Ot­tawa must not bend on its car­bon tax

The Globe and Mail Metro (Ontario Edition) - - OPINION -

The United Na­tions, one of Swe­den’s No­bel com­mit­tees and Canada’s con­ser­va­tive pre­miers have con­spired to put car­bon taxes back on the front burner of Cana­dian pol­i­tics. In do­ing so, they have also con­firmed the ba­sic wis­dom of the fed­eral gov­ern­ment’s car­bon plan – and sug­gested ways it could be im­proved.

The con­spir­acy be­gan last week, when Man­i­toba Premier Brian Pal­lis­ter can­celled his province’s planned car­bon tax.

The ges­ture has lit­tle ef­fect on the price Man­i­to­bans can ex­pect to pay for car­bon emis­sions in the next four years, as­sum­ing a fed­eral Lib­eral re-elec­tion next year. Man­i­toba’s levy was set at a flat $25 a tonne; un­der the Lib­eral plan, any province with an in­suf­fi­ciently strong price on car­bon by next year will trig­ger a fed­eral back­stop tax set at $20 a tonne in 2019 and ris­ing to $50 by 2022.

The po­lit­i­cal ef­fect of Mr. Pal­lis­ter’s move is big­ger. Man­i­toba is the fourth province, along with On­tario, Saskatchewan and Prince Ed­ward Is­land, to refuse Ot­tawa’s en­treaties to cre­ate its own car­bon pric­ing plan. Al­berta and New Brunswick seem poised to make that num­ber six.

That could put Justin Trudeau’s gov­ern­ment in the tough po­si­tion of hav­ing to im­pose the car­bon tax on more than half the coun­try. Part of the cal­cu­lus be­hind giv­ing prov­inces the op­tion of craft­ing their own plan was that it would spread the po­lit­i­cal pain around. Mr. Trudeau now owns the tax.

Of course, if this all seems like a parochial way of think­ing about the fight against global warm­ing, the United Na­tions came along on Sun­day with an an­ti­dote.

The brac­ing re­port from the UN’s In­ter­gov­ern­men­tal Panel on Cli­mate Change urged pol­icy-mak­ers to keep global tem­per­a­tures from ris­ing by 1.5 de­grees over prein­dus­trial lev­els, and painted a dark pic­ture of what will likely hap­pen to the planet if we fail: large-scale hu­man dis­place­ment and death, the loss of ecosys­tems and pun­ish­ing eco­nomic con­di­tions in the de­vel­op­ing world.

That cap will be hard to meet, but the cli­mate sci­en­tists also made it clear that, if we ex­ceed 1.5 de­grees, it will still be worth achiev­ing what­ever emis­sions cuts we can, be­cause ev­ery bit of warm­ing hurts.

That brings us to Mon­day’s No­bel Prizes in eco­nomics. One of them went to Wil­liam Nord­haus, whose work has fo­cused on car­bon taxes.

His ba­sic point is that the emis­sion of green­house gases into the at­mos­phere ex­acts a toll on ev­ery­one by heat­ing the planet, but that toll does not fig­ure into the price of car­bon fu­els. It’s up to gov­ern­ments, then, to in­cor­po­rate the so­cial cost of burn­ing these fu­els into their real-world cost through a tax.

Mr. Nord­haus is not some lefty. His work shows that a car­bon tax is the most ef­fi­cient way to lower emis­sions, be­cause it de­pends on mar­ket forces rather than on di­rect reg­u­la­tion.

So, to­tal vin­di­ca­tion for the Trudeau gov­ern­ment? Not quite. Their car­bon tax plan still faces hur­dles to be­ing work­able and ef­fec­tive. Luck­ily, these can be over­come.

The first hur­dle is le­gal. Saskatchewan and On­tario are chal­leng­ing the fed­eral gov­ern­ment’s author­ity to tax car­bon. This is the eas­i­est to vault over. Most con­sti­tu­tional ex­perts agree the feds have wide lat­i­tude to make laws pro­tect­ing the en­vi­ron­ment.

The sec­ond prob­lem for the Lib­er­als is po­lit­i­cal. Their plan doesn’t poll par­tic­u­larly well, and con­ser­va­tive lead­ers across the coun­try are ral­ly­ing against it. Mr. Trudeau should counter their ar­gu­ment that car­bon pric­ing is a tax grab by send­ing re­bates from any fed­eral rev­enue di­rectly to res­i­dents, in­stead of pour­ing it into pro­vin­cial trea­suries.

The last prob­lem is ef­fec­tive­ness. A car­bon tax of $50 a tonne in 2022, even cou­pled with Ot­tawa’s other green ini­tia­tives, is too low for Canada to meet its Paris Agree­ment tar­gets. Some en­vi­ron­men­tal­ists are there­fore de­mand­ing the Lib­er­als hike the tax im­me­di­ately.

That would be too po­lit­i­cally risky. The cur­rent plan is a good start, and it’s what the gov­ern­ment has promised. But if the Lib­er­als are re-elected in 2019, they’ll have to con­sider in­creas­ing the car­bon tax be­yond 2022.

Con­ser­va­tive politi­cians will moan. But the UN and the Royal Swedish Academy of Sci­ences have shown us that fight­ing cli­mate is the world’s most im­por­tant col­lec­tive en­deav­our, and that car­bon taxes are the best way to join that fight. Canada must do its bit.

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