The cap and trade plan was…

The cap and trade plan was far from a perfect solution in that it was complex and not revenue neutral or technology neutral (revenue went to rebates for specific technologies). Economists, including the recent winners of the Nobel Prize in Economics, are in broad agreement that pricing carbon (as opposed to limited, targeted regulation) is the most economically efficient way to reduce emissions deeply and broadly across the economy. Further, a revenue-neutral (for government) carbon tax (call it a fee-and-dividend if you'd prefer) is typically their favoured instrument because it it does not grow government but rather returns the proceeds to the taxpayers. It nevertheless provides a new incentive structure for consumers where, regardless of whether one is a net beneficiary financially, everyone is incentivized to make lower-emitting consumer choices. This in turn encourages clean technology innovation and entrepreneurship, and corporate and private investment, both domestic and foreign.

As other countries work to transition from fossil fuels, it will be the jurisdictions that develop scaleable clean energy solutions first that benefit economically through increased exports of technologies and services. That head-start can only be developed with a thriving domestic market, which is best fostered by pricing carbon. Therefore, carbon pricing is a wise long term provincial and national economic strategy in this century.

I recommend that Ontario proceed with this bill, and then do absolutely nothing else. Don't enforce targeted regulations as a climate plan, and don't take the Federal government to court on their carbon tax. Simply let them implement a simple revenue-neutral carbon tax--a free-market based pricing signal that ought to appeal to conservatives more than any other type of plan. It is promoted by the World Bank (see link), and more countries are implementing one all the time -- including China.