http://www.thestar.com/
A tariff on carbon
Mar 29, 2008 04:30 AM
Canadians and the citizens of other Western industrialized countries are
growing increasingly worried about the losses of high-paying
manufacturing jobs to low-wage developing countries, particularly China
and India. Yet, as these jobs go up in smoke in the West, the jobs
replacing them in Asia are themselves creating a lot of real smoke with
all its attendant pollutants and carbon emissions.
As CIBC economist Jeff Rubin put it this week: “It becomes absurdly
quixotic to ban coal plants in North America while at the same time
China’s got 570 coal plants slated to go into production between now and
2012, 30 plants between now and the Olympics.”
With the growing realization in the West that the economy and the
environment are but two sides of the same coin, a consensus is emerging
that the only sure way to halt climate change is to put a realistic
price on carbon that captures the environmental damage it is doing. This
view, however, is being fiercely resisted on the other side of the
planet, where carbon emissions are surpassing those of the West.
But putting a carbon price on goods produced in the West, through either
a carbon tax or a cap-and-trade system, will raise the price of those
goods and thus lead to the export of even more jobs to countries that
refuse to impose a price on the carbon that goes into the goods they
produce. The net effect would be an economic loss in the West without
any gain on the global climate change front.
When the link between trade and climate change are viewed from that
perspective, the solutions become obvious. If developing countries are
not willing to incorporate the price of carbon into the prices of the
goods they produce, the industrialized world will have no choice but to
impose a carbon tariff on imports from those countries.
By levelling the playing field in that way, the West would not only give
these other countries a real incentive to start cutting their own carbon
emissions, but it could also win back some of the jobs in industries
where the reduction or elimination of carbon content more than offsets
the developing world’s low-wage advantage.
The time has come to recognize that globalization doesn’t simply mean
mutual dependence in trade and investment; it has to be reinterpreted to
mean interdependence on a far broader scale.
