Making necessary policy with a price on carbon

Merran Smith & Dan Woynillowicz report that in July, the Conservative Party of Canada announced that, just like the price on pollution, Canada’s clean fuel standard would be met with a falling axe if the party were to form government in October.

 

Coastal Erosion

What is the argument put forward to scrap it? In Conservative Party Leader Andrew Scheer’s words, because it’s “a secret fuel tax” that would increase the cost of gasoline by four cents. That number, according to the party, was informed by Clean Energy Canada’s 2017 report on the clean fuel standard, along with stakeholder interviews.

 As Simon Fraser University professor Mark Jaccard put it, rather bluntly, “If a politician focuses only on the increase in the price of gasoline and does not point out that this lowers the price of zero-emission alternatives that we must be quickly switching to — like Norway, Sweden, California, Brazil, China — (that politician) should score at the maximum on the baloney meter.”1

Here are the facts as they pertain to gasoline prices:

• The clean fuel standard (which was never secret and is literally not a tax) will not become a regulatory requirement for liquid fuels like gasoline and diesel until 2022.
• It will add a cent or two to the cost of a litre of gasoline in 2025.
• And it is not until 2030 that the policy could add about five cents to the price at the pump

Mia Rabson reports that federally, Elizabeth May, leader of the Green Party of Canada, says she could support a minority government of any party but only if that party is serious about acting to stop climate change.

A serious balance

Nanos Research says the "best scenario" for May and the Green party is that Canadians don't think anyone will form a majority and they want more Greens in the House of Commons.

May doesn't say it quite as directly.

 "I think it's really important to communicate with Canadians how our democracy works and that a minority Parliament is the very best thing, if, and this is a big if, you have parties and MPs in Parliament who are committed to working together," she says.
And by "working together" she specifically means to slow climate change with policies that drastically reduce greenhouse-gas emissions, don't build any more oil pipelines and replace fossil fuels with renewable energy as fast as possible.2

Brendan Frank answers What’s a price on carbon? It’s a charge on fossil fuels, the main drivers of climate change. The charge is based on how much carbon pollution (a.k.a. greenhouse gas emissions) the fuel produces when it is burned. For example, a litre of diesel produces more carbon pollution than a litre of gasoline, so the carbon price is higher on a litre of diesel. This creates an incentive to conserve energy, or look for alternative sources. If we want our climate to remain as stable as possible, economists overwhelmingly recommend we start by putting a price on carbon.

	Places where carbon pricing is working
1	How it worked: B.C.’s carbon tax reduced the use of gasoline and natural gas by seven per cent per person. There’s even evidence that it spurred people to buy more fuel-efficient cars. Key fact: B.C. used the revenues to cut income taxes and, more recently, to cut health premiums and invest in green technologies. It has some of the lowest income tax rates in Canada.
2	In 2009, 10 states, including New York and Massachusetts, worked together to put a price on carbon. They used the other type of carbon pricing: cap-and-trade. Their system is known as RGGI (Regional Greenhouse Gas Initiative), or “Reggie.” How it worked: Electricity producers started burning way less coal and started using more natural gas and renewable energy, which reduced greenhouse gas emissions. Key fact: “Reggie” improved public health. Less coal meant less soot, and these states avoided more than US$5 billion worth of asthma attacks, hospital visits, chronic illnesses and premature deaths.
3	Sweden has had a carbon tax since 1991. It started at €25 per tonne of greenhouse gases and is now €120 per tonne, the highest carbon tax in the world. Since implementing carbon pricing, Sweden’s economy has grown well above the European average. How it worked: Businesses and homes started using less coal, gas and oil for heating, and started using biofuels instead. Sweden has reduced its greenhouse gas emissions by 25 per cent since 1995. Its carbon tax was a key contributor. Key fact: Sweden wants to be carbon neutral by 2045 and will use pricing to help get there.
4	The United Kingdom has had a bipartisan consensus on climate change for a long time. They introduced a carbon price in 2001 and gradually ramped it up over time. How it worked: The carbon price completely transformed how the U.K. generates and uses electricity. Its emissions haven’t been this low since 1890, and studies point to carbon pricing as a key contributor. Key fact: The U.K. got serious about carbon pricing in 2013. In 2012, the U.K. got 36 per cent of its electricity from coal. In 2018, it got six per cent of its electricity from coal.
5	Tokyo was the first city to put a price on pollution back in 2010. About 1,300 of its largest buildings pay a price on carbon. How it worked: Building operators started massive upgrades and retrofits. The most common initiatives were the installation of high-efficiency furnaces and lights. Key fact: Over 70 per cent of buildings met their 2020 targets by 2013.
6	Fighting climate change isn’t controversial in the EU. It has had a price on carbon for 15 years, fostered international co-operation and emphasized the need for collective action. The system applies to most of Europe’s large industrial facilities (manufacturing, power, etc.). How it worked: It took a while to get working, but the EU’s system is finally humming along. It led to a direct increase in the number of low-carbon patents and innovations, and it’s slowly changing how the EU produces electricity. Key fact: The EU’s carbon market is the largest in the world, but it will fall to No. 2 when China launches its carbon market in 2020.

The evidence shows that it helps the environment in a way that’s best for the economy. Pollution pricing works. It’s working around the world. It’s working here in Canada.

 As long as we take the time to do it properly, carbon pricing can be a key part of the solution to climate change. And at a time when cost-of-living concerns are high, how we get there matters. Let’s lay the right foundation.3

A climate change plan without a price on carbon is like a house without a foundation. Sure, it can do the job, but you’ll take on a lot of unnecessary costs.

References

1	(2019, July 22). How to misrepresent good climate policy | National Observer. Retrieved July 23, 2019, from https://www.nationalobserver.com/2019/07/22/opinion/how-misrepresent-good-climate-policy
2	(2019, July 21). May says Greens will work with any party that has a serious plan for .... Retrieved July 23, 2019, from https://calgaryherald.com/pmn/news-pmn/canada-news-pmn/may-says-greens-will-work-with-any-party-that-has-a-serious-plan-for-the-climate/wcm/c361056c-9c9d-4e8d-b7e6-c479e97ed1fb
3	(2019, July 22). Six places where carbon pricing is working | National Observer. Retrieved July 23, 2019, from https://www.nationalobserver.com/2019/07/22/opinion/six-places-where-carbon-pricing-working