Canadian Political Battle Lines Drawn Over Carbon Pollution Policy

April 17, 2019 – It is the day after a right-wing political party has won a majority in Canada’s province of Alberta. This is the fifth province to be led by political leadership opposed to the federal initiative to put a price on carbon pollution as a market mechanism to reduce greenhouse gas emissions (GHGs). All of these provinces have taken the federal government to court to have the Greenhouse Gas Pricing Pollution Act declared unconstitutional. Arguments in an Ontario courtroom are ongoing this week with the province suggesting that if the law stands the federal government will be able to regulate every aspect of Canadians’ lives.

In a sense, the argument proposed by the province proves the point that the federal government is trying to make: that pollution knows no boundaries, and that carbon is intrinsically woven into the fabric of our lives. Weaning us from much of it requires policies that move us off carbon without impacting the nation’s economy. That’s why the federal government chose a market mechanism to tackle GHGs, a method that has proven to work in one Canadian jurisdiction, British Columbia, for more than a decade.

What is so very interesting about the pushback from provincial governments on the political right is that the policy they are fighting is one that originates from a conservative, and business-oriented playbook from the 1980s in the United States. It uses the market, rather than regulation to tamp down carbon use and encourage innovation and invention to address GHG emissions. A gradually rising carbon price is designed to influence buyer and producer behaviour.

The Canadian act tops the price on carbon at $50 CDN per ton by the year 2022 with no current provision to raise it further in subsequent years. The act also doesn’t apply to any province or territory that has created its own GHG emission policies that are seen as consistent with the federal legislation which has one aim: to reduce overall Canadian GHG emissions 30% from 2005 levels by the year 2030. The provinces fighting the federal government in court, are only those that have not instituted equivalent reduction capability through their own legislation or regulations, and therefore are subject to it.

As provincial challenges wind their way through the courts Canada is left with a fragmented strategy for addressing carbon emissions on a national scale. Still on board are British Columbia, Quebec, and most of Atlantic Canada. The federal government’s argument in court is simple: pollution knows no boundaries and therefore impacts all Canadians as well as the rest of the planet’s population. Thus it is the responsibility of the federal government as a signatory to the Paris Climate Agreement of 2015, to create the means by which Canada can contribute to an overall effort to reduce GHGs to mitigate the impact of climate change.

Are the provinces arguing that human-caused climate change is a hoax? For the most part, no. Instead, the squabble is over the division of powers in the Canadian Constitution and which jurisdiction has authority over pollution policy. It is a stupid position to take in the face of the existential threat that climate change represents. But political behaviour like that being shown by these provinces is motivated by obtaining power and holding it while undermining the credibility of the federal government’s climate change initiative. And lost in the provinces’ attacks on federal legislation is the rebate policy which will return up to 90% of the carbon levy collected to citizens of the jurisdictions that have not instituted their own carbon reduction legislation and policies.

Canada’s next federal election will happen this fall. It now appears that climate change will be a key issue in determining how Canadians vote.

Do they believe that a singular price and on pollution is the best way to move forward in addressing GHGs?

Will they understand that the rebate more than compensates them for the added cost of gasoline and diesel at the pump, and for natural gas used to heat most Canadian homes?

Will they ignore the political posturing of leaders who spread fear and doubt, and make a responsible choice to support governments that create policies to address climate change through a method that has been universally declared by economists around the world as the best way to tackle GHG emissions?

Don’t take my word for it.

The former Chair of the US Federal Reserve, Janet Yellen, along with many other economists in her country, have united in supporting a price on carbon pollution. According to The Wall Street Journal, a publication with strong conservative leanings, here are the numbers:

• 3,508 U.S. economists
• 4 former Chairs of the Federal Reserve
• 27 Nobel laureates in economics
• 15 former Charis of the Council of Economic Advisers
• 2 former Secretaries of the U.S. Department of the Treasury

In their joint statement, they are united in believing a price on carbon “offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. by correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.” 

They also state, “A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.” 

They conclude that “revenue should be returned directly to U.S. citizens through….rebates” with “the majority of…families, including the most vulnerable” benefitting financially by receiving “More in ‘carbon dividends’ than they pay in increased energy prices.”

This is Canada’s federal carbon policy. That’s why Canadians should be wondering why a number of provincial leaders whose credentials are certainly as conservative as the views of The Wall Street Journal, would fight a policy universally conceived to be in the best interests of the country and the planet. Is their position one of self-interest, or the Canadian public’s interest?