Friday, March 28, 2008

Carbon Tariffs Will Hurt Canada, the Poor

Call this green reality check day or something. So, economists are all excited about the idea of imposing carbon tariffs on goods manufactured in countries with poor environmental records (read China). Canadians shouldn't just reject this idea we should run from it screaming. Let's start at home. Canada has a poor record on the environment. Some of this is our fault. Some of it, frankly, isn't. As everyone knows, Alberta has the world's second largest reserves of oil in the world. Unfortunately, those oil reserves are expensive to attain, both economically and ecologically. This means that barring a major breakthrough in oil sands technology it is going to be more ecologically damaging to get a barrel of oil from Alberta than from other oil producing nations. If the world adopts a carbon tariff system, Alberta will be the loser. If Alberta loses, we all lose. Now I know that the US probably couldn't impose tariffs on Canada under NAFTA (see Jack, it has its perks) but that wouldn't be true of the EU and others. If the Dems down south are serious about renegotiating FTA's the US might be able to sneak this past an unsuspecting Canadian government. I am not willing to gamble the booming Albertan economy on the prospect that some of the manufacturing might come home (no proof for this claim by the way). However, even if you have in for the good people out West, have some sympathy for the world's poor.

We have witnessed in recent weeks how the rise of oil prices has directly impacted the cost of food. People around the world rely on oil (unfortunately) for the pesticides that protect their food, the machines that cultivate their food and the vehicles which bring them their food. Oil goes up, price of food goes up. If oil sands production in Alberta is cut by eco-tariffs and their is no new production elsewhere, the price of oil will go up. If the price of oil goes up, the price of food will go up. This means that people will go hungry. This doesn't even bring into account the hypocrisy of Western governments who are denying other countries their best path to development. Until we can offer countries like China more affordable cleaner technologies, it would be unjust to impose trade sanctions. It would be particularly unjust since we have a global environmental regime that requires nations like China to do nothing to fight climate change. If we are going to confront this crisis we need to do so in cooperation with the developing world, not by engaging in a Pyrrhic trade war.

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