I'll answer your first question first.
The reason why I and I think many policy-makers in the U.S. now are rethinking taxes seriously is that when you look at what happened with the European emissions trading system, it certainly hasn't been a total failure, but even the people who are in the middle of creating it, folks like Michael Grubb, agree that it actually has been very ineffective in incenting real emissions reductions.
There are some real advantages to taxation because it is so simple. The objective here is, after all, not to beat people up; it's to actually help the environment, to reduce emissions. Taxes are a very administratively efficient way to put in even pricing all across the whole economy for carbon emissions to the atmosphere, to tell people they can't use the atmosphere as a free dumping ground, and to do that in a way that's stable.
Part of the problem with the European system is extreme instability in prices, and there are a bunch of political reasons for that, as you may know. For instance, the German government has suddenly backed out of really clamping down on emissions.
So I think there's no question that a cap and trade system can work, and a bunch of these things could work. The devil's in the details. We could make a cap and trade system that would work, but I think there are a lot of reasons to think a tax system might work. My sense of the people in Washington right now is that taxes used to be completely off the table, and now people are scratching their heads and saying, “Well, if we're actually going to swallow this bullet, there might be better ways to do it than cap and trade, and tax might be it.”
Remember, it could be revenue-neutral. A government could introduce a tax and, say, eliminate the GST, so on the day it was done it was revenue-neutral.
So I don't know exactly what this government will do in two days or two weeks, whenever it finally announces its policy, and I really don't care to speculate. I think the bottom line is that Canada has spent something like 10 years grandstanding about this with very little to show for it.
I'm not blaming the former government or the previous government; it really doesn't matter to me. My job is to help people make decisions that actually cut emissions.