Containers are piled up at a port in Yokohama, south of Tokyo Wednesday, June 17, 2020. (AP … [+] Photo/Koji Sasahara)
ASSOCIATED PRESS
In June the European Union’s director general for trade announced that the EU is developing a carbon border levy that will be imposed on imports of carbon-intensive goods such as steel and cement. The border adjustment, part of Europe’s Green Deal to dramatically curtail carbon dioxide emissions, in part through carbon pricing, will aim to protect the bloc’s industries from cheaper foreign goods from countries where no carbon price is in place. The EU will release its finished proposal by mid-2021.
On this side of the Atlantic, the eight carbon pricing proposals now circulating through Congress all include border adjustments to protect American companies from imports not burdened by a carbon price in their country of origin. A corresponding refund of the carbon price on American exports would help ensure that American goods sold overseas are not priced out of foreign markets.
With all of the attention paid to carbon border adjustments, it would seem that they must be a good thing. Yet the full story is more complex. Border adjustments are a zero-sum game, and where there are winners, there are likely those that won’t fare so well.
Border adjustments are meant to protect carbon-intensive domestic industries from foreign competitors not subject to a carbon price, and reduce the temptation for industries to transplant production overseas to avoid higher costs, preserving jobs at home.
Yet, while border adjustments alleviate economic pressure on polluting industries, at least in the near term, they transfer that pressure onto consumers. In an oft-cited 2016 paper, University of Chicago law professor David Weisbach and Yale economist Sam Kortum explore the impact of border adjustments on consumers.
“The basic question we wanted to ask is whether border adjustments would make the American people overall better off,” Weisbach recently said. “Not just the industries that are complaining about the carbon tax, but really everybody.”
“We found out that they probably don’t help U.S. consumers.”
Border adjustments level the competitive playing field by levying a carbon fee on imports that’s equivalent to the carbon price borne by products made at home. Similarly, exports from a country with a carbon tax, such as a hypothetical future U.S. with serious national climate policy, have their carbon price refunded at the border, eliminating any pricing handicap in export markets.
While the carbon price burden is lifted from domestic industry, the underlying cost of carbon still exists. That cost is shifted onto domestic consumers, who now pay the baked-in price of a carbon tax for goods produced domestically, and on imports. Meanwhile, foreign consumers are freed of any carbon price burden.
“What the border adjustment has done effectively is shift the tax off of foreign consumers and put it on U.S. consumers,” Weisbach says. “Foreign consumers are really happy about this. And U.S. consumers — well, not so much.”
Border adjustments may also reduce the competitive pressure on industries to reduce the carbon intensity of their operations and products versus manufacturers of similar products, as carbon content becomes less relevant to pricing. Of course, consumers will still have an incentive to seek out substitutes to carbon-intensive goods, to the extent they’re available. But the pressure on companies to become more carbon efficient versus their direct competition is diluted.
And it might be argued that by preserving jobs in fossil energy production and carbon-intensive manufacturing, border adjustments do ultimately help consumers.
“To the extent that we think that border adjustments are really preventing those industries from shifting out of the U.S., it’s not really clear how much in the long-run you’re going to stop those industries from having to retool anyway,” says Weisbach. “In some ways, it’s a rearguard action.”
“And it’s not clear that border adjustments, by trying to continue to protect these industries from retooling are really doing something that’s good for the U.S. in the long-run.”
“I think the supporters of border adjustments are the affected industries,” he says. “They are the loudest voices out there, and they have an easy time making their views known in Washington. But nobody is out there speaking the American public generally.”
Competitive issues aside, Weisbach and Kortum found that border adjustments will be immensely complex and costly to implement. Imagine the difficulty in calculating the carbon content of a car produced overseas. That car will have components produced by a number of suppliers, through a variety of methods and from a potentially dizzying array of source countries.
“The global supply chain is just too complex,” says Weisbach. “There’s no way to impose a reasonably accurate border adjustment, and that’s why they’d be limited to simple fuels or steel. Implementing on any comprehensive basis would be impossible, the cost would be overwhelming.”
“So border adjustments are crude and inaccurate, and then you induce problems because you’re not getting the incentives you want.”
None of which is to say that carbon pricing itself isn’t a good idea. “There could be huge benefits in having a carbon tax,” says economist Kortum. “It’s really an issue of whether you should leave it on the extraction sector, the energy sector, or push it downstream either to the production sector or to the consumers.”
