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Will the carbon tax reduce the amount of Alberta’s emissions? Perhaps. In principle yes — put a tax on something and people will buy less of it, all else being equal. Part of the reason that energy demand in Ontario has gone down is because the price of energy has risen rapidly, though not due to a tax, but rather massive mismanagement of energy policy.

In practice though, the carbon tax will change carbon consumption decisions only if set at the right level. If the cost of reducing carbon emissions is, say, $45/tonne for a particular producer, then Alberta’s carbon tax will have no effect on its energy consumption. It will pay the $20 or $30/tonne tax, but continue to burn carbon at the same level because the cost of reduction — the “marginal abatement cost” as economists call it — is too high.

Trying to figure out what the marginal abatement cost might be across an entire economy is immensely difficult. But if those costs are very high, say $50 or $60/tonne, it becomes politically very difficult to set carbon taxes at a sufficient level. So it is possible to have a carbon tax with little, if any, appreciable reduction in emissions.

What the tax will do is raise revenue, and taxes on everything can raise a lot of revenue. Alberta promises, like B.C., that the tax will be revenue-neutral. Unlike B.C., Alberta is not even trying to tell the truth. In B.C., all carbon-tax revenues must be offset by corresponding tax cuts, credits or rebates. A recent Fraser Institute study found that it did just that until recent years, in which it has failed to be revenue-neutral.