July 23rd, 2019

Opposing carbon tax shortsighted

By Lethbridge Herald Opinon on February 26, 2019.

Carbon-pricing framework has been shown to lower emissions without hurting economy

Roger Gagne and Andy Kubrin

Canada’s federal government recently set a national carbon pricing framework that will impose a revenue-neutral carbon price of $30 per tonne on all provinces and territories that don’t have their own carbon pricing law. Proceeds from the carbon backstop will be rebated to taxpayers in the jurisdictions in which it was generated. The carbon backstop also ensures that the carbon price will rise to $50 per tonne by 2022.

Opposition to the new law is strong. Conservative politicians Andrew Scheer, Jason Kenney, Doug Ford, Brian Pallister and Scott Moe have all staked their political futures on opposition to carbon taxes. This stance is shortsighted. A low-carbon world is coming and Canadians deserve genuine leadership in this momentous transition.

Scientists around the world overwhelmingly agree that the Earth is warming due to greenhouse gases released by fossil fuel combustion. Accordingly, we have two choices. We can cut our emissions by weaning ourselves from fossil fuels, profitably rebuilding our infrastructure and energy systems in the process – a gargantuan investment opportunity ranging from $5 trillion to $7 trillion per year.

Or we can wait until the laws of physics and chemistry cut our emissions for us, but this choice will have drastic consequences. Waiting for nature to force our hand means crippling our economies by drowning coastal cities like Miami, Vancouver and Charlottetown. It means accepting extreme heat waves, like the one that killed over 90 Quebecers last summer, as a common occurrence. It means accepting the droughts that will devastate farm communities and cause widespread food insecurity. It means living with immense firestorms, like the ones that devastated Fort McMurray in 2016, and British Columbia in both 2017 and 2018, costing many billions of dollars in the process. By far, the most expensive means of dealing with our carbon emissions is to ignore them.

Economists increasingly support this view. Bank of England Governor Mark Carney – the same Mark Carney who once led the Bank of Canada – argues that businesses must calculate and disclose the risk to their business models posed by the carbon intensity of their assets. After all, if large parts of the global economy transition to renewable energy and clean infrastructure, the value of fossil fuel reserves, pipelines and refineries will drop precipitously. So will the value of the firms holding these assets.

Carney is not alone in this view. The highly regarded International Energy Agency states that “carbon pricing is a critical element of energy-climate policy packages.” Nobel laureates Joseph Stiglitz and William Nordhaus, Lord Nicholas Stern of the London School of Economics, and Canada’s own Ecofiscal Commission of experienced economists all believe a tax on greenhouse gas emissions offers the most cost-effective means of combating climate change.

Carbon pricing is effective because it provides incentives for low-carbon technologies, penalizes the use of fossil fuels, and generates revenue. When businesses assign a value to their CO2 emissions, they reveal the hidden risks and opportunities in their operations and supply chain. When businesses and individuals pay for their greenhouse gas emissions, or anticipate paying next year, they are motivated to seek out low-carbon alternatives to save money. When taxpayers receive the benefit of carbon revenues, either in the form of direct rebates or offsetting reductions in other taxes, they have the means and motivation to forego GHG-intensive goods and purchase cleaner ones. The resulting price signals can reshape entire economies.

Some argue that carbon pricing places a burden on economic growth and competitiveness, but the data do not bear out this assertion. The Ecofiscal Commission has studied carbon pricing in several jurisdictions and found that the practice lowers emissions without inhibiting growth. In British Columbia, the carbon tax lowered per capita gasoline demand and lowered residential and commercial demand for natural gas while B.C. outpaced every other province in economic growth. In the United Kingdom, a carbon pricing framework lowered emissions from electricity generation and electricity demand while sharply boosting electricity generation from renewable sources. Economic growth in the U.K. has generally kept pace with or outperformed other nations in the European Union. In Sweden, emissions have been in absolute decline for over 20 years while the country has outperformed both the EU and the Euro zone in economic growth.

The atmosphere is not a free dump. Pretending it was has been a huge mistake. Putting a modest but predictably rising price on carbon offers the best means of lowering our emissions while boosting economic growth and competitiveness. We’d be foolish not to embrace it.

Roger Gagne is a lifelong Albertan who has run in a provincial election for the Green Party of Alberta. Andy Kubrin is a writer and environmental activist who works with the Alberta Green Economy Network and Citizens’ Climate Lobby Canada.

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23 Responses to “Opposing carbon tax shortsighted”

  1. Socrates says:

    Why Roger and other “greenies” ignore other countries? For exampleGermany has had Carbon Taxes the longest of time. For the last 10 years the German emissions are not going down in-spite of the Carbon Taxes. In fact they are increasing slightly.

    Is that a Green Party policy to give partial (convenient) consideration on the facts provided as arguments?

  2. phlushie says:

    It is just what it is, a TAX by another NAME. INCOME TAX can only tax so far. The same with MUNICIPAL TAX, STATE/PROVINCIAL TAX, SALES TAX an GST. Just another means for a government agency to access income from the common man.

    • roger1g says:

      No, phlushie, carbon taxes are different. Is the goal of an income tax to cut income? The goal of a sales tax to cut sales and economic activity? Of course not, but the goal of a carbon tax is to reduce the use of carbon. Use less carbon, pay less tax.

      • phlushie says:

        Who collects the tax? The government, despite what the tax is supposed to be for, the government uses it as income for them to do as they please. The Government should be doing something about the homeless, the poor and the unfortunate or disabled. Instead they are like Don Quixote, tilting at windmills, trying to change something that they know nothing about that has been occurring for billions of years. But , it ids a deflection to keep the populus from asking them to solve real problems.

