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.