor person drives their car to work and kids to Karate in a small fairly fuel efficient vehicle. They don't switch to a SUV or start taking road trips with their rebate cheque.

Now the damage to the economy of the tax, redistribution of the rebate is not something we can gloss over and yes at $170 it becomes inflationary. But as you say the Carbon tax will be gone and just a memory. It shows what a mistake it was and building say a high speed train Montreal to Toronto taking thousands of cars off the road and planes out of the sky would be something the Conservatives can't undue. And unlike Carbon tax there are other tangible benefits that don't get wiped away by China's weekly new Coal fired power plant addition.

[Build.It]

Originally Posted by ToxiK

Could that be because we have more tar sands than they have?

It's definitely a contributing factor.

Here is a breakdown by State. Oil producing states are obviously high. But Ontario at 11 tons/person is very comparable to states like Georgia - who happens to have the most sprawling city in the world.

https://en.m.wikipedia.org/wiki/List...xide_emissions

[acottawa]

Originally Posted by Truenorth00

Elasticity of fossil fuels is time dependent. It's inelastic in the short term and elastic in the long term. We know this by how car purchasing behaviour changes with gas prices. If gas jumped to $2/L tomorrow and stayed there for months, what do you think would happen to F150 and Corolla sales?

Yes, but since there is no political consensus about a carbon tax, a rational car buyer is not going to assume a carbon tax will still exist in 18 months.

[Innsertnamehere]

Originally Posted by YOWetal

Yes a $170/ton carbon tax would see less consumption. I don't understand how BuildIt thinks Carbon is some weird counterfactual. Yes you get a rebate but you don't suddenly spend that all on gas. As you say gas consumption is fairly inelastic. A poor person drives their car to work and kids to Karate in a small fairly fuel efficient vehicle. They don't switch to a SUV or start taking road trips with their rebate cheque.

Now the damage to the economy of the tax, redistribution of the rebate is not something we can gloss over and yes at $170 it becomes inflationary. But as you say the Carbon tax will be gone and just a memory. It shows what a mistake it was and building say a high speed train Montreal to Toronto taking thousands of cars off the road and planes out of the sky would be something the Conservatives can't undue. And unlike Carbon tax there are other tangible benefits that don't get wiped away by China's weekly new Coal fired power plant addition.

This is the one real argument I see against a carbon tax. It's a "stick" - not a "carrot".

The US feds are using "carrots" in their carbon reduction strategies right now through massive subsidies of green products, instead of just taxing polluting products like in Canada. In a way the Ontario Liberal's previous cap and trade approach was much more moderate - it introduced new taxes on carbon which in turn funded carrots on products to get off of carbon. Probably not quite as efficient from a market perspective as there would have been market inefficiencies in the subsidization of certain goods, but also probably a lot more palatable as consumers would see the options to avoid the tax as being a lot more accessible cost-wise.

The real debate in the Carbon Tax lies in that distribution, not whether a tax influences consumer behavior. Which it most certainly does.

[Innsertnamehere]

Originally Posted by acottawa

That isn’t a demand curve for an inelastic good.

*snip*

I acknowledged this in my post in that the demand curve varies based on the elasticity of a good.

Fossil Fuel demand over the short term isn't particularly elastic, correct, but even then there is significant elasticity in the face of significant cost pressures. Look at Europe over last winter - natural gas consumption plummeted in the face of sky-high costs:



Carbon taxes work best over the span of many years as markets need time to implement technologies to avoid the tax. It's not an overnight solution - but no solution is to climate change.

[Truenorth00]

Originally Posted by acottawa

Yes, but since there is no political consensus about a carbon tax, a rational car buyer is not going to assume a carbon tax will still exist in 18 months.

Like I said, a situation that has come about because of deliberate political cynicism. That doesn't invalidate the basic economic concepts behind carbon pricing.

[thewave46]

Originally Posted by Truenorth00

Elasticity of fossil fuels is time dependent. It's inelastic in the short term and elastic in the long term. We know this by how car purchasing behaviour changes with gas prices. If gas jumped to $2/L tomorrow and stayed there for months, what do you think would happen to F150 and Corolla sales?

This being Canada: not much, sadly.

2022 had record gas prices, the F-150 kept flying off dealer lots. 2023 saw interest rates rise, the F-150 scored a repeat victory.

Never underestimate the sheer folly of Canadians drunk on eight year car loans.

Policy generally requires rational actors.

Not saying the carbon tax is bad, but Canadians are a very special breed.

[Innsertnamehere]

Originally Posted by thewave46

This being Canada: not much, sadly.

2022 had record gas prices, the F-150 kept flying off dealer lots. 2023 saw interest rates rise, the F-150 scored a repeat victory.

Never underestimate the sheer folly of Canadians drunk on eight year car loans.

Policy generally requires rational actors.

Not saying the carbon tax is bad, but Canadians are a very special breed.

consumers are rational actors, even when it comes to cars.

The F-150 continuing to fly off the proverbial shelves simply means the incentive isn't high enough yet - consumers place enough value in large vehicles that they don't significantly modify their behavior at a carbon tax of $50 a tonne.

We also have to remember that Canada's largest auto market, Ontario, has cut gas taxes quite significantly over the last two years largely offsetting the impact of the carbon tax on gas prices. Areas like BC which have large EV incentives and very high gas costs have seen uptake of EVs skyrocket. Unfortunately Ontario, by cuttin regular gas taxes, is mitigating the intended effect of carbon taxes on fuel consumption.

[thewave46]

Originally Posted by Innsertnamehere

consumers are rational actors, even when it comes to cars.

The F-150 continuing to fly off the proverbial shelves simply means the incentive isn't high enough yet - consumers place enough value in large vehicles that they don't significantly modify their behavior at a carbon tax of $50 a tonne.

