Carbon Pricing: Important, Complicated, but only part of the solution

Prime Minister Trudeau, in an interview with CBC news on July 22 after the Premiers’ meetings in Whitehorse, stated that a price on carbon  is an “essential element” of Canada’s climate change plan and the federal government is “going to make sure there is a strong price on carbon right across the country”. Premier Brad Wall of Saskatchewan is the most vocal of the Premiers opposed to carbon pricing: see  “Saskatchewan threatens legal clash over nationwide carbon price”. There’s been no shortage of reports on the issue:most recently, The Least Costly Path to  Climate Action  was released by think tank Clean Prosperity on August 25. Dave Sawyer and Chris Bataille were commissioned as co-authors to  model the economic performance, environmental effectiveness,  and scalability of  two carbon pricing alternatives:  a “pure carbon tax” modelled on the B.C. program, and a “hybrid” scenario based on Alberta’s system. Both scenarios assumed the carbon price would rise from $30 per tonne in 2018 to roughly $110 per tonne by 2030.  Among the conclusions: “When applied to key jurisdictions and Canada-wide, the hybrid carbon price policy actually boosts economic performance when compared to current and developing federal and provincial policies. For energy producing provinces, an Alberta-style hybrid carbon price model … improves economic performance by 1.43% in Alberta and 4.23% in Saskatchewan.” The authors conclude:  We believe that adopting an Alberta-style hybrid carbon pricing policy, and recycling the revenues by reducing personal and corporate income taxes, represents the best way forward for Canadian governments” to achieve the goals of environmental and  economic performance as well as a perception of regional fairness.

Other notable reports: On July 27, the EcoFiscal Commission released  Comparing Stringency of Carbon Pricing Policies  in Alberta, British Columbia, Ontario, and Quebec. Although the report provides numbers and rankings, Energy Mix states  that “More important than the ranking of provincial carbon taxes may be the Ecofiscal Commission’s development of a methodology for comparing dissimilar systems across the country.” Also in July, the C.D. Howe Institute published A Blueprint for Going Green: The Best Policy Mix for Promoting Low-Emissions Technology , which concludes that “Supporting technology development means not only investing in new technologies but also creating demand for clean technologies in the broader economy, through carbon pricing.” Internationally, the Carbon Pricing Leadership Coalition  of the World Bank released Carbon Pricing Leadership Coalition: What is the Impact of Carbon Pricing on Competitiveness?  in September.

Though important, carbon tax policy is only one aspect of climate change policy. An August 30 Opinion Piece in the National Observer,  “Carbon tax fetishism: We’re losing the plot on climate change”  reflects on the intense attention to carbon taxes, including in the public reaction to the B.C. Climate Leadership Plan.  It argues that the attention to carbon taxes “sucks politicians, analysts, and journalists into groupthink, and the entire national climate conversation is losing the plot.”  And “5 reasons there’s more to climate policy than a price on carbon”  in Vox  (June 28) defends Ontario’s cap and trade policy from the criticism in a June 10 Globe and Mail editorial.  The Vox article is based on an essay by Brendan Haley, which concludes “The sooner we dispel ourselves from the myth that the market alone will solve the climate change problem, the sooner we can start to ensure more technology and sector specific policy approaches are implemented effectively and democratically.”  It’s complicated.

Leave a Reply

Fill in your details below or click an icon to log in:

Gravatar Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s