The easiest solution by far would be the global adoption of a uniform carbon price. The Paris Climate Agreement takes a step in this direction by driving nearly all countries toward some level of carbon price, either explicit or implicit.
“I think the big picture is that if all countries get together and impose a common policy, that’s just by far the best way to solve the issue of climate change,” says Kortum. “And what we’ve been talking about today is the second-best situations, where only some countries have a policy.”
Nobel laurate economist William Nordhaus has proposed an alternate solution he calls Climate Clubs, whereby a uniform tariff is imposed on all imports from countries that don’t have a carbon price. The plan is theoretically made stronger because countries with carbon pricing would band together to levy the tariffs, putting extra pressure on non-conformers to join the community of carbon pricing nations. Yet another option would be to implement border adjustments that are based on industry-average emissions for a given class of goods, avoiding the complexity that would come with measuring the carbon pollution for individual products.
Kortum suggests that a partial border adjustment that still leaves pressure on extracting industries may also be a good compromise.
All of these are being explored. What’s clear is that border adjustments or their alternative are messy attempts to address the challenge of global warming, and the competitive implications of policies to address it, in a world that isn’t unified in its response to climate change.
HALIFAX – Nova Scotia Premier Tim Houston says it’s “disgraceful and demeaning” that a Halifax-area school would request that service members not wear military uniforms to its Remembrance Day ceremony.
Houston’s comments were part of a chorus of criticism levelled at the school — Sackville Heights Elementary — whose administration decided to back away from the plan after the outcry.
A November newsletter from the school in Middle Sackville, N.S., invited Armed Forces members to attend its ceremony but asked that all attendees arrive in civilian attire to “maintain a welcoming environment for all.”
Houston, who is currently running for re-election, accused the school’s leaders of “disgracing themselves while demeaning the people who protect our country” in a post on the social media platform X Thursday night.
“If the people behind this decision had a shred of the courage that our veterans have, this cowardly and insulting idea would have been rejected immediately,” Houston’s post read. There were also several calls for resignations within the school’s administration attached to Houston’s post.
In an email to families Thursday night, the school’s principal, Rachael Webster, apologized and welcomed military family members to attend “in the attire that makes them most comfortable.”
“I recognize this request has caused harm and I am deeply sorry,” Webster’s email read, adding later that the school has the “utmost respect for what the uniform represents.”
Webster said the initial request was out of concern for some students who come from countries experiencing conflict and who she said expressed discomfort with images of war, including military uniforms.
Her email said any students who have concerns about seeing Armed Forces members in uniform can be accommodated in a way that makes them feel safe, but she provided no further details in the message.
Webster did not immediately respond to a request for comment.
At a news conference Friday, Houston said he’s glad the initial request was reversed but said he is still concerned.
“I can’t actually fathom how a decision like that was made,” Houston told reporters Friday, adding that he grew up moving between military bases around the country while his father was in the Armed Forces.
“My story of growing up in a military family is not unique in our province. The tradition of service is something so many of us share,” he said.
“Saying ‘lest we forget’ is a solemn promise to the fallen. It’s our commitment to those that continue to serve and our commitment that we will pass on our respects to the next generation.”
Liberal Leader Zach Churchill also said he’s happy with the school’s decision to allow uniformed Armed Forces members to attend the ceremony, but he said he didn’t think it was fair to question the intentions of those behind the original decision.
“We need to have them (uniforms) on display at Remembrance Day,” he said. “Not only are we celebrating (veterans) … we’re also commemorating our dead who gave the greatest sacrifice for our country and for the freedoms we have.”
NDP Leader Claudia Chender said that while Remembrance Day is an important occasion to honour veterans and current service members’ sacrifices, she said she hopes Houston wasn’t taking advantage of the decision to “play politics with this solemn occasion for his own political gain.”
“I hope Tim Houston reached out to the principal of the school before making a public statement,” she said in a statement.
This report by The Canadian Press was first published Nov. 8, 2024.
REGINA – Saskatchewan Opposition NDP Leader Carla Beck says she wants to prove to residents her party is the government in waiting as she heads into the incoming legislative session.
Beck held her first caucus meeting with 27 members, nearly double than what she had before the Oct. 28 election but short of the 31 required to form a majority in the 61-seat legislature.
She says her priorities will be health care and cost-of-living issues.
