Carbon, for what it’s worth

Joe Terrett   

Sustainability Government Manufacturing cap-and-trade carbon carbon pricing carbon tax climate environment government greenhouse gases manufacturing

We’ll pay a high price for government efforts to do a poor job of reducing emissions.

Carbon pricing is a mystery to many climate change believers.
Photo: Thinkstock

Many Canadians believe climate change is real, that we’re causing it and our governments should do something about it. Point taken. So far several federal regimes and their provincial counterparts have done a lot that hasn’t amounted to much, and the current guardians of the climate are doing much of the same.

Many manufacturers contending with all kinds of government-induced costs to their businesses probably haven’t paid too much attention to the federal Liberal government’s scheme to put a price on carbon, starting next January. That’s $20 per tonne of emissions, which will escalate to $50 in 2022. The provinces can come up with their own, equivalent plans, either by adopting a carbon tax or implementing a cap-and-trade regime.

Will this send us well on the way to achieving our international commitment of a 30% reduction in emissions from 2005 levels by 2030, and will it help to hold global warming at an increase of 2 degrees C? Don’t bank on it.

First of all, Canada’s contribution to the world’s greenhouse gas emissions is about 1.6% so anything we do – for the most part – is symbolic. Moreover, we already have a lot of catching up to do. As of 2015, Canada was behind its target by 200 million tonnes.


Combined, China and the US account for about 41% of the world’s total emissions. Both are heavily reliant on coal power. And our good neighbour to the south is busy dismantling its climate regulations. Since most of our trade (80%) is with the US, putting a price on carbon is to our competitive disadvantage. Pricing levers add cost to doing business, but they’re also jumbled up in politics and regulation, all of which serves to repel foreign and domestic investment.

How is carbon pricing supposed to work? It’s based on the premise that if you have to pay for it, you’ll use less of it. Economists love the pricing model because of its theoretical simplicity, and they’ll trot out various examples where it’s successful – such as BC – where good citizens have obligingly reduced their use of fossil fuels.

That’s very laudable and green of them. But Canadians and businesses do enjoy heat in the winter; power to illuminate, run plants, processes and households; and the ability to get around town. These consumption factors offer limited potential for conservation.

Meanwhile, taxes and cap-and-trade both leave a gaping hole for companies that don’t mind spending the money to continue discharging their carbon with abandon.

Not that it matters. Both levels of government are doing a poor job of executing a climate strategy, according to auditor generals across the country.

They did a joint audit that concludes: few governments have detailed plans to reach their targets; their assessments to adapt to risks posed by climate change have been haphazard, inconsistent and lacking in detail; and they lack timelines and plans for funding. Only Ottawa and two provinces have emissions targets but they’re not on track to meet them.

For those keeping score, the auditors note Canada has set four emissions targets, and had eight plans to meet them, but have not done so, even once.

Looking ahead, Prime Minister Justin Trudeau can expect more pushback on carbon pricing from Saskatchewan; Ontario if Tory Doug Ford wins the upcoming election; and Alberta if rebranded conservative Jason Kenny wins the election next year in Alberta.

And as Canada’s contorted efforts to chip away at the 1.6% play themselves out, it will be China, the US and to a lesser extent Europe that will ultimately determine how high the global thermostat will go.


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