Policy makers who embrace market-based approaches to environmental regulation, typically eschew carbon taxes in favor of the political advantages of cap and trade, which offers lower visibility of costs to consumers and the opportunity to allocate valuable permits freely to industry. Against this backdrop, the article examines two surprising proposals for carbon taxes, by the government of British Columbia (BC) and by the federal Liberal Party of Canada. Both reflected a triumph of party leaders' normative "good policy" motives over "good politics." The BC tax alone succeeded first because it was adopted by a party already in government. Second, the onset of a recession before the next elections shifted voters' attention to the economy, which advantaged the BC Liberals but disadvantaged their federal counterparts. However, proposals for carbon taxes were unpopular in both jurisdictions, offering a cautionary tale concerning the fate of politicians' normative commitments absent electoral backing. KEY WORDS: climate policy, carbon tax, cap and trade, policy instruments, Canada, British Columbia bs_bs_banner 383

In recent years, a number of authors have been critical of the adversarial U.S. “regulatory style,” and have expressed interest in more cooperative regulatory approaches common in Western Europe. They have argued that the inflexible, deterrence‐based approach that has characterized enforcement of U.S. health, safety, and environmental laws is not only inefficient in treating minor and significant violations equally, but counterproductive in fostering antagonistic relationships between regulators and the regulated. This article examines the effectiveness of the cooperative Canadian approach to enforcement of environmental regulations, using the pulp and paper industry as a case study. The resulting levels of compliance are compared with rates of compliance in the United States for the same industry. Significantly lower rates of compliance in Canada cast doubt on the growing consensus in favor of cooperative regulatory approaches.

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Cap and trade and carbon taxes offer the prospect of reducing greenhouse gas emissions at a lower cost to society than conventional regulation. Between these two market-based approaches, however, carbon taxes offer significant advantages, including transparency and predictability of costs, ease of implementation, and application to small and large sources alike. This article thus seeks to inform our understanding of the conditions under which carbon taxes are politically viable by comparing the experience of four jurisdictions: Finland and Denmark, which adopted carbon taxes; Germany, which adopted a related energy tax; and Canada, which rejected a carbon tax. The cases highlight the role of policy entrepreneurs in advancing academic theories about environmental taxation. However, the impact of those ideas was conditional on voters' attention to either the environmental or economic benefits of carbon taxes. Even then, business tended to be more attentive, thus winning tax concessions relative to households. Proportional electoral systems tended to facilitate adoption of carbon taxes, whereas international institutions had mixed effects, in some cases advancing harmonization and in others undermining resolve for unilateral taxation.

The authors use a comparative politics framework, examining electoral interests, policy-maker's own normative commitments, and domestic political institutions as factors influencing Annex 1 countries' decisions on Kyoto Protocol ratification and adoption of national policies to mitigate climate change. Economic costs and electoral interests matter a great deal, even when policy-makers are morally motivated to take action on climate change. Leaders' normative commitments may carry the day under centralized institutional conditions, but these commitments can be reversed when leaders change. Electoral systems, federalism, and executive-legislative institutional configurations all influence ratification decisions and subsequent policy adoption. Although institutional configurations may facilitate or hinder government action, high levels of voter concern can trump institutional obstacles. Governments' decisions to ratify, and the reduction targets they face upon ratification, do not necessarily determine their approach to carbon emissions abatement policies: for example, ratifying countries that accept demanding targets may fail to take significant action. (c) 2007 by the Massachusetts Institute of Technology.