The Futility of Canada’s Carbon Tax

Carbon tax is not merely ineffective, it is doing incremental harm to the environment. Let’s explore a better alternative.

Note to the reader: I write this essay as someone who is in a significant position to benefit from carbon credits and the carbon tax penalties in general. I am the owner of Upstream Data Inc — a business that deploys technology to reduce methane emissions in oilfield. Our technology reduces massive volumes of GHG emissions and we have sparked a rapidly growing industry around this tech. The carbon tax is a huge incentive for our customers to buy our products and thus benefits our business greatly. However, I refuse to sit silent and abide such fraudulent destruction to the wealth of Canadians and feel compelled to give my honest thoughts regarding this massive, ignorant scam. The carbon tax must be abolished!

There is no denying that climate change is real and human civilization is having a significant impact on our environment and habitat.

Even without scrutinizing any of the data presented by the scientists and just taking their word at face value, it should already have been obvious and undeniable that human pollution and resource destruction is real. How many species have been wiped out by human activity? How many rivers have been poisoned? How many forests have been cleared? How much soil has been contaminated?

It would be impossible to truly quantify our impact on the environment because far too much data is unaccounted for and far too much is lost in the opaqueness of time.

But the data doesn’t matter anyway.

We can all agree that we, as a species, must continue to strive to find more efficient ways in which we consume our resources. This has always been a natural goal for people — to keep doing better. To do more with what we have. This is common behavior to all human beings of all races and to all life forms on earth in general.

We do NOT NEED ANOTHER TAX to keep doing better!

The stated purpose of the Carbon Tax

Here in Canada we have a carbon tax in full force, mandated by the federal government. Their goal behind this new federal tax is to extract capital from activities they deem “dirty” and then redistribute that capital to the provinces who subsidize activities which they deem “clean”. Here is an excerpt directly from the Canadian government’s website:

The federal carbon pollution pricing system is not about raising revenues. It is about recognizing that pollution has a cost, empowering Canadians, and encouraging cleaner growth and a more sustainable future. All direct proceeds from carbon pollution pricing under the federal system will be returned to the jurisdiction in which they were generated.

Somehow, taxing Canadians means empowering Canadians? That’s typical government logic for you.

Further on we find out that the funds raised provincially by the carbon tax will be redistributed by the provinces in two ways.

First, some of the funds will be given right back to tax paying families:

Most households in those provinces will receive more in Climate Action Incentive payments than the increased costs they incur from carbon pollution pricing. Returning proceeds from carbon pollution pricing mitigates the financial impact on families while maintaining the incentive to pollute less.

So basically people will be paying the government for polluting then the government will give them their money right back. In that process a significant % of that money will be consumed by accountants, bureaucrats and general administrative overhead, but let’s just ignore that. Sustaining the accounting industry’s bank balances is net zero emissions right? Somehow it will all be perfectly fair and Canadians will get back exactly the money they deserve!

The second avenue for the funds will be directed to initiatives and projects that the provincial governments deem “clean and green”. There are many such initiatives and generally I think this a more logical use of the tax funds gathered than the circular game of smoke and mirrors previously stated.

In Alberta, for example, we have the government sponsored clean technology initiative called ‘Emissions Reduction Alberta’ who works with startups and new technology projects with a goal to help commercialize novel, clean technology. While using tax funds to support clean tech initiatives does seem logical, let me share my doubts.

Clean tech initiatives are ineffective

Look, when it comes to funding clean technology their heart is definitely in the right place. But is it right to strip people of their hard earned dollars through another tax and then give it to someone else who wants to risk it commercializing a new technology? When has this ever been an effective way to invent in the past? Sure, the bureaucrats look great, but are we really creating wealth and a sustainable future?

Invention comes from capital applied to opportunity. Throwing ill-conceived money at start-ups with smooth pitch decks does not create opportunity and you certainly don’t create it by taxing and impoverishing people en masse.

Creating opportunity requires many minds with diverse backgrounds and experiences who have the capital and resources required to take advantage of the opportunities they discover. Diminishing the ability of the masses to act on opportunity by encumbering them with more tax is not going to end well for a society searching for technological progress.

We would be far better off having more people with more capital to maximize our chances that an inventor sparks a novel, cleaner technology than we are by impoverishing everyone and redistributing their wealth to a select few. Two heads are better than one and millions of heads are better than some.