We also have to remember that Canada's largest auto market, Ontario, has cut gas taxes quite significantly over the last two years largely offsetting the impact of the carbon tax on gas prices. Areas like BC which have large EV incentives and very high gas costs have seen uptake of EVs skyrocket. Unfortunately Ontario, by cuttin regular gas taxes, is mitigating the intended effect of carbon taxes on fuel consumption.

Fuel has stayed above $1.30/L in the province since 2022.

Regardless of the driver of high fuel prices, one would assume more fuel-efficient and cheaper vehicles would be in vogue. Doubly so with higher interest rates, very high transaction prices, and getting squeezed on other essentials.

Here we are.

I am starting to doubt the assumptions I make regarding people and ‘rational behaviour’.

[Nashe]

Speaking as someone who applied lease payments on an F150 for years against small business income, I wonder how many other people drive F150's for "work" instead of as a non-write-offable personal vehicle?
I know a lot of people with Fn50's but when I really think about it... most are contractors of some sort, at least in my circle of friends.

[ToxiK]

Originally Posted by Build.It

It's definitely a contributing factor.

Here is a breakdown by State. Oil producing states are obviously high. But Ontario at 11 tons/person is very comparable to states like Georgia - who happens to have the most sprawling city in the world.

https://en.m.wikipedia.org/wiki/List...xide_emissions

I think the link you provided only counts CO2 and not other GHG like methane. Do the 11 tons/person for Ontario includes all GHG or only CO2 ?

[Truenorth00]

Originally Posted by thewave46

This being Canada: not much, sadly.

2022 had record gas prices, the F-150 kept flying off dealer lots. 2023 saw interest rates rise, the F-150 scored a repeat victory.

Never underestimate the sheer folly of Canadians drunk on eight year car loans.

Policy generally requires rational actors.

Not saying the carbon tax is bad, but Canadians are a very special breed.

First off, high as gas prices are, corrected for inflation, they are still substantially affordable. Next, new vehicle sales have been making up for COVID shortages. I don't think behaviour has changed significantly from past sensitivity to fuel affordability. It's not like truck and SUV sales haven't moved when fuel affordability was impacted. In essence, what $15 per ton per year essentially puts a floor on gas prices and keeps them going up with inflation, basically freezing perceived fuel affordability (sticker price not including rebate) at current levels, to incentivize transition. And given the uptake on EVs, it does seem to be having some effect.

[Truenorth00]

Originally Posted by thewave46

Fuel has stayed above $1.30/L in the province since 2022.

Regardless of the driver of high fuel prices, one would assume more fuel-efficient and cheaper vehicles would be in vogue. Doubly so with higher interest rates, very high transaction prices, and getting squeezed on other essentials.

Here we are.

I am starting to doubt the assumptions I make regarding people and ‘rational behaviour’.

$1.3 in 2024 is like $0.99 in 2012 as per the BOC inflation calculator.

https://www.bankofcanada.ca/rates/re...on-calculator/

Dollar gas wouldn't have done that much to change truck and SUV purchase behaviour back then either. Right now we're seeing some migration at the higher end to BEVs. Mostly because these are the folks that pay $1.5/L for premium gas. That is basically the kind of gas prices that would be needed to actually get people to maybe drop the F150 for the Maverick.

Go back and look at gas prices in 2012. Gas was less affordable in the rebound after the 2008 GFC than it is today. Gas prices were over $1.2/L in 2012. That would be like $1.5/L for regular today. Gas is not only cheaper, when corrected for inflation, but vehicles are more fuel efficient. This means that the actual monthly burden of fuel is probably better than in 2012 for most, even with carbon taxes and larger vehicles.

[WarrenC12]

Originally Posted by Innsertnamehere

Conservative opposition to the Carbon Tax is simply mind blowing to me. It's the exact definition of a market-driven response to climate change. Put a price on carbon and let the market figure out how to cut emissions.

Exactly this. And it's extremely simple to implement and adjust.

[Truenorth00]

Originally Posted by WarrenC12

Exactly this. And it's extremely simple to implement and adjust.

Unfortunately we're at the point where politics is more important than even ideological consistency. That's true for both parties by the way. Just look at the heating oil exemption for the LPC.

[WarrenC12]

Originally Posted by Truenorth00

Unfortunately we're at the point where politics is more important than even ideological consistency. That's true for both parties by the way. Just look at the heating oil exemption for the LPC.

Yes, that really sealed the deal for the carbon tax. Something even O'Toole flip flopped on and promised to keep in the last election, assuming you believe he would have.

[Build.It]

Originally Posted by ToxiK

I think the link you provided only counts CO2 and not other GHG like methane. Do the 11 tons/person for Ontario includes all GHG or only CO2 ?

Ontario’s emissions per capita are the third lowest in Canada, at 10.1 tonnes of CO2e – 43% below the Canadian average of 17.7 tonnes per capita.

https://www.cer-rec.gc.ca/en/data-an...s-ontario.html

They use the metric tonne, so when you convert to imperial tons it's 11.1 tons, same as Georgia and many other US states. We were a tad lower than NY and PA in 2020. I'm curious how we compare today.

[Build.It]

Originally Posted by Truenorth00

Unfortunately we're at the point where politics is more important than even ideological consistency. That's true for both parties by the way. Just look at the heating oil exemption for the LPC.

Originally Posted by WarrenC12

Yes, that really sealed the deal for the carbon tax. Something even O'Toole flip flopped on and promised to keep in the last election, assuming you believe he would have.

Both of you have yet to provide evidence that the revenue-neutral model has successfully reduced emissions in Canada when compared to us having no carbon tax.