Professor touts carbon tax

Oilpatch 'receptive' to revenue-neutral proposal

Shaun Polczer
Calgary Herald

Saturday, September 15, 2007

Calgary's oilpatch is warming up to the idea of a carbon tax as a way to reduce greenhouse gas emissions, says an Ontario academic who pitched the idea to the city's energy elite Friday.

Ross McKitrick, an associate professor of economics at the University of Guelph, urged local energy CEOs to consider what he termed a "revenue neutral" carbon tax linked to actual levels of warming in the upper atmosphere.

McKitrick admitted the idea of a carbon tax is a "hard sell" in a city well known for its opposition to government interference in the oilpatch.

"The surprising thing from my perspective is the number of industry people that are receptive to this," he told the Herald.

"It's an interesting idea that's been getting some attention from pretty senior people in the industry. They see it as a way of going forward without actually picking sides."

Under McKitrick's proposal, the tax would be tied to actual temperature measurements in a region of the upper atmosphere called the troposphere.

If global warming projections are correct and the region experiences drastic warming, the tax would rise rapidly over the coming decades, forcing major carbon emissions reductions and a shift from fossil fuels.

But if the warming does not occur, the tax would stay low "as it should," McKitrick said.

The professor said the tax would strike a balance between advocates of hard emissions reductions and a skeptical industry that still questions the science of climate change.

Energy powerbrokers in attendance at McKitrick's presentation included Petro-Canada CEO Ron Brenneman and Imperial Oil Ltd. CEO Tim Hearn.

Joining them was outgoing Talisman Energy Inc. CEO Jim Buckee, who has long staked a reputation as a climate change skeptic.

"While legitimate scientific questions about the causes of climate change remain, companies do have an obligation to effectively respond to the issue," Buckee said.

"This proposal provides a logical response without gambling in advance on which side of the debate is right."

Other industry captains said a carbon tax might eliminate uncertainty associated with an emissions trading system or a hard cap on carbon output.

"A proposal that creates a more objective operating environment for companies while addressing climate change is worth serious consideration," added George Gosbee, Tristone Capital's president and CEO, who described McKitrick's proposal as "compelling."

Presently, Alberta is the only jurisdiction to impose emissions intensity reductions, which took effect July 1. Companies that exceed the caps pay into a special fund used to finance research into emissions reduction technology.

But Clare Demerse, a climate change policy analyst with the Pembina Institute in Ottawa, said Alberta's plan is a de facto carbon tax.

"A tax doesn't actually force companies to reduce emissions because they can just pay the tax," she said. "We have a lot of issues with the Alberta approach."

Demerse noted McKitrick has a contrarian reputation among environmental advocates who see him as a climate change skeptic.

She said there's "more than enough" evidence to show that climate change is linked to carbon dioxide concentrations in the atmosphere and Canada needs to adopt policies that lead to meaningful emissions reductions that address the root causes of global warming.

"This is a proposal that's premised on climate change not being proven. It's designed to appeal to people who don't accept the mainstream science of global warming," she said.

"We are way, way beyond that point. What we need now is policies to get us to those reductions, not an approach that casts doubt on whether there's a problem at all."

© The Calgary Herald 2007