Michael Porter and Carbon Tax

Canadians should agitate for a progressive carbon policy rather than let Ottawa follow the mindless U.S. path, a world expert on competitiveness said yesterday in Montreal.The carbon capture-and-trade model that the U.S. "has patched together" is too complicated and blunts incentives that would enhance innovation and competitiveness, Harvard University professor Michael Porter said in a speech delivered to an audience of international business, policy and academic leaders."What we really do need is, in effect, a carbon tax. That is a very visible, transparent, fair approach that is likely to trigger the appropriate innovation," Porter told a symposium organized by the Sustainable Prosperity network.

Citing concerns about competitiveness, the Stephen Harper government has said that it will await and follow U.S. policy, including the creation of a cap-and-trade system."Unfortunately, the American government has kind of regressed in this whole area and has somehow lost their mind," said Porter, who garnered international attention in the 1980s when he challenged conventional wisdom about the impact of environmental regulation on business by arguing that well-designed regulation could enhance competitiveness.

His luncheon speech was webcast yesterday and delivered to an audience of about 80 people, including a few senior government officials.Porter asked the Canadians in his audience "to start agitating" for a change in current federal policies. "I think it's unfortunate that Canada, for once, wants to follow the U.S.," he said.

Both Porter and Daniel Esty, director of the Yale University Centre for Business and Environment. praised the implementation of a carbon tax in B.C. Esty was applauded when he said that Canada should stop complaining that it can't act on emissions to protect the environment because of competitiveness concerns. "That is really yesterday's news in a big way," Esty said.

In an interview, Porter said that carbon and energy issues are becoming critical factors in economic growth. "Even if you don't believe in climate change, we do understand the fundamental importance of energy and energy costs," he said. A carbon tax would lead to a rethinking of energy use, drive innovation in the green economy and yield profits for "first movers," Porter said.

"I think there is plenty of evidence that that works (where it has been implemented in Europe), and it has been implemented in a very intelligent way in B.C., and it's working there."It's unfortunate that the federal government has not been able to convince itself that it will actually drive and encourage economic growth," he said.Increasingly, companies will measure production by "unit energy cost" rather than labour costs, Mikael Skou Andersen, of the European Environment Agency, told the symposium.

European countries that have introduced an environmental tax while lightening corporate taxes related to payrolls have seen energy conservation, reductions in greenhouse gas emissions and improvements in gross domestic products, Andersen said.

The symposium was held on the eve of an international conference on environmental economics in Montreal this week expected to draw about 1,100 participants.

lmoore@thegazette.canwest.com
Read more: http://www.montrealgazette.com/technology/need+carbon/3214419/story.html#ixzz0yZwMZBQt