To protect Canadian jobs, Trudeau must drop carbon pricing - Macleans.ca
 

To protect Canadian jobs, Trudeau must drop carbon pricing

Slapping a carbon price on Canadian goods weakens the ability of Canadians to compete, and measures meant to mitigate the impact won’t work


 
Trucks unload containers from cargo ships in the Port of Montreal in a January 4, 2016, file photo. THE CANADIAN PRESS/Graham Hughes

Trucks unload containers from cargo ships in the Port of Montreal in a January 4, 2016, file photo. THE CANADIAN PRESS/Graham Hughes

The overarching priority for Prime Minister Justin Trudeau when he met with United States President Donald Trump in Washington, D.C. this week was to keep trade flowing across the 49th parallel. Access to the U.S. market is critical to the wellbeing of the Canadian economy. The Prime Minister’s diplomacy paid off.  Trump said he plans to merely tweak the Canada-U.S. trade arrangement and called our shared economic relationship “outstanding.”

Tariff-free trade has indeed been very good for both nations. Today, our two countries exchange more than $2-billion in goods and services each day. The Prime Minister’s unwavering support for free trade is thus to be commended. But the economic benefits of all this tariff-free trade for Canadian workers—particularly those in manufacturing—is threatened by his determination to put a price on carbon.

Mr. Trudeau’s carbon pricing tax plan will increase the cost of Canadian made goods. That’s the impact of any tax. What should alarm Canadian companies is how our trade interests will be harmed by carbon prices. Putting a price on carbon in a global economy is equivalent to putting a brand new tariff on Canadian products.

Tariffs are normally used by governments to make imports more expensive and give domestic firms a cost advantage. Trudeau’s tax plan flips this sort of protectionism on its head by handing foreign companies a price advantage. Carbon pricing puts foreign workers ahead of Canadian workers.

Slapping a carbon levy on Canadian goods weakens the ability of Canadians to compete. But the price disadvantage won’t just hurt export sales to the U.S. and other countries. The carbon tax—along with its ugly cap-and-trade sibling—will hit most Canadian products whether those goods are sold at home or abroad. Because imports aren’t subject to the carbon tax, foreign goods sold in Canada will be less costly than similar domestic products.

Proponents of carbon pricing insist there are three mechanisms available to resolve these damaging trade distortions caused by carbon pricing.

Handing out “free” carbon allocations to export businesses is meant to compensate for these new costs. But this won’t stop the damage. In Ontario—Canada’s manufacturing heartland—carbon credits will mostly go to large firms well versed in high stakes lobbying. But thousands of small- and medium-sized companies will be shut out. The Coalition of Concerned Manufacturers of Ontario says carbon pricing means job losses because it will force some companies to move to the U.S. to compete or shutter operations altogether.

Alternatively, carbon tax advocates put their faith in a lower Canadian dollar. But a weaker loonie is a crude solution since it would apply equally to all sectors. It cannot adequately shield a high-energy user in Canada from foreign competitors since the dollar’s adjusted equilibrium value reflects Canada’s overall trade balance and not that of any particular industry.

It’s a fool’s game to try to predict the future value of the loonie, especially when foreign exchange rates are influenced by many external factors. The Canadian dollar could be worth less under a carbon tax regime or it could be worth more. Who knows?  Prudent policymakers shouldn’t be risking Canada’s manufacturing sector on a foreign exchange bet.

The final rescue plan for Canadian jobs offered up by carbon price enthusiasts is the creation of a border carbon adjustment scheme. This would apply a tariff levy on goods from nations that don’t tax carbon. It’s meant to protect Canada’s competitiveness and punish free-riding by other countries and is offered as path to prevent Canadian job losses should China or the U.S. refuse to tax carbon emissions.

But determining the carbon content of goods coming into Canada will be all but impossible if other nations choose not to participate. Plus, this will be a cure far worse than the disease. It would thicken our border with bureaucracy and upend Canada’s commitment to tariff-free trade.

Imagine how the White House and Congress will react if Canada slaps a carbon tariff on U.S. exports. Canada would be declaring a trade war with a President itching to put America first.

To protect Canadian interests and jobs, the Prime Minister will either have to convince the Trump Administration to tax U.S. carbon at roughly the same rate as Canada (good luck with that) or abandon his own carbon taxing plan in the interest of defending Canadian jobs.

Earlier this week the Prime Minister said it is a shared Canada-U.S. goal to remove barriers to trade.  President Trump agreed. Now Prime Minister Trudeau needs to heed his own advice.

 

John Williamson is president of Canadians for Affordable Energy.


 

To protect Canadian jobs, Trudeau must drop carbon pricing

  1. No.

  2. The government would be better to investing in urban transit, high speed rail, and infrastructure that reduces our carbon footprint. A carbon tax won’t get people out of cars if they have no alternate. The tax will do little but put additional burden on Canadians and Canadian businesses.

    • Things are changing over. Can’t be done overnight.

      A tax is a kick in the rear

      • Overnight? You’ve had the ability to purchase carbon credits in Canada for at least 10 years?

