Canadians will support a carbon tax if they get a cheque in the mail

Ontario’s new premier, Doug Ford, is scrapping the province’s cap-and-trade program, designed to reward businesses that reduce their greenhouse gas emissions, as part of his promise to make gasoline more affordable.

Where does carbon policy in Canada’s most populous province go from here?

Climate change isn’t going away by ignoring it and doing nothing. While Ford, Saskatchewan Premier Scott Moe and federal Conservative Leader Andrew Scheer all oppose carbon pricing, they do not offer any coherent alternative.

Under the federal mandate, the federal government will enforce a backstop carbon levy on recalcitrant provinces.

This levy, charged on all fuels that emit greenhouse gases, is due to rise to $50 a tonne by 2022, a carbon price almost twice the predicted price of carbon permits in 2022 under Ontario’s cap-and-trade system, linked with California and Québec.

The federal government accepted Ontario’s cap-and-trade system because the predicted carbon reductions under it were at least as large as those under a unilateral carbon backstop.

But there’s uncertainty if the national carbon policy will succeed against populist politicians such as Doug Ford, who has vilified carbon pricing as “the biggest rip-off I’ve ever seen.”

Jason Kenney promises to rid Alberta of its carbon tax if elected premier of Alberta. If that happens, there will be very little provincial support for the federal plan.

This political challenge is probably larger than the legal challenge launched by Saskatchewan against the federal carbon price. The federal government has broad powers to institute nationwide taxation under the Constitution.

If the Justin Trudeau government wishes to reassert its green credentials, it will have to implement its backstop policy even in the face of vociferous opposition from Ontario and Saskatchewan. But to keep broad support for the plan, it might also have to change the way it implements it.

British Columbia’s carbon tax survived political changes because it was conceived as revenue-neutral: Tax revenue is returned through low-income climate action tax credits and other reductions of personal and corporate income taxes.

As currently written in the legislation, all revenue generated from the backstop should remain in the province. However, instead of returning it to the provincial government, the federal government should return it directly to taxpayers.

Each person, young or old, could receive an annual “carbon dividend” cheque. It would be impossible to denounce such a policy as “yet another tax grab.”

A carbon dividend also mitigates the most significant economic objection: That a carbon levy burdens poorer households disproportionately.

Returning the revenue on a per-capita basis will correct this undesirable distributional effect. It is also a family-friendly policy, if children receive the same amount as their parents.

In 2016, Ontario emitted 160 million tonnes of carbon dioxide. If a carbon price of $20 a tonne was applied to those emissions, the $3.2-billion revenue could be divided equally among Ontario’s 14.2 million residents.

An Ontario family of four would receive an annual $900 cheque that could climb to more than $2,000 in 2022 when the levy reaches $50 a tonne — an approximation because as the tax rises the tax base will shrink over time.

Canada has committed, through the Paris Agreement, to reduce carbon emissions. To meet Canada’s pledge, all provinces have to do their fair share to reduce carbon dioxide emissions.

Carbon pricing works, as our own research shows. Per-capita fuel consumption decreases in response to permanent increases in fuel and carbon taxes.

Much of the traction comes from purchasing more fuel-efficient vehicles, and some from driving less or switching to other modes of transportation.

But the economic logic of carbon pricing is lost on voters if they only see what they will pay and not what they will get.

Werner Antweiler is an associate professor at the University of British Columbia. Sumeet Gulati is a professor at University of British Columbia. This article originally appeared at theconversation.com