Beck says people need affordability help right now and will press Premier Scott Moe’s Saskatchewan Party government to cut the gas tax and the provincial sales tax on children’s clothing and some grocery items.
Beck’s NDP is Saskatchewan’s largest Opposition in nearly two decades after sweeping Regina and winning all but one seat in Saskatoon.
The Saskatchewan Party won 34 seats, retaining its hold on all of the rural ridings and smaller cities.
This report by The Canadian Press was first published Nov. 8, 2024.
HALIFAX – Nova Scotia‘s growing population was the subject of debate on Day 12 of the provincial election campaign, with Liberal Leader Zach Churchill arguing immigration levels must be reduced until the province can provide enough housing and health-care services.
Churchill said Thursday a plan by the incumbent Progressive Conservatives to double the province’s population to two million people by the year 2060 is unrealistic and unsustainable.
“That’s a big leap and it’s making life harder for people who live here, (including ) young people looking for a place to live and seniors looking to downsize,” he told a news conference at his campaign headquarters in Halifax.
Anticipating that his call for less immigration might provoke protests from the immigrant community, Churchill was careful to note that he is among the third generation of a family that moved to Nova Scotia from Lebanon.
“I know the value of immigration, the importance of it to our province. We have been built on the backs of an immigrant population. But we just need to do it in a responsible way.”
The Liberal leader said Tim Houston’s Tories, who are seeking a second term in office, have made a mistake by exceeding immigration targets set by the province’s Department of Labour and Immigration. Churchill said a Liberal government would abide by the department’s targets.
In the most recent fiscal year, the government welcomed almost 12,000 immigrants through its nominee program, exceeding the department’s limit by more than 4,000, he said. The numbers aren’t huge, but the increase won’t help ease the province’s shortages in housing and doctors, and the increased strain on its infrastructure, including roads, schools and cellphone networks, Churchill said.
“(The Immigration Department) has done the hard work on this,” he said. “They know where the labour gaps are, and they know what growth is sustainable.”
In response, Houston said his commitment to double the population was a “stretch goal.” And he said the province had long struggled with a declining population before that trend was recently reversed.
“The only immigration that can come into this province at this time is if they are a skilled trade worker or a health-care worker,” Houston said. “The population has grown by two per cent a year, actually quite similar growth to what we experienced under the Liberal government before us.”
Still, Houston said he’s heard Nova Scotians’ concerns about population growth, and he then pivoted to criticize Prime Minister Justin Trudeau for trying to send 6,000 asylum seekers to Nova Scotia, an assertion the federal government has denied.
Churchill said Houston’s claim about asylum seekers was shameful.
“It’s smoke and mirrors,” the Liberal leader said. “He is overshooting his own department’s numbers for sustainable population growth and yet he is trying to blame this on asylum seekers … who aren’t even here.”
In September, federal Immigration Minister Marc Miller said there is no plan to send any asylum seekers to the province without compensation or the consent of the premier. He said the 6,000 number was an “aspirational” figure based on models that reflect each province’s population.
In Halifax, NDP Leader Claudia Chender said it’s clear Nova Scotia needs more doctors, nurses and skilled trades people.
“Immigration has been and always will be a part of the Nova Scotia story, but we need to build as we grow,” Chender said. “This is why we have been pushing the Houston government to build more affordable housing.”
Chender was in a Halifax cafe on Thursday when she promised her party would remove the province’s portion of the harmonized sales tax from all grocery, cellphone and internet bills if elected to govern on Nov. 26. The tax would also be removed from the sale and installation of heat pumps.
“Our focus is on helping people to afford their lives,” Chender told reporters. “We know there are certain things that you can’t live without: food, internet and a phone …. So we know this will have the single biggest impact.”
The party estimates the measure would save the average Nova Scotia family about $1,300 a year.
“That’s a lot more than a one or two per cent HST cut,” Chender said, referring to the Progressive Conservative pledge to reduce the tax by one percentage point and the Liberal promise to trim it by two percentage points.
Elsewhere on the campaign trail, Houston announced that a Progressive Conservative government would make parking free at all Nova Scotia hospitals and health-care centres. The promise was also made by the Liberals in their election platform released Monday.
“Free parking may not seem like a big deal to some, but … the parking, especially for people working at the facilities, can add up to hundreds of dollars,” the premier told a news conference at his campaign headquarters in Halifax.
This report by The Canadian Press was first published Nov. 7, 2024.
