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Setting a price for carbon

Despite the collegial, sunny vibe, Trudeau and the premiers are not necessarily on the same page.


When Prime Minister Justin Trudeau met with Canada’s premiers to nail down a national approach to a carbon tax – or as he likes to call it, carbon pricing – there was much back patting because they had come to an agreement on the need for a “mechanism.” But there were no specifics on how it would work. The details will be hashed out later.

Despite the collegial, sunny vibe, Trudeau and the premiers are not necessarily on the same page. All the players are anxious to be seen as climate change warriors, yet they have their own political agendas based on what they can sell their businesses, industries and constituents.

Carbon pricing has a cost. It’s far from clear what that cost will be.

BC has been operating its own carbon tax regime, which has proven to be effective and it hasn’t been a drag on the province’s economy. Alberta is putting together its own initiatives in a province heavily reliant on the good fortunes of the energy industry, Saskatchewan doesn’t want to add to the burden of its energy companies, Quebec is working a cap and trade scheme and Ontario plans to do the same.

Well, good luck to them.

In a world so reliant on fossil-based energy, whatever action Canada takes – and at the risk of repeating this point – it will be for the most part symbolic, because we are responsible for less than 2% of global greenhouse gas emissions. Greater urgency for action lies with China (28%), the US (16%), Europe (10%), India (6%), Russian Federation (6%) and Japan (4%). Not that the rest of the world (responsible for 30%) should do nothing. But whatever action Canada takes must be carefully calibrated to avoid t-boning the economy.

With that in mind, Ontarians should be wary of the provincial Liberal government’s cap and trade scheme. It’s supposed to bring in $1.9 billion that will be invested in so-called green projects.

Manufacturers already struggling with challenges operating in the province may be skeptical. Afterall, this is essentially the same crew of fumblers, chairs shuffled, that was responsible for the $2 billion gas plant debacle and the poorly planned and executed renewable energy initiative that has not come close to delivering promised jobs or investments.

BC has a better approach. The money its carbon tax generates goes back to the taxpayers, without damaging what has become the fastest growing economy in the country.

In a letter to Trudeau prior to the meeting with the premiers, Jayson Myers, president and CEO of Canadian Manufacturers & Exporters, warned that neither a carbon tax nor cap and trade will be much good without measures that encourage capital investment; in fact, they could be damaging if they divert money “that could otherwise be invested by consumers or industry in new technologies, into general government revenues or high-risk technology unicorns with little chance of commercial success or widespread adoption here in Canada.”

Myers says we’ll have to triple the rate of technological progress to achieve a reduction in greenhouse gas emissions of 30% below present levels by 2030. He recommends a cross-government approach that includes: tax and financial incentives for investment in and adoption of more productive, less emission-intensive products and technologies; funding for the construction of smarter, more efficient energy and transportation infrastructure; reducing regulatory impediments to putting new technologies and infrastructure in place; and ensuring industrial investment is not lost to other jurisdictions only to generate even more emissions elsewhere.

Ontario’s government and Trudeau should be especially mindful of his last point.



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