Canada's carbon tax is still the right way to go

There is a good, short, succinct article in today's Globe and Mail on how Canada's carbon tax is the best way to go to mitigate greenhouse gas emissions. It is by Mark Jaccard, a professor at Simon Fraser University in BC, and an advisor to the Intergovernmental Panel on Climate Change. I think I can do no better than to reproduce it in full here.

Implementing effective climate policy is extremely difficult. Just ask any honest politician – if you can find one.

Climate-sincere politicians must motivate us to phase out our gasoline cars, diesel trucks and natural gas furnaces in favour of technologies using cleanly produced electricity, hydrogen and bioenergy. But this switch has upfront costs, such as the higher price of electric cars and home heat pumps. Many of us focus on these costs and forget the reduced energy bills that come with cleaner, more efficient technologies. This leads voters to short-sightedly punish politicians who dare promote tightening regulations and rising carbon taxes that are essential to get us to switch technologies, and to reward dishonest politicians who claim these policies are ineffective, economy-wrecking and punitive.

That’s why I was pleasantly surprised Friday when the Trudeau government told us the truth we don’t want to hear: that our carbon tax and regulations must increase significantly to achieve our 2030 climate commitment, the one initially set by the Harper government. Thus, the carbon tax must rise to $170 per tonne of carbon dioxide by 2030, a tax of 40 cents per litre of gasoline, to reflect the planetary destruction we cause when burning this fossil fuel.

We’ve heard lots of misinformation about carbon pricing, however. And we’re about to hear a lot more.

Some politicians claim that a carbon tax (or equivalent regulation) is ineffective. But climate policy experts know this is untrue. An easy way to spot dishonest politicians is if they set decarbonization targets without implementing essential carbon pricing or strong regulations.

Others claim that a carbon tax will hurt the economy. But carbon pricing is actually the cheapest way to decarbonize, as decades of evidence from Scandinavia confirms. Switching to electric vehicles and heat pumps, while your utility switches to zero-emission electricity, has negligible long-term effect on the family budget, which is why economists show GDP growing just as fast.

A related argument is that carbon pricing harms our industries because it significantly raises production costs relative to foreign competitors. This would be true if government required industry to pay a high carbon price for all emissions. Instead, climate-leading governments such as Canada’s apply the carbon price to only a fraction of industry emissions, thus incentivizing their reduction efforts without substantially increasing their production costs. And the government will also provide subsidies to industries that demonstrate global leadership. If the Canadian oil industry has difficulty exporting its “ethical oil,” it is because we are high-cost producers in a stagnant global market, not because of our carbon-pricing policy.

Others still argue that federal carbon pricing intrudes on provincial jurisdiction. Our Supreme Court will soon decide this issue, but heaven help us if it allows provinces to opt out of effective policies. Humanity has thus far failed on the climate change file because of how slow we have been in developing an international mechanism requiring all countries to act. If this global governance weakness is affirmed within federations such as Canada, the task gets even harder. Our national government must have the authority needed to meet our international environmental commitments.

And there are those who claim that our carbon-pricing policy is unfair, imposing higher costs on some. This concern may be valid in some countries, but Canada’s carbon pricing policy is obsessed with equity. It is revenue-neutral on a national basis, meaning that each province receives precisely the amount that carbon taxes would collect. It includes support mechanisms for the most vulnerable. And the carbon tax rebates received by most Canadians will exceed the carbon tax they pay. Only high polluters will be net losers, and these tend to be wealthy people who heat a primary and secondary residence, drive gas guzzlers and fly a lot.

Carbon pricing is fundamentally equitable because it rewards anyone who smartly decides, when renewing their vehicle or furnace, to take advantage of the subsides for electric vehicles, home insulation and electric heat pumps. After doing this, they’d pay zero carbon taxes. What is more equitable than financially rewarding those who decarbonize to avoid major climate costs to our children? One day we’ll appreciate the Trudeau government’s honesty and guts in hoping that enough of us will reject the false claims of climate-insincere politicians.