| That's actually part of Nordhaus' recommended carbon pricing policy. (Nordhaus wrote the book on carbon pricing and won a Nobel prize in economics for it). The idea is that carbon-priced countries get together and form an internal free trade agreement, and tariff carbon-intensive goods from outsiders. Because of the political complexity of implementing this, Canada has gone a different way to keep businesses from being uncompetitive against foreign non-carbon-taxed businesses. Canada uses "output-based allocation" where a relatively green business in an industry is used as a baseline. That is set as a target - create X unit of product with Y units of carbon emissions, and your carbon emissions are untaxed. Every carbon emission over Y is taxed. In this way, a comparatively green business within a dirty industry can still compete with foreigners, but for a dirty business, the marginal value of going green is just as high as if there was no exemptions at all. It's not ideal. It's bureaucratic, tedious, economically suboptimal, and politically complicated since it seems unfair. But it's a good intermediate solution until Nordhaus' full dream could be realized. The money is rebated directly to citizens in federally-regulated provinces. Conservatives hate it all anyways because their carbon plan is "no." |