Over the last few years as I’ve been promoting our business I have gone to several of these ‘clean technology’ pitch events and have even participated in the pitches themselves. Another problem you will encounter is that the judges who select the winners simply cannot effectively recognize scalable, commercial tech and too often these programs end up rewarding those who have a great pitch as opposed to those who have a great technology.

These clean tech initiatives produce a whole lot of good feels, back patting and speeches but not a whole lot of commercialization.

Instead of having government sanctioned authorities leech capital from Canadians to dictate the future of clean technology we should instead seek for more ways to enrich Canadians and put them in a position to seize opportunities as they arise and not have them beholden to a panel of judges.

Just check out this awesome example I came across recently where a Canadian farmer-tinkerer comes up with an innovative way recycle a waste into a valuable product. If more people had more free capital then I bet you we would see a hell of a lot more innovation like this!

The futility of carbon based emissions metrics

Using carbon as a metric for pollution is completely redundant, as I will explain shortly.

I personally consider it to be one of the dumbest things to be ratified by the scientific community in living memory. It is so utterly pointless that it calls into question the very credibility of its supporters as scientists and whether or not they are even relying on the scientific method at all.

Indeed there’s plenty of evidence in today’s academia, generally, that credentialed frauds have ditched the scientific method altogether for more profitable schemes, such as grant hunting and paper stacking.

The product of science is truth, so we must be wary of external financial incentives as they can create significant conflicts of interest and product dilution. I personally believe that there is an insidious problem in academia right now with the scientific method being bastardized by those who monopolize publications and control the distribution of funding. Just check out this hilarious anecdote for your viewing pleasure. I would wager that we will look back on the carbon equivalence measure and laugh, as we do with so many missteps of the past.

Today’s students of truth must be extra vigilant and learn to sift between actual scientific experimentation that can be self-validated and what is increasingly being misrepresented as science — experimentation which is infeasible to replicate. My friends and I refer to the latter as “tHe SciENcE” and the use of carbon equivalent emissions (CO2e) as the basis of a sustainability efforts is a fine example.

You see the problem with using the CO2e metric is not that it is inherently unsound but that its application is fraught with error. Wide, gaping assumptions are used and misapplication of the methodology is common when comparing differing energy technologies.

The carbon equivalent methodology is largely subject to external bias and can be easily massaged to make certain technologies appear “cleaner” or “dirtier” then they truly are. Conclusions often depend on who is funding the study and the integrity of the authors. Replications of the source data are often infeasible or obscured by access permissions. This is really not good because government authorities rely on the results of these reports to allocate penalties and subsidies. The decisions made by the authorities can hurt working class people who are struck by penalties while others many undeservingly benefit from the wealth transfer.

For example, if you dig into the studies and reports that quantify the emissions in the supply chain of solar panels you will find that they discount or even disregard entirely the emissions from the coal that is used in the manufacturing process of the panel. Meanwhile, they penalize coal fired power plants for “negative externalities” caused by their GHG emissions yet do not apply the same penalty to solar panels which use the byproduct of coal fired power plants in their raw material manufacturing!

One industry is suppressed while another is artificially boosted. This is very unnatural and, frankly speaking, evil.

And what about the “positive externalities” why are only the negatives accounted for in these models? Renewable energy is considered clean power yet it relies on fossil fuels in its entire supply chain. Shouldn’t fossil fuels get some credit for providing the raw materials for renewables? Isn’t that a positive externality if we are comparing apples to apples?

You don’t need renewables for fossil fuel energy but you do need fossil fuel for renewable energy. There should be some kind of correction factor here. There are fiat games afoot.

Using the carbon metric as the basis of consumption and pollution is truly a cluster f*** of non-science, but luckily there is a much better alternative.

A better metric than carbon

What really irks me about the entire carbon scam is that it is completely pointless because we already have a perfect metric for measuring human consumption — the dollar.

Economics teaches us that producers of goods and services will produce inventory in that good or service when they anticipate getting paid for it at a future time. So every time you or I spend money we are responsible for a producer consuming resources (energy and raw materials) to produce that product or service. This effort consumes resources which can be converted to CO2e.

The more money you spend, the more resources you consume. The more money you spend, the more carbon you emit.

