In the specific environment, governments across Canada are effectively blocking pipeline infrastructure, coal production, fracking, LNG plants and much more, through endless process requirements or outright bans. Much of these regulatory restrictions limit manufacture of natural resources with significant regional income losses specifically for Bc, Alberta, Saskatchewan and 2 Atlantic provinces.
But why stop at reining in upstream greenhouse gas emissions when there are plenty of downstream emitters we are able to control, too? Here are a few policies that all those politicians pushing for limits to GHG emissions might consider.
First, federal and provincial governments should no more approve gas-guzzling car plants. Or at the minimum, we should quit subsidizing them. Sorry Ontario, but all those GMC 4x4s, Lincolns and Dodge Chargers you have produced are compromising Canada’s environmental objectives.
Second, we ought to stop all subsidies to existing fuel-powered aerospace companies. Quebec’s Bombardier is not a national champion whether it makes items that pump the atmosphere filled with emissions, right?
Third, farm and heavy-equipment machinery using diesel or gasoline should no longer be produced in Canada. It’s difficult to believe we not only still allow this, but we even encourage carbon-emitting manufacturers with the subsidy of accelerated depreciation underneath the corporate income tax system. My goodness. Where are the demonstrations?
Finally, all petroleum refining should be stopped and all sorts of petrochemical industries turn off exactly the same way we have been ordering coal power plants to shut.
Bombardier – makes items that pump the climate full of emissions.
Now you might think that I’m smoking something not-yet legalized. And it is true that these are irrational policies. Stopping manufacturing in Canada around the pretext of reducing downstream emissions is a pretty bad idea that achieves nothing: Rather than manufacturing taking place in Canada, it will shift elsewhere, with the resulting products truly being imported into Canada rather than being produced here. This is what happens when a country attempts to act alone.
So why have we not taken exactly the same view for that manufacture of fossil fuels? If we don’t allow an oil pipeline due to upstream GHG emissions, we’ll simply import oil using their company countries instead. We will also provide fewer exports, as our customers import their oil from elsewhere. Worldwide GHG emissions will not be meaningfully different, but Canadians is going to be hurt with lower incomes and much more expensive energy-intensive products.
That is the reason why the key to the GHG policy should be ensuring we remain consistent using what other energy-producing countries are doing. The Trudeau government is on the right track in the aim to harmonize our environmental policies with those of the United States.
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There’s no point in Canada putting in a higher carbon tax when the major emitting countries responsible for three-quarters of global GHG emissions – China, U.S., India, the EU countries, and Japan – tax lower at, say, $20 a tonne. Our stricter policies is a significant economic cost taken care of through unemployment and investment, while achieving no global environmental objectives.
This reaches the issue of carbon pricing, the subject of last week’s federal-provincial ministerial conference. The need for uniform carbon tax or cap-and-trade systems is that emissions could be priced generally. In principle, which includes both upstream and downstream emissions, with both production and imports taxed on emissions. Consumers therefore have a hit through higher prices on fuel, heating and electricity, as well as transported goods.
The advantage of a uniform carbon price over other sorts of climate policies is that the marketplace is best suited to sort out the best methods for curbing emissions. It is also broad-based, signing up to all emissions, as opposed to policies which use regulations and renewable subsidies that are selective and, invariably, much more costly. That’s the theory, anyway. However it only works if international co-operation creates a similar carbon price.
So far it hasn’t. What we see are non-uniform carbon prices around the globe. The current EU cap-and-trade prices are barely over five euros ($7.00). Carbon taxes, among the few non-European countries which have adopted them, are usually below $30 per tonne. And although carbon taxes are higher in Denmark, Norway, Sweden and Switzerland, those countries provide large exemptions for many industries, which wind up taxed very little.
But the greatest “implicit prices” of carbon control are found not in taxes, however in the price to consumers and the economy that comes from regulations phasing out coal, subsidizing solar, as well as banning Keystone XL. Actually, Canada is far from using a climate policy that is remotely as efficient as a basic carbon tax: Federal and provincial policy-makers are eagerly introducing carbon taxes and cap-and-trade systems, but aren’t prepared to undo previous regulations and subsidies that impose higher implicit carbon prices. They’re still adding more.
So when Brad Wall argues that a carbon tax is just a revenue grab when it is not returned to taxpayers the type of income and sales tax cuts, he’s a place. Canada’s carbon tax rates are relatively low (B.C.’s $30 per tonne is the highest) and do little when compared with drastic regulations, like phasing out coal. Patrick Brown, the new kid on the market Ontario PC leader, has become also backing a carbon tax – however i suspect he too is happy to keep his province’s jungle of numerous regulatory and subsidy policies.
Economists who argue for uniform carbon taxes to curb both upstream and downstream emissions are failing to recognize that governments like the hodge-podge of implicit carbon prices, often for political reasons. Maybe, that should be expected. Central planners prefer to control an economy as they think fit.
Jack M. Mintz is the President’s Fellow at the University of Calgary’s School of Public Policy and scholar-in-residence at Columbia School.
