Rolling the Dice With “The Green Shift”
Am I about to go for the “Green Shift”? Or is it more about getting “Green Shafted”? Or is it much ado about nothing? I dunno. For comic relief click on http://youtube.com/watch?v=abAAi98DPkc&feature=related
I shouldn’t be so harsh. Stephane Dion is one sharp guy. I was thoroughly impressed with the man after spending a day with him last summer. His critics are harrowing, but this guy has a towering intellect. However, in the world of politics, we know it’s not how smart you are. It’s all about winning. Its pretty obvious to me, rolling the dice on the “Green Shift”, is something Stephane Dion is completely comfortable with.
We shall see. At first glance the optics of it aren’t good. With Canadians lining up on the weekend to buy “cheap gas” at $1.24/litre, paying more for energy doesn’t seem to be the thing political dreams are made of. No, according to the Liberal plan that won’t show up at the pumps, but it’ll be everywhere else. Guaranteeing it will be revenue neutral, enshrined by the auditor general, won’t give solace to Canadians shivering on a cold winter’s night.
After a week to digest, I just cannot see this. However, nobody can be against being green. Nonetheless I’m wondering when Canadians have a choice between the Green party and the new green Liberal party and the retro green NDP party, who’ll win. It would seem to me this vote is going to be split on the left giving Stephen Harper and his big oil apologists, more grist for their “light green” plan.
Critics of Dion’s plan could surely fill up the Air Canada Centre or Hamilton Place. However, Dion’s plan has merit, just like the many other “cap and trade” “carbon tax” proposals that have permeated green political circles. The difficulty is trying to change consumer’s behaviour when it’s going to cost them more money. It’s like legislating Canadian’s beer consumption during hockey season. Unfortunately for proposals like the “green shift”, it’s the same thing, like canoeing up Niagara Falls.
Nonetheless, the green shift comes with income tax cuts and host of other incentives, which would add to its “revenue neutral status. I dunno. Stephane Dion is a smart guy, with a lot of smart men and women behind him. If they think it will work and are willing to throw down the gauntlet, who am I to say it won’t work.
Problems arise when you mix green intentions, political goals and realities with pure economics. Take for example the ethanol economy in North America. It was put together for a myriad of reasons, partly for being green, partly for being politically expedient and partly to ward off being dependent on Middle East oil. However, with commodity prices surging over the last two years, we’re finding out if consumers have a choice between “being green” and having “cheap food”, they’ll choose cheap food every time. Ethanol and its environmental benefits in the middle of 2008 are getting thrown off the boat.
For instance in the United States, there have been at least 16 ethanol companies file for bankruptcy and two to three times that coming in the next year. That’s according to Alex Moglia, President of Amoglia Advisors group based near Chicago. (Ethanol Industry in Distress, DTN News) His group helps companies restructure debt, which can invariably lead to bankruptcy protection. This is of course what we know. There are a myriad of ethanol firms, which are surely quietly pulling back or shutting down.
It has to do with the price of corn, the price of ethanol and the renewable fuel standard in the United States. In fact, even Brazilian ethanol has been imported into the US, jumping over a 51-cent import tariff at New York harbour.
In Canada its not quite the same, we export oil and we don’t have a policy to wean ourselves off it. Still, the small Canadian ethanol industry has many of the same problems, but worse. Now, that somebody said food prices were getting higher, the NDP and Bloc got off the Canadian ethanol boat. Of course the next question will be do the Liberals and the Conservatives do the “Green shift” and get off too?
The point being at one time ethanol was seen as a green saviour with economic and environmental benefits to all. Now, it’s a dirty word in much of the world, sandbagged by politicians with no guts and sandbagged by its own shaky economics.
So with Stephane Dion’s “Green Shift” be careful what you hope for. The ethanol story does not yet have a final chapter. However it should serve as an example to those who envision a green future leading to a utopian world. At the end of the day, it’s all about the economics baby. Putting a green tinge on that will surely be Stephane Dion’s greatest challenge.