You can effectively replace the carbon tax with a higher sales tax and achieve the same thing while also cutting out the errors and overhead of this new, onerous tax scheme.

To be clear, I do NOT advocate for more taxes to help the environment. In fact, quite the opposite because generally speaking the government is the most inefficient distributor of capital in the entire economy. It would be preposterous to believe that raising taxes would be good for the environment. Lowering taxes however… Have you ever heard of a government construction project hitting budget?

A better solution than carbon tax

I started this essay admitting that humanity is indeed wasting tons of resources and I wouldn’t have bothered writing this if I wasn’t convinced that there was a better way.

Here is what government can do to help accelerate a sustainable future:

Government needs to end fiat money, abolish central banking and return to a fully reserved financial system.

Now if you read my most recent post — ‘The Inflection Point’ — then you will know that fiat money’s time is coming regardless of what the government chooses to do. Central bankers are are already well on their way to destroying confidence in fiat money with their monopolized, unpredictable monetary distribution policies, but now Bitcoin is fanning the flames.

The good news is that in the meantime the Canadian government can act positively towards a sustainable future by bringing back a sound money.

Why will sound money create a sustainable future?

Energy consumption and the efficiency of resource use is the crux of a sustainable future. If you look at historical data you can see clearly that energy usage, especially in fossil fuels which dominate the spectrum, tend to increase every year with human population and demand.

Jevons Paradox teaches that as human’s create more energy efficient technology energy use only increases:

In economics, the Jevons paradox (sometimes Jevons effect) occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises due to increasing demand.

With human demand for energy increasing it is vital that we learn to use the energy more efficiently. We can observe in historical energy data that the only time we use less energy is during an economic recession.

So what happens during economic recession that results in reduced energy expenditure?

Well generally people save money and defer spending. By deferring spending producers shut off their energy and reduce the inventory the build since they anticipate less demand and lower prices.

Recently, we witnessed during the Covid-hysteria that government mandated lockdowns resulted in mass reduction of GHG emissions in China as people were more or less forced to “save money” and “defer spending” by being forcibly locked in their homes, according to Nasa anyway.

As great as lockdowns are for the environment, they clearly aren’t a sustainable humanitarian solution to get people to save money. A much better solution would be if we had a sound, hard money that naturally incentivizes people to save and defer spending. Ideally this money is not produced and distributed by any one entity, like a central bank, but by many. For example gold miners and bitcoin miners. Through competition in distribution the market would be more stable.

The Canadian government can do its part to incentivize a sustainable future by introducing better money with a full reserve. Since bitcoin already exists and cannot be controlled by the government, they can simply revert back to what they know and re-issue the gold standard.

When people are incentivized to save they will stop lending out their money willy-nilly to financial advisors to risk on the stock market. People will think twice about spending money on silly things they don’t need. Less resources will be wasted.

Famously, one early bitcoiner spent 10,000 bitcoins on some pizza and now that bitcoin is worth over $475,000,000 USD. This is obviously an extreme example but with a deflationary money this is generally the trend — your money becomes more valuable later in time and deferring consumption is highly rewarded.

In observing the bitcoin community’s tendency for hoarding coins, called ‘hodling’, you’ll find that it is a much praised and ‘holy’ activity while spending is typically condemned. This is generally for good reason as deferring spending is heavily rewarded, the way it should be. Deflationary money is the answer to almost a century of accelerating consumerism.

Conclusion

The climate change debate has been raging for decades and has certainly been the hottest political topic in recent memory. Governments believe more tax, wealth distribution and oversight is the answer but they are very much in the wrong. It is time to admit that and start reversing these oppressive policies.

A carbon tax is not a scalable, efficient solution. It harms people and enriches bureaucrats. It diminishes innovators, making it harder for them to take advantage of opportunities they come across. People are forced to pitch their ideas to a panel of judges instead of having the means to just go out and execute by themselves.

It is high time we stop debating the data and start implementing the solution:

  1. Immediately abolish the carbon tax
  2. Immediately abolish central banking and fractional reserve
  3. Bring back a fully reserved sovereign money
  4. Allow retail / small banks / custodians to use any reserve they wish
  5. Enable people and businesses who want to use bitcoin to do so unencumbered

❤ Steve

Bitcoin mining enthusiast / owner of @UpstreamDataInc / oilfield tech innovator / internal gears will change the world