        When was the last time you flew anywhere? Did you buy any optional carbon credits to offset your flight? Air Canada, Air Transat, Westjet have all had them for years.

        Each airline publishes the offsets they sold each year. But I have yet to meet ONE person who has purchased the optional offsets (and I fly 30,000 to 50,000 air miles each year). Correct me if I’m wrong, but you are likely one of those people who complains about the environment ad nausea but has NOT purchased any carbon offsets.

        • I have a hybrid car…..

          • Surely YOU must know the difference between a carbon FOOTPRINT and a carbon OFFSET?!? LOL!?!

        • Yes, but I’m aware I have to speak simply to you.

          • How you changed an entire article on carbon pricing to carbon footprint is baffling.

          • Chip you were born baffled.

  3. Actually Trudeau should drop the carbon pricing because climate change is a hoax ( as Trump said ).

    The physicists from CERN, Switzerland pointed out it’s solar activity who creates the global warming and not necessarily the greenhouse gases from human activity. It’s nothing we can do to control it.

    The solar activity intensified in the last 100 years ( coincidental with the industrial era ) and stabilized in the last 15 years – now, global warming is modest even with a tripled amount of CO2 emissions.

    When the solar activity is low, more cosmic rays ( particles magnetically charged ) reaches the Earth and initiate clouds. With more clouds covering the sun, less sunshine, the Earth becomes colder.

    When the solar activity intensifies, the solar magnetic storm retains the cosmic rays, the sky is sunnier, without clouds and the Earth temperature increases.

    That explains why the global warming was accelerating from 1920 to 2000 but becomes more stable in the last 15 years.

    NOOA observed the hiatus in global warming in the last 15 years and manipulated the data to fit the government agenda. It has been twice rejected and confirmed. Climategate and Climategate 2.0

    But it’s the CERN’, CLOUD experiment results from the last 6 months who really creates a breakthrough.

    Until now the climate change supporters dismissed the solar activity as “unchanging”.

    The Paris climate change conference 2015 will be the laughing stock of all conferences.
    So much for “being back”…

    • Appreciate the info!

      Canada was really the biggest joke of the conference. Sending a contingency of people that was nearly as much as the host and more then Britain, Australia and the USA combined. The amount of carbon that our Canadian contingency created was quite possibly the largest of the conference.

    • what CERN paper are you referring to? i went to the cern site and see nothing on this topic. please provide links
      Climate change chemical understanding has been around since the 1800s and has been a analysed issue since the 1950s in effects.not just the last 15 years.

      • Those two make it up as they go along.

          • I see I didn’t simplify that one enough.

        • I’m so very sorry Emily. I didn’t realize you could not read at a Grade 12 reading level. I will try to provide sources from publications that are geared to your simple understanding.

          • I got a better idea Chip

            Don’t bother posting to me at all.

            You can join the others who are in the Zombie corner.

            Ciao

        • When you leave imbecile remarks you leave yourself open to criticism. Can’t take it? Don’t make imbecile remarks!

          And now you want to suppress people’s comments? Funny how there’s an article on freedom of speech today on Maclean’s front page.

    • Very accurate and concise comment. Now, if only the Liberal left could understand how climate “science” really works (without the political interference) rather than relying on the main stream media propaganda machines, we would all be much better off.
      Even the anti-science activity involved in the infamous Karl paper trying to exaggerate global warming, when exposed by Dr. John Bates, was played down by main stream media both here and in the U.S.
      Thanks for telling it like it is and it was a real treat to see an article in Macleans actually pointing out what financial destruction will be caused by Trudeau’s ill-conceived carbon tax (grab).

    • There are 31,700+ scientists around the world who share this view. In addition to solar activity, they believe it also has to do with the changing tilt of the Earth’s axis. While they agree there has been some warming it is not uniform. That’s why ice cover in the Arctic is shrinking while it is increasing in the Antarctic. CO2 in the atmosphere is uniform and if that was the cause, the warming would be uniform as well.

  4. yeah right, and no.

  5. What would have happened if the govt of the day had put a huge tax on cars in order to protect the jobs of buggy-makers, livery stable workers, saddle-makers etc?

    Hmmm?

    • Or the reverse – take the tax off cars to keep those workers working, as in this instant?

      • Well as other countries moved to more advanced forms of travel……cars will be left in the dirt.

        And so will the workers.

  6. Why aren’t imports subject to a carbon price adjustment? It often requires energy to dispose of them. It’s likely they originate in countries that will benefit from the Canada’s cap and trade regime. It would level the paying field for Canadin manufacturers.

    As far as exports are concerned – while there is a 23 -24 percent premium on the US dollar an 8 to 10 percent carbon tax would hardly be noticed. If it’s on something the need to get from us, so much the better … cars for instance. If they won’t buy it now dropping the price even more ain’t going to help. Sell to Europe ….. or Russia.

    • Why would they buy cars from here?

  7. Put stop to any forms of Carbon taxes. Put a stop to any kind of subsidies or cash incentives to ALL alternative energy sources. If the wind/solar industry can’t compete on an economy based on hydro/nuclear/natural gas power then the higher rates or higher taxes to pay the subsidies also put us at a disadvantage in a international marketplace.

