The Texas of Canada Just Turned Its Back on Oil

11/24/2015 - Associate Professor of Economics James Bushnell in Wired.

Alberta is sometimes called the Texas of Canada. It’s home to one of the largest rodeos in the world, a respectable number of annual tornadoes, and a plethora of oil and gas reserves. Falling in the not-quite-so-Texas category: blankets of winter snow, the way they pronounce their vowels, and most recently, a tax on carbon emissions.

In California, the US’s sole cap and trade state, each slice—or permit—allows one ton of emissions. Energy companies buy permits by the bushel at auctions every four months. (Unfortunately, these auctions occur online, and do not feature speed-talking callers.) “The state announces a certain number of permits, and someone says ‘I want 50 of these at $15,” says James Bushnell, an environmental economist at UC Davis who helped consult California’s program. Then the computer gives the permits to whoever offered the highest bids. See, the carbon cuts come from the scarcity of the permits, rather than the tax rate.

Read the full story in Wired.