Car­bon tax and be­haviour

Aim is to al­ter way peo­ple deal with fos­sil fu­els

The Hamilton Spectator - - COMMENT - ALANA LAJOIE-O’MALLEY

Pric­ing car­bon is about much more than get­ting peo­ple to drive less. It is also about gen­er­at­ing the money we need to ac­cel­er­ate the process of get­ting our econ­omy off fos­sil fu­els and onto re­new­ables.

If a na­tion-wide price on car­bon is go­ing to be suc­cess­ful, get­ting this part right is cru­cial.

Our whole eco­nomic sys­tem cre­ates de­pen­dence on fos­sil fu­els. This is big­ger than tax and roy­alty struc­tures, but th­ese struc­tures mat­ter. A lot. Fos­sil fu­els are still sub­si­dized. The nat­u­ral gas boom has left prices low. This has stunted large-scale up­take in re­new­able en­ergy tech­nolo­gies. Over­re­liance on hy­dro­elec­tric­ity isn’t help­ing ei­ther.

As an in­sti­tu­tion work­ing to­ward zero emis­sions by 2035, the Univer­sity of Win­nipeg knows this first hand. In 1990, Univer­sity of Win­nipeg build­ings and owned ve­hi­cles emit­ted 3,132 tonnes of CO2 equiv­a­lent. In 2015, oc­cu­py­ing 38 per cent more space than we did in 1990, we emit­ted 2,129. That’s a 32 per cent re­duc­tion in ab­so­lute emis­sions de­spite a pe­riod of rapid cam­pus ex­pan­sion.

The Univer­sity of Win­nipeg has al­ready mir­rored Canada’s emis­sion re­duc­tion com­mit­ments un­der the Paris Ac­cord. And it’s done so in a way that will pay for it­self in about eight years. The next tar­get is to achieve a 50 per cent re­duc­tion in emis­sions com­par­ing 1990 to 2020 with or with­out a car­bon price, which we think is achiev­able. How­ever, our univer­sity is also pretty sure that we can’t get to zero un­less rev­enues from the price help tip the scales away from the ar­ti­fi­cially low cost of fos­sil fu­els.

The univer­sity has con­ducted fea­si­bil­ity stud­ies for geo­ther­mal, so­lar, wind and biomass sys­tems for our cam­pus. Th­ese are all forms of en­ergy that pro­vide lots of promise for re­plac­ing both fos­sil fu­els and ex­pen­sive hy­dro­elec­tric­ity as heat­ing sources.

But in ev­ery in­stance, the univer­sity’s ca­pac­ity to im­ple­ment th­ese tech­nolo­gies to their fullest is lim­ited by the cost rel­a­tive to fos­sil fuel al­ter­na­tives. That won’t stop us from nib­bling at the edges and im­ple­ment­ing what we can while be­ing good stew­ards of pub­lic funds. But if we’re go­ing to stop emit­ting, we need to do bet­ter than nib­ble at the edges. To do bet­ter, en­ergy eco­nom­ics need to change. So­lar, wind, geo­ther­mal and sus­tain­able biomass need to be­come vi­able al­ter­na­tives to fos­sil fu­els.

This is where the car­bon tax comes in. By us­ing car­bon price rev­enues to in­vest in Canada’s grow­ing re­new­ables in­dustries, prov­inces can tip the scales. They can nar­row the price gap.

Es­pe­cially in th­ese early years of car­bon pric­ing, us­ing rev­enues to nar­row this price gap can have a big­ger im­pact than the be­haviour change in­duced by a mod­estly higher price on fos­sil fu­els.

A car­bon price will change be­haviour, but for it to change be­haviour to the ex­tent nec­es­sary it will have to be sub­stan­tially higher than the prices we see out there to­day.

When the BC gov­ern­ment pub­lished its 2008 cli­mate plan, it pro­jected emis­sion re­duc­tions from its car­bon tax would ac­count for only 9 per cent of the re­duc­tions required to meet its 2020 tar­get. In its cli­mate plan, California ex­pected to achieve 85 per cent of its 2020 emis­sion re­duc­tion com­mit­ments through mea­sures dis­tinct from its cap-and­trade sys­tem.

Que­bec’s ap­proach is a step in the right di­rec­tion. By 2020, the prov­ince’s cap-and­trade sys­tem is ex­pected to have gen­er­ated $2.445 bil­lion in rev­enues. Th­ese rev­enues are pay­ing for other emis­sion re­duc­tion ini­tia­tives iden­ti­fied in the prov­ince’s 20132020 cli­mate ac­tion plan.

Cli­mate change is al­ready cost­ing Cana­di­ans money, and it will cost us more. The fed­eral gov­ern­ment spent more on re­cov­er­ing from large-scale nat­u­ral dis­as­ters be­tween 2009 and 2015 than it did in the pre­vi­ous 39 fis­cal years com­bined. And this years’ wild­fire sea­son ap­pears poised to add to this trend. In 2011, the Na­tional Roundtable on the Econ­omy and the En­vi­ron­ment es­ti­mated that cli­mate change would cost Canada be­tween $21 bil­lion and $43 bil­lion per year by 2050.

Us­ing the rev­enues from car­bon pric­ing to in­vest in the tran­si­tion away from fos­sil fuel de­pen­dence now will help us mit­i­gate the costs tax­pay­ers are al­ready in­cur­ring be­cause we failed to act sooner.

Alana Lajoie-O’Malley is an ex­pert ad­viser with Ev­i­denceNet­ and a Se­nior Ad­vi­sor Re­search & Sus­tain­abil­ity, The Univer­sity of Win­nipeg.

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