If the empirical evidence on carbon pricing presents skepticism, what are the activists’ true goals?
The federal government released an updated climate plan full of big dreams and even bigger handouts. Touting the COVID-19 pandemic as an opportunity to build back to address climate change and deliver a stronger economy, the government has a vision for the future they want for all of us, and that includes a 32 to 40 percent reduction in emissions, exceeding our Paris targets. It’s clear that they believe in their plan, but should we?
Do carbon pricing policies reduce emissions?
Do policy alternatives like carbon pricing schemes, under whatever name you want to use, actually make a positive impact on a “negative externality” such as GHGs?
Well, the research shows the answer isn’t quite a simple “yes” or “no”.
A recent report from the think-tank Fraser Institute entitled “Carbon Pricing in High-income OECD Countries” says, “Layering regulations on top of emission-related taxes will have distortionary effects causing disproportionate damage to the economy”. Most governments are using carbon taxes as a means of generating revenue rather than as a way of reducing emissions in a meaningful manner. Poorly designed carbon tax or cap-and-trade regulations can undermine the emissions reduction-effectiveness and cost-effectiveness of the policy.
As the World Bank notes in the table below, Canada’s carbon tax isn’t the highest in the world at present, but with the federal government’s recent announcement to increase it to $170/ tonne by 2030, we won’t be laggards anymore.
By its very intent, the increased carbon price is going to impact the cost of goods that are produced or transported using carbon-based fuels, which is basically everything. But fear not, struggling, unemployed oil and gas workers in Alberta and Saskatchewan! Don’t worry. Your troubles are over. The Feds are here to save you… and the planet. They’ve promised that the majority of people subject to the national pricing program are going to get a rebate. In fact, they say you’re going to get more money back than what you spend on the carbon tax!!
How does that math work? Where will the extra money come from? Someone has to pay it for you to get it.
The carbon tax makes fuel more expensive. So, even though the intent of the policy is to decrease the amount of fuel we use, sometimes that’s not possible. Let’s consider commercial transportation. I’m certainly glad the trucks keep rolling to deliver essential products, especially during COVID. Those trucks need fuel, and a carbon tax doesn’t offer them an alternative fuel to use to reduce emissions. It just makes it more costly for them to do what we need them to do.
That’s where the federal Clean Fuel Standard (CFS) comes in. It will incentivize the creation of alternative fuels to decrease emissions.
BC implemented their version of the CFS in 2010. BC’s CFS successfully avoided 7.73 million tonnes of CO2 emissions between 2010 and 2017. However, people drove more, so overall emissions in the province increased. This makes me wonder – do regulations like this make us feel better about the product we’re using resulting in us carelessly using more, negating the regulation’s effectiveness? Is it kind of like me with recycling where I feel less guilty about what I’ve consumed because I recycled it?
A second carbon tax? Really?
Canada’s Clean Fuel Standard is a technical-sounding term for an additional tax. The government can use whatever nomenclature it wants to make it sound more appetizing to the voting public, but it’s another cost to consumers and businesses. Much like the national “Carbon Pollution Pricing System”, known as the “federal backstop” (by whom, I have no idea, but that’s what the Government of Canada website says.), or what your tax return refers to as the “climate action incentive” (gosh, doesn’t that sound nice and warm on a cold day?), the CFS is another cost on top of existing emissions reduction legislation.
But Canada isn’t alone. No other OECD country has repealed its other regulations when it has implemented carbon pricing regulations.
With all of these punitive measures intended to influence behaviour, you might think that emissions have been decreasing rapidly each year making it easy to meet or exceed the Paris targets. Unfortunately, you’d be wrong.
Considering that Canada’s emissions have been fairly flat since 2005, other than during the 2008/ 2009 global recession, it’s going to be a tough slog to decrease them by thirty percent by 2030 (to around 500 MT), let alone meet the Fed’s forecasted 32 to 40 percent reduction they believe their new climate plan will achieve. We’re going to be impacted by this legislation, but likely in inconspicuous ways. And it will likely take many years before we, as consumers, notice the negative impacts. That’s the frustrating part.
Show me the data!
This time it will be different, they say. There’s a plan. A 79 page plan. A plan with little evidence to back up the claims. The Feds need to show us the data; so far they haven’t. They need to show us that this time their climate plan will create jobs, make life more affordable, and lower emissions – as promised. If that’s the case, I’m on board!
This screen grab is right from the source – the Government of Canada’s updated climate plan “A healthy environment and a healthy economy” report released in December 2020.
If an effective national plan has been in place since 2016, why haven’t emissions decreased? Why should we believe that this time it will work?
Is it because the feds didn’t actually do the things they said they would in the past? In this latest announcement, they pledged to “Invest up to $3.16 billion over 10 years, to partner with provinces, territories, non government organizations, Indigenous communities, municipalities, private landowners, and others to plant two billion trees.” Wonderful idea! But didn’t they make the same announcement a year ago as part of their 2019 campaign platform and Prime Minister Trudeau’s pledge to climate activist Greta Thunberg during their September 2019 meeting? And yet, they haven’t planted a single tree. I’m no mathematician, but shouldn’t they have only nine years in which to meet their 2019 target in the year 2020?
Canada should do its part to protect the environment, but every single country needs to implement a similar climate plan or it doesn’t work. Being the only country in the world to implement taxation schemes or fuel standards is problematic for a number of reasons, but in large part because anything climate related, including the Paris agreement, needs to be global in scale. Canada cannot go it alone, destroy its industries and businesses, and think it can save the entire world while others go on as business-as-usual and reap the rewards from our lost industries and competitiveness.
Regrettably, emissions reduction is a complex issue that governments can’t simply tax their way out of to make the problem magically disappear. If it’s more difficult to reduce emissions than we’re being lead to believe, what is the ultimate objective of the anti-development activists and the politicians pushing these agendas?
Call to action
If you would like to learn more about the new climate plan, the CFS, and biofuels, please check out:
If you have concerns about this legislation, talk to your provincial and federal elected representatives and senators. Tell them you want regulations that enhance Canada’s competitiveness and that you don’t want more costs placed on your overburdened household. https://www.ourcommons.ca/members/en