Joe Biden’s surprise climate victory is good for the planet, and Canada
The Democrats long ago decided that carbon pricing, though economically efficient, isn’t politically saleable in the United States. So instead of making carbon more expensive, the legislation includes US$369-billion to subsidize consumers and businesses into cleaner technologies. Most important are tax credits for electric utilities to invest in low- or zero-carbon energy.
Some of the subsidies involve high costs for low returns, such as payments to buyers of electric vehicles. But though it doesn’t always use the most economically efficient means, this climate package is ambitious, and it should get the Biden administration close to meeting its goal of cutting emissions in half by 2030, compared to 2005.
That will make the U.S. a climate leader, rather than the world’s leading climate laggard. The subsidies, and their spur to innovation and economies of scale, are likely to steadily lower production costs of everything from solar cells to electric cars. That’s good for the world, and Canada, too. Also helpful for Canada are U.S. plans to sharply lower industrial emissions; absent such plans, Ottawa would have had to consider watering down its own policies.
It will all be paid for – in fact, it will be more than paid for, thereby lowering both the deficit and inflation pressures – through higher taxes on top earners, and a 15-per-cent minimum corporate tax. That last item is also good for Canada, and is part of a global agreement on fighting tax avoidance that Mr. Manchin was thought to have scuppered last week.
The price of Mr. Manchin’s conversion? Renaming this the “Inflation Reduction Act.” Plus a promise of future legislation for quicker permitting of new infrastructure, including pipelines. Environmentalists don’t like that, but speeding up the approvals process is not a bad idea – and something Canada could use, too.
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