Tories need to come around on carbon pricing

Carbon pricing, already a reality in some parts of Canada, will soon be the reality across Canada. The question is: at what point will it become a reality for the Conservative party? Or perhaps better: will the Conservatives please get real?

British Columbia has had a carbon tax since 2008. Alberta will have one in place by 2018. Ontario and Quebec are implementing capand-trade regimes. That’s 80 per cent of the country, by population, where carbon pricing is now law. And in six weeks the government of Canada will formally commit the country to the Paris climate accord, together with its Intended Nationally Determined Contribution, UNspeak for emissions reductions target. By year’s end, the Trudeau government has signalled it will have a national carbon price in place, with or without the provinces’ cooperation.

By the next election, three years from now, carbon pricing will be well-established as policy, nationwide. Businesses will have planned accordingly. Investments will have been made. Any implementation costs will have been fully absorbed.

Yet the position of the Conservative party, and of virtually every one of its leading lights, is flat-out opposition to carbon pricing, in whatever form. Of the federal party leadership candidates, only one, Michael Chong, has come out in favour. The other 87 or so are all opposed. The official line remains the same: it’s a “tax on everything,” and they want no part of it.

If we take them at their word, then, the federal Conservatives, if returned to power in 2019, would abolish the national carbon pricing regime introduced by the Liberals. Perhaps the provinces that had implemented their own carbon pricing plans would leave them in place; perhaps, in the absence of a national floor, they would find themselves under competitive pressure from provinces that opted out.

But an extra element of uncertainty would have been added to business decisions. Were those investments that had been made in anticipation of carbon pricing still valid? Would new ones be? Should businesses expect carbon pricing to remain the norm or not? In which provinces? At what rates?

It would be one thing if Conservatives rejected, not just carbon pricing, but the very necessity of reducing carbon emissions — if they denied, not only that carbon pricing was the right solution, but that climate change was a problem. But Conservatives, at least publicly, do not say that. The previous government was at some pains to stress that it accepted the scientific consensus on climate change, even claiming at one point it meant the “end of winter as we know it.”

Rather, the official Conservative position favours, as a remedy, regulations limiting emissions by industry (even if they never got around to implementing many of these).

Interim leader Rona Ambrose, attacking the Liberal carbon price plan this week, said her party favours “regulation on industry rather than taxes on Canadians,” as if the costs of regulation were not a form of tax, or that industry would not pass on these costs to “Canadians.”

This has lost none of its power to astonish for all the years the Tories have been spouting it. The party of free markets, rather than support a plan that relies on the quintessential market instrument — prices — favours the most costly, intrusive and regulatory-heavy approach imaginable: the very approach that has so signally failed to date. The party of personal responsibility favours sparing people the costs of their economic choices, either socializing them via subsidy or disguising them via regulation.

This might have been understandable, once. It was the left that first sounded the alarm over climate change; Conservatives could be forgiven for reacting skeptically, at least at first. But when the left, defying stereotype, adopted carbon pricing as the solution, Conservatives let their oppositional instincts get the better of them. If the left were for prices, they would be against them. They have been boxed into that position ever since.

This isn’t just economic madness. It’s dumb politics. It makes the Conservatives look unserious on an issue that for many voters is an entrance exam. More than that, it is a massive missed opportunity — not only to show “Conservatives care about the environment,” but to make the case for markets and market-based approaches more generally — markets, not merely as arenas for private gain, but in their truer role, as instruments for solving collective problems. Carbon pricing is the biggest victory for markets in a generation, and conservatives are nowhere to be found.

Embracing carbon pricing need not be seen as capitulation to their opponents. There remain sharp differences between left and right approaches to carbon pricing, which conservatives could usefully exploit. One, Conservatives should insist that any revenues collected from the public via carbon pricing be returned to them in the form of lower taxes on income. That is, carbon pricing should be revenueneutral, as it was in B.C.

Two, carbon pricing should be instituted as a replacement for existing subsidy and regulatory approaches, not, as currently envisaged, simply loaded on top. Carbon pricing might thus be used to lighten, rather than add to, the regulatory burden on industry, just as it lightens the tax load on individuals — a feature that might be of greater interest to many voters than even saving the planet.

Conservatives allowed the left to claim carbon pricing as their own, but there is no reason they cannot reclaim it. There’s a conservative case for carbon pricing. But there is no good conservative case for the alternative.