Stewart Muir is executive director of the Vancouver-based Resource Works Society and writes for Canadians for Affordable Energy.
Until recently, Canadians have been broadly supportive of federal carbon pricing plans. That is changing, however, as a 2018 deadline approaches and more details of the agenda become known.
The Pan-Canadian Framework on Clean Growth for Climate Change calls for all jurisdictions to have carbon pricing in place by next year. Yet two provinces, Saskatchewan and Manitoba, have not signed on, and both are prepared to take legal action against the federal government. The official Oppositions in at least two other provinces—New Brunswick and Alberta—are opposed to carbon pricing. The federal Conservative Party is also complicating the narrative, given that the party’s new leader has vowed to repeal the carbon pricing plan if elected prime minister.
For more than three years, we’ve been told Canadians support carbon pricing because they support action to combat climate change. It is increasingly evident that this bargain is at best uncertain. Canadians are taking stock of multiple factors and the early signs are not good; a recent public opinion poll by the Angus Reid Institute says residents are going through sticker shock as they realize that the good feeling of trying to do something positive for global climate carries significant costs and variables.
For provinces only now starting down the carbon pricing track, British Columbia offers a practical example of the policy in action. The province’s decade-old carbon dioxide emissions tax is designed to flow back its revenues to taxpayers by lowering income and other provincial taxes as a way to encourage climate-friendlier choices. But some large companies already have to pay nearly $1 million a week in extra carbon-related costs under the plan, increasing the likelihood that they will shift their production to lower-cost jurisdictions. The new B.C. NDP-Green alliance government has vowed to increase the tax, and many observers expect it won’t be cushioned by other tax cuts as under the previous government—and that will not likely be met kindly by British Columbians.
Last month, the federal government rolled out a Low Carbon Economy Fund that set aside $2 billion to make homes and buildings more efficient, helping companies cut emissions, and supporting the forest and agriculture sectors to enhance stored carbon in forests and soils. If that sounds like a positive development, less heralded were a whole new set of regulations laid out by Canadians and international academics in a recent publication, Canadian Pathways Towards Deep Decarbonization (CPDD). The Business Council of British Columbia has written a letter to federal environment minister Catherine McKenna contending that Ottawa appears to have, without approval or debate by federal Cabinet or Parliament, adopted elements of this strategy, which will add new regulations and appears to contradict the underpinning principle of carbon pricing.
A dual approach—aggressive carbon pricing together with heavy top-down government regulation—contradicts the principle of carbon pricing. It can also create unintended risk for the economy when businesses have to figure out competing and confusing regulations across jurisdictions that ultimately add costs.
Imagine if Canada optimistically takes on the climate burdens, only to discover within several years that America remains a fossil-fuelled economic juggernaut, its growth at least partly at our expense. The United States has already emerged as the world’s top producer of petroleum and natural gas, and is clearly eager to keep growing its market share. The strategy is clearly working: According to Statistics Canada data for April, Canadian imports of natural gas from the U.S. shot up 55 per cent over the past year.
Taking part in international efforts to reduce greenhouse gases is important, as not doing so will deprive Canadians of jobs and of opportunities to export innovative Canadian cleantech and clean-energy solutions to other countries. There is also the risk that policies will make some Canadian industries uncompetitive, resulting in a higher risk of carbon leakage by which stiffer regulations and higher costs cause businesses to relocate to the U.S. or other places.
A successful approach requires showing Canadians that risks are being managed effectively, particularly for Canadian natural resource and manufacturing sectors that operate in highly competitive global markets and contribute so much toward our quality of life. It means encouraging investment in existing and new solutions to help lower greenhouse gas emissions over time. And above all, it must weave together actions and obligations based on the Canadian tradition of collaborative negotiation.