    • how about zero subsidies for oil and gas and no carbon tax then?

      • Zero subsidies for both fossil fuels and the so-called “green” energy industry would help us all. Competition is usually always the better choice. Allowing inefficient ideas and companies to fail will make both our industries and our economy stronger.

      • All in, the Canadian oil industry is taxed at a higher level than the vast majority of it competition in the rest of the world.

  8. Why do people think modern progressives have any interest in protecting Canadian jobs?

  9. The problem is Wind and Solar are not reducing C02 and our government will not admit this costly failure. Ontario’s professional Engineers, those tasked with generation, transmission and billing, have reported the problem. our government continues to build more wind and solar.

    Reference: “Ontario’s Electricity Dilemma – Achieving Low Emissions at Reasonable Electricity Rates”. Ontario Society of Professional Engineers (OSPE). April 2015.
    (Archived at: http://c.ymcdn.com/sites/www.ospe.on.ca/resource/resmgr/DOC_advocacy/2015_Presentation_Elec_Dilem.pdf)

    Page 15 of 23. “Why Will Emissions Double as We Add Wind and Solar Plants ?”

    – Wind and Solar require flexible backup generation.

    – Nuclear is too inflexible to backup renewables without expensive engineering changes to the reactors.

    – Flexible electric storage is too expensive at the moment.

    – Consequently natural gas provides the backup for wind and solar in North America.

    – When you add wind and solar you are actually forced to reduce nuclear generation to make room for more natural gas generation to provide flexible backup.

    – Ontario currently produces electricity at less than 40 grams of CO2 emissions/kWh.

    – Wind and solar with natural gas backup produces electricity at about 200 grams of CO2 emissions/kWh. Therefore adding wind and solar to Ontario’s grid drives CO2 emissions higher. From 2016 to 2032 as Ontario phases out nuclear capacity to make room for wind and solar, CO2 emissions will double (2013 LTEP data).

    – In Ontario, with limited economic hydro and expensive storage, it is mathematically impossible to achieve low CO2 emissions at reasonable electricity prices without nuclear generation.

  10. Another shill for carbon. The article is blissfully absent of a single concrete example. This content and context free technique is aimed at perpetuating confusion and uncertainty, both enemy’s of change. It would be helpful if the author could muster the ambition to calculate, as a percentage, what the tax burden would be for a $10.00 per tonne carbon levy on a typical manufactured product. I’m afraid he won’t because it’s such a small amount tthat his argument would be destroyed. I saw in another comment, the figure 8%. This is nonsense. If the carbon tax is revenue neutral it should flow back to all taxpayers in income or sales tax reductions. If it’s spent on carbon reducing (and productivity enhancing) projects like transit, it’s activity that would otherwise be paid by taxes on income or sales. Dispute DT, many states are moving a head regardless. You know, places like California, with an economy larger than ours. Maclean’s should demand some substance from these jokers before giving them a free platform.

    • A revenue neutral scheme achieves nothing. To change consumption of fossil fuels you need to change behavior. Getting what was taken as a carbon tax and returning it as reduced income tax results in no impetus to change behavior. Canada has the second lowest gasoline tax in the developed world with only the US being lower. Our gasoline tax is around 41 cents/litre. Go to a place like Italy where it’s $1.25/litre-you sure don’t see many gas guzzlers there.

  11. Really! How about the high price of whale oil for you lamps? Business as usual arguments are beside the point: the point is to change what we do, not just keep on doing the same thing our grand-daddy did. It should be obvious (maybe not to the writer) that the cheapest energy is the energy you don’t use. Carbon pricing is admittedly a weak-kneed political solution – a kind of sin task to persuade us to use less fossil fuel. Strange as it seems, that shouldn’t be too hard as Canadians compared to other developed countries are profligate energy users; for example, merely upgrading a furnace from 1990s high efficiency to 2010s high efficiency would more than offset the impact of carbon pricing on NG consumption. If we look to our neighbor to the south we can see that the states with the lowest energy intensity have the highest per capita income. The author might have noted that even in the US, the majority of new growth in power generation was in renewable energy while fossil fuel plants are going out of business based on cost competition from renewables or perhaps he could have compared Quebec electricity prices to see the price advantage of renewable energy. Perhaps he could riff on why hybrid vehicles use less fuel than conventional but more likely will dwell on the price of filling up the tank of a monster truck. One has to wonder what Canadian industry of the future is even dependent on the price of coal? It’s pretty simple: if you don’t like paying a price for carbon, don’t burn it; studies show that the least cost means of reducing CO2 is energy conservation followed by energy efficiency.
    If money is all you care about, then consider this: according to WTO analysis the net benefit of federal grants and tax spending over revenues received is ~$24B per year: every barrel produced is wrapped in taxpayer dollars. Just imagine how well other industries would do if instead we paid them to make money!
    Don’t worry about China: they’re leading in investment in renewable energy technologies and creating many jobs in the process; even the US is surprisingly proactive in this area. More surprisingly, major Arab oil producers are planning for a fossil fuel free future.

  12. FINALLY! Maclean’s prints a Conservative friendly article. I’m impressed.