Stop worrying about a carbon tax driving up the cost of everything we buy after this election.

Start worrying about a cap-and-trade carbon market doing the same thing.

Canada will only get a carbon tax if Liberal Leader Stephane Dion [pictured] wins a majority government Oct. 14, or a minority in which Green Party Leader Elizabeth May holds the balance of power -- both unlikely.

By contrast, it's very likely the next Parliament will create a cap-and-trade system.

To varying degrees, Prime Minister Stephen Harper, NDP Leader Jack Layton, Bloc Leader Gilles Duceppe, Dion and May all support cap-and-trade, as do U.S. presidential contenders Barack Obama and John McCain, neither of whom supports a carbon tax.

The American position will put economic pressure on Canada to adopt a cap-and-trade system consistent with the U.S. Both countries already have voluntary carbon markets whose volume would skyrocket under cap-and-trade.

There's also more support for cap-and-trade, rather than a carbon tax, among provincial governments.

Politicians prefer cap-and-trade to carbon taxes because they never have to say the word "tax," which is also why Dion doesn't talk about carbon taxes but a "green shift."

But cap-and-trade does exactly what a carbon tax does -- puts a price on emitting carbon -- an added cost to businesses they will pass along to us for everything we buy from utilities to fuel, manufactured goods and food.

Cap-and-trade is modelled on a reasonably successful program to control acid rain emissions, started in the U.S. in 1995.

But the major real-world experience with carbon trading -- Europe's large and growing Emissions Trading Scheme (ETS) -- has been a disaster.

Last week, the U.K.'s Guardian newspaper, after investigating along with an environmental group, reported the ETS, while "designed to fight global warming is set to hand hundreds of millions of pounds to some of Britain's most polluting companies, with little or no benefit to the environment ...."

The ETS has been a fiasco since it was created three years ago. Among its problems:

• European governments initially blundered by handing out free credits (each allowing the holder to emit one tonne of carbon dioxide) to 12,000 large industrial emitters, meaning they created a new stock market and gave participants free stock. Then they caved into industry lobbying for more credits than their current emissions, destroying the point of cap-and-trade, which is to supply fewer permits initially and decrease that number annually. Unsurprisingly, total emissions by these companies have since gone up.
• Because too many credits were issued initially, prices crashed, making it cheaper to buy more credits than reduce emissions.
• Industries with free credits passed along costs to consumers as if they had paid for them, resulting in undeserved profits.
• Electricity prices skyrocketed, while hospitals and universities had to scramble to buy carbon credits instead of hiring staff.
• A United Nations program under which countries and industries can obtain carbon credits is rife with allegations of corruption and ineffectiveness.

Canadian politicians seldom mention these problems, or how they will avoid them, in promoting cap-and-trade, which has failed to reduce carbon emissions, increased costs to consumers and delighted mainly large industrial emitters, speculators and hedge funds.

It's time we demanded some answers.

Source