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Jeffrey Simpson (Bill Grimshaw)
Jeffrey Simpson (Bill Grimshaw)

Jeffrey Simpson

Cap-and-dividend: the jolt Harper needs? Add to ...

Since the Harper government has essentially handed over most of Canada's climate-change policy to the United States, what happens there directly affects what will happen here.

In the U.S. political system, the shortest distance between two points is never, ever a straight line. Climate-change policy, therefore, predictably wobbled around the House of Representatives before emerging in a bill of monstrous size and complexity, and is going nowhere fast in the Senate. As with just about everything else in the U.S. these days, the climate-change file is stuck, as opposition to doing anything grows among the public and in Congress.

This might well please the Harper government, whose enthusiasm for doing anything serious about climate change is as lukewarm as the scoffers on the sidelines of the Canadian debate, the ones who throw little darts at this or that revelation of scientific overstretch while never denying the reality of global warming, thereby adopting the ultimate position of justifying doing nothing without ever actually counselling that position.

Canada, like the U.S., has been hung up on placing a price on carbon emissions, the single most important element in any serious, long-term shift away from polluting fuels.

The B.C. government implemented a carbon tax, but the Canadian electorate rejected the idea in the last federal election. Instead, the Harper government has said it would implement a cap-and-trade system for emissions, another way of establishing the price - provided the Americans did likewise.

Cap-and-trade, however, is drawing political fire in the U.S. for being complicated, a boon to Wall Street traders, and leaving companies uncertain about the price they will pay. The House bill that squeaked through the chamber was a lobbyist's dream: unfathomably complicated except to lawyers, laden with political pork, immensely long and full of giveaways to the coal industry and other polluters. Anyone who thought the making of sausages was edifying to observe delighted in watching this monster pass through the House.

But now comes a new idea, or at least an amalgam of old ideas that makes it seem new, and this might break the logjam in Congress. Properly studied and adapted to different circumstances, it could provide a jolt of new thinking for the Harper government, assuming this government wishes to do any thinking about a subject it dislikes.

The idea, from Democratic Senator Maria Cantwell of the state of Washington, is for a cap-and-dividend system, whereby an annual cap would be placed on emissions from coal, oil and natural gas sources. The cap would gradually fall each year. The permits to pollute would be traded, with a fixed price known in advance.

The bulk of the revenue from the yearly auction, however, would be returned to consumers to compensate them - and, in some cases, to overcompensate them - for the higher prices that fuel companies would pass on after buying the polluting credits.

Seventy-five per cent of the yearly revenues would be sent to consumers, with a family of four receiving $1,000. The rest would be placed in a trust fund to be spent on further emissions reductions, technology research and development.

You can easily see the potential political attractiveness of the cap-and-dividend scheme, in that families would get a cheque in the mail every year - something the Harper government already does with its family credit that is laughably supposed to be a child-care policy. You can see another attractive angle, in that the cap-and-dividend scheme targets only upstream polluters.

For them, the attractiveness (if any exists) is knowing the cost of the polluting permit, the long-term reduction targets, and the ability to pass on costs, believing that most consumers will be protected. If Canada ever expressed an interest in cap-and-dividend, it could be regionally adjusted to help fossil fuel-producing provinces.

The devil of such a scheme lies in the details, but the advantage lies in its simplicity. Ms. Cantwell's bill, co-sponsored by Republican Susan Collins of Maine, is just 39 pages.

Who knows if the Cantwell-Collins bill has a chance in Congress, where almost every idea these days goes to die? Of all the proposals on offer, however, it would seem arguably the most politically astute, while likely achieving the objective of reducing emissions.

Since the Harper government is letting most of Canada's climate-change policy be written in Washington, the fate of the Cantwell-Collins bill could be quite germane for both countries.

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