Canadian Carbon Tax Quid Pro Quo For Keystone XL Approval

Wow, this was bugging me. I knew I had posted this but I couldn't find it. I was sure I had posted that a carbon tax would be the quid pro quo for approving the Keystone XL, but I couldn't find it. I must have spent an hour looking for that post.

Then I remembered: I didn't post it. I thought it too "crazy" to post, and instead just sent it as an e-mail to Don. But here's what I sent Don on February 3, 2013:

1. TransCanada has it figured out. It needs a carbon tax to get the Keystone XL approved. The Canadian govt say "no."

2. Obama talks to Canadian govt; to get Keystone XL, Canada has to enact a carbon tax.

3. Canada enacts a carbon tax.

4. Canada enacting a carbon tax gives Obama "top cover" to do the same thing in the US.

5. Obama says he will approve Keystone XL if US follows Canada's lead and enacts a carbon tax.

6. So, will House of Representatives go alone with a carbon tax? Depends how it's structured.

It looks like the first half is "on the table," as they say. In the Financial Post, Terence Corcoran writes that the price of the Keystone may be a carbon tax in Canada.

Hello Canada! Are you ready — ready for a new national tax on carbon that will ding pocketbooks across the country?

My bet is that a new carbon tax is coming, made almost inevitable by Prime Minister Stephen Harper’s full-bore push to secure Washington’s approval of the Keystone XL pipeline. For early clues on the carbon tax/Keystone trade-off, tune in Tuesday night to President Barack Obama’s State of the Union address. As the president speaks, he will be alert to the chorus of Hollywood stars, environmental activists, editorial writers and industry leaders who are pushing for him to make the biggest climate-change decision he can possibly make: Impose a carbon tax.

It is time Canadians became aware of the giant trap being set in Washington over Keystone. The short version is this: The president approves Keystone, greatly expanding the flow of Canadian oil sands production into the United States. In return, however, Canada has no choice but to accept a carbon tax at home as part of a grand bargain.

So, that's on the table. Canada can't turn on a dime. It will be at least a year before Canada votes yes/no on a carbon tax. Canada pulled out of the Kyoto Protocol. It's hard to believe the Canadians would vote yes on a carbon tax to get the Keystone XL approved.

Don't forget: Canadian oil is trading at a huge discount to Brent. A forgotten story is the increasing amount of oil Canada is exporting to Europe. If the activists in the US kill the Keystone XL and the activists in Canada kill their pipeline dreams to the west coast, there is only one alternative, assuming Canadian oil sands can hold out long enough/survive this transition.

Gotta move on...too much breaking news....

But one last thought -- again, to repeat, a carbon tax in Canada would give the president of the US top cover for a carbon tax in the United States.