Apr 17, 2009

Green Gods Abandoned by Godless Socialists?


So Keith Baldrey thinks the NDP has sold its environmental soul by opposing so-called green run-of-river IPPs. And Mark Jaccard , Tzepora Berman and friends predict economic and environment ruin from the NDP’s plan to abolish the Liberals’ carbon tax.

As for run-of-river IPPs, the fact is they are not very green, at least not if you value the large amount of land and water resources they cumulatively impact in pristine wilderness areas. They are not needed in the amounts that the government is forcing BC Hydro to acquire with its incredibly ill-considered and needlessly costly self-sufficiency and insurance policies. The energy they provide is relatively low in value, delivered disproportionately in the spring when least needed. They are high price. And the private contracts under which they are purchased provide BC Hydro with no long term security of supply. At the end of the contract terms the IPP power must be repurchased at then prevailing market prices.

Liberal Energy Policy forcing the development of excessive amounts of these ‘green’ IPPs is what I like to call a strategy to buy high-sell low (because much of the IPP power will be surplus and exported at relatively low prices) and buy now-buy again later (at the end of the initial contract terms). En realidad, as my Baja friends would say, its not just godless socialists that could question its wisdom.

As for the carbon tax, the hysteric debate and forecasts of doom have nothing to do with what is being proposed. Axing the Liberals carbon tax will mean fuel prices by 2012 may be 7 cents per litre less than they would otherwise be. That is a relatively small difference in price (less than the very annoying daily swings in price that sometimes take place at your friendly service station). And that in turn will have only a marginal impact on fuel consumption and related emissions. The demand for fuel is widely recognized by economists as inelastic (relatively unresponsive) to price.

Whatever you think about the Liberals carbon tax — a token gesture to attract green votes or a bold, albeit modest, step in the right direction — it is almost irrelevant to the much larger issues that need to be addressed. How and when will a cap and trade system for large emitters be put in place? How will transit initiatives be developed and financed to reduce auto use? Will vehicle levies or system tolls be introduced? If we are going to retain a carbon tax, how high should it go, and how can it be linked to the price of crude oil, so that it isn’t too small when crude prices are low and too high when crude prices go through the roof. Shouldn’t carbon tax revenues be devoted at least in part to offsetting the emissions on which they are levied? And shouldn’t we coordinate any carbon tax policy, like cap-and-trade, with what is going on elsewhere.

There is an opportunity to have an interesting debate here. But, at least so far, passion, politics and new found religious zeal seem to rule.

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