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BC: An Environmental Nexus – Carbon Tax vs. Cap and Trade

March 3rd, 2008 [by Doug Alder]

[tag]RackForce[/tag]‘s staff and principals take the state of the [tag]environment[/tag] very seriously. [tag]British Columbia[/tag], [tag]Canada[/tag], is truly one of the most beautiful regions in the world. From the Pacific coast through to the Rocky Mountains, BC is the place for outdoor adventure and many of RackForce’s staff are avid outdoor adventurers. We are grateful for the opportunity to live and work here and thus are committed to preserving what we have.British Columbia has been a crucible of environmental activism and change for many decades now. Indeed one could even make the case that the whole modern environmental movement really got its start here in 19711 when Greenpeace was formed to protest the Amchitka underground nuclear tests in the Aleutian Islands off of Alaska. Add to that the many protests to save virgin coastal rain forests such as the Clayoquot Wilderness Area and Haida Gwaii, and you can understand why we take global climate change seriously here.The above is to underscore why we at RackForce take the environment, and what we can, and should, do for it seriously (see the previous two posts on [tag]Gigacentre[/tag] and [tag]datacenter green technology[/tag] for a background.) Following is some of what is happening in BC recently on the carbon front and how it applies to RackForce.The BC provincial government just this past month brought in a revenue neutral carbon tax on fuels that will gradually ramp up over the next 4 years. Last year BC Premier Gordon Campbell was the only Canadian representation at the [tag]ICAP[/tag] summit in Lisbon where BC joined many European countries and US states in signing on to the [tag]International Carbon Action Partnership[/tag] agreement.

(The Vancouver Sun) The carbon tax will apply to virtually all fossil fuels, including gasoline, diesel, natural gas, coal, propane, and home heating fuel. B.C.’s carbon tax, the provincial government claims, will be the most comprehensive in the world.[snip]the new [tag]carbon tax[/tag] will begin July 1, starting at a rate that will have drivers paying about an extra 2.4 cents per litre of gasoline at the pumps.[snip]The tax will then increase each year after that until 2012, reaching a final price of about 7.2 cents per litre at the pumps.

This is certainly a start in the right direction. However, if it is to make a substantial difference in the province’s GHG emissions this needs to be applied across all industries and products, not just fuel products. RackForce, because it uses zero carbon [tag]hydroelectric power[/tag], will be minimally affected by this tax. As carbon taxes become more prevalent across North America and Europe data centers that rely on non-renewable energy sources are going to find themselves at a tremendous cost disadvantage. As this is an industry with very low margins it will not be surprising to see some of the commercial datacenters go out of business and as mentioned in a previous article it will make ever more sense for corporations running their own in house datacenters to seek out companies [tag]zero carbon[/tag] [tag]datacenters[/tag], like RackForce, to do their [tag]hosting[/tag] and/or [tag]server co-location[/tag] for them so as to not only avoid those tax penalties but in many cases be able to claim green carbon credits for doing so (if they are involved in cap and trade as well.)Carbon taxes, because they are not open to the types of abuse and cheating (at the corporate level) that [tag]cap and trade[/tag] is (see video below), are ultimately better than cap and trade systems, as long as they are mostly revenue neutral (and there’s the rub) for the government. That portion of that tax revenue that is not returned to the general public, in the form of other lowered taxes, must be allocated to support environmental research whose goal is to develop technology that further lowers [tag]GHG[/tag] ([tag]Green House Gas[/tag]) emissions. Doing anything else with those taxes would most likely be viewed by the voters as just a tax grab. By making GHG emitting products more expensive and then rebating that increased revenue stream through separate tax reductions, the overall cost to most members of society will remain approximately the same while making the perceived cost of using inefficient GHG producers much higher. This will cause consumers to look for ever lower GHG producing products in order to reduce their tax burden. That search for lower GHG producing products (which therefor carry a lower tax burden) combined with government investment, of some of the carbon tax generated, into GHG technology research companies, is a great economic development incentive for new and existing companies in that area of research, within the political boundaries of the tax collecting entity. The net effect of carbon taxes (when done with appropriate tax penalties) is the reduction of GHG whereas that is by no means certain with cap and trade.Here’s an interesting look at the relative values of [tag]Cap and Trade vs. Carbon Tax[/tag]

Or, as two former senior BC provincial civil servants (Bruce McRae Assistant Deputy Minister Forests and Energy ministries, and Don Wright Deputy Minister Forest and Education ministries and Secretary to the Treasury) , said last year in a report

Carbon taxes are the most effective approach because they can apply equally to consumers, businesses and industries, and serve as incentives for all those groups to reduce their energy consumption”The market will go to work. The cost of energy will rise, which will provide businesses and households with an incentive to consume less and demand more fuel-efficient vehicles, equipment, appliances and buildings. Businesses will pursue technologies that result in less greenhouse gas emissions.” [ed. emphasis mine]

that is exactly what RackForce is doing, pursuing a course of business using technologies that reduce our carbon footprint to as close to zero carbon as possible. Join us in helping our planet!

1 well it really got its start with the publication in 1962 of Rachel Carson’s seminal work Silent Spring but the movement truly took off when Greenpeace was formed and generated international publicity through its confrontation with authorities and corporations over bad environmental practices.

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