      • Dennis Bremner says:

        sorry roger1g you and the authors of this crap letter to the editor are equally wrong.
        Why are they wrong? Its quite easy really, at NO TIME do huggers count the numbers of companies that move their polluting ways from a high tax environment to a non existant tax environment. They do count the “reduction of a company shutting down” as PROOF that Carbon taxes work, they do not.
        Find one country that is reducing carbon with carbon taxes and I will show you a country that does not count the carbon increase elsewhere as they force polluters out of their countries. Want proof, look at the long list of companies that have relocated their polluting ways from Europe to India, or from NA to SA

        Huggers have a natural knack to work the numbers so their stupidity always seems brilliant to a layman, I ain’t know layman!

        I suggest you get more informed as to what is happening to emissions elsewhere ie 2/3rd world as we “make appearance we are cleaning up”

  3. “In British Columbia, the carbon tax lowered per capita gasoline demand”. Sure! Smart British Columbians near the border might fill up in Washington. Cars have also become much more efficient over the years. Show us some data. Where is the science to support this conjecture that the rebated carbon tax is having any real effect?

    • roger1g says:

      Hi Duane,

      Thousands of years of trade and economic history have shown that as the price rises on a commodity, as long as there are alternatives then its use will drop. Again and again, recent economic research bears this out.
      A dozen top-drawer economists at Canada’s Ecofiscal Commission looked at carbon pricing in three jurisdictions: BC, California, and the UK. It works.

      • Thanks Roger. Here is a passage from one of your references.

        Q&A: Why have BC’s emissions continued to go up if the carbon price is working?
        Still, the emissions news from BC isn’t completely rosy. In recent years, BC’s total GHG emissions have actually increased. Two main factors are at work.
        First, the tax was “frozen” at $30 per tonne in 2012 after steady increases for the previous few years. As a result, businesses and individuals had a weaker incentive to make long-term investments to reduce emissions than they would have had with a slowly rising carbon price. For example, gasoline consumption fell between 2008 and 2013 when the carbon price was rising but rose by 7% between 2013 and 2016 when the price was frozen.
        Second, even though BC’s total GHG emissions have increased in recent years, they are almost certainly lower than they would have been in the absence of the tax. BC’s strong economic (and population) growth has contributed to more overall energy use and therefore GHG emissions.
        Similarly, declines in energy prices over time encouraged energy use, partially offsetting emissions reductions from the carbon tax.
        The $30 per tonne tax caused emissions to grow less quickly than they otherwise would have. But a higher carbon price will be required to drive deeper emissions reductions in the future.”

        Sure, carbon taxes if enforced, increased and not rebated could reduce fossil fuel use. What will it do to our economy in comparison with others not so encumbered?

        • roger1g says:

          Hi Duane,
          I think the growing momentum pushing the low-carbon economy will reward any jurisdiction using a carbon price. Institutions with $6.2 trillion in assets are divesting from fossil fuels, while a growing coalition of investors currently with $32 trillion are pushing for climate risk disclosure and alignment with the goals of the Paris Agreement. These are changes that have occured in the past four years, and they are accelerating.

          And, to go back to the EcoFiscal article, if you don’t like carbon taxes then what’s your alternative?
          “In addition (and this point is also often overlooked), carbon pricing will achieve these outcomes at a lower economic cost than other policies.”

  4. roger1g says:

    Like Suncor CEO Steve Williams said in Calgary in May of 2015, “Climate change is happening, and doing nothing is not an option we can choose”. Equally stark are the warnings from the US military as they deal with climate-related threats to their bases.

    “Climate change fuels widespread insecurity and erodes America’s ability to respond to it.”

  5. biff says:

    phlush has it right – carbon tax is another layer of tax. it exists to steal away more money from the sap wage earner, and redirect it to the top of the pyramid. big corp will simply pass along whatever expenses they incur to us; in fact, given all the gasoline taxes, you still see an awful lot of people filling up. and once the price is up, it rarely ever comes down to anything fair. have food prices dropped after going up because of fuel costs…even though fuel prices are cheaper since that that last spike? nope. and given that oil prices have been very low for a long time now, have gas prices come down anywhere near proportionally? nope. carbon tax is another scam! al gore is rubbing his well greased hands in anticipation.

  6. Dennis Bremner says:

    Let me give you a forecast.
    Carbon tax comes in.
    Treehuggers report its not working at $30
    Gov raises to $50
    Treehuggers report not working at $50
    Gov raises to $100
    Treehuggers report not working
    Gov raises to $200

    Meanwhile 184 other countries continue to pollute and have no carbon tax. In fact their emissions rise as the polluters flock to the third world countries that do not and WILL never have CARBON TAX.

    So, the Federal Liberals and the Provincial NDP kill Canada…the end, and I mean THE END!

    • roger1g says:

      Hi Dennis,

      At any price, carbon taxes reduce emissions. Even Alberta’s timid carbon tax of $1.80/tonne, and the subsidies it funded, cut emissions by 3% from 2007 – 2012. BC’s GHGs, however, are 5-15% lower than they would have been, if not for the carbon tax.

      As a carbon price rises, the incentive to reduce grows. As more jurisdictions create their own carbon pricing mechanisms, the opportunity for cross-border shopping, or else moving production or a whole factory, lessens. Then, faster GHG reductions happen on both sides of the border.

      “Economists are virtually unanimous in the view that carbon pricing reduces greenhouse-gas emissions at the lowest possible cost to the economy… Those who oppose carbon pricing should either admit that they don’t care about climate change or they should propose a serious alternative policy. ”