Andrew Coyne.
The climate change comedy continues. The prime minister whose government failed to submit new carbon emissions reduction targets to the United Nations in time for the March 31 deadline now says it will have them in by June. The government that is nowhere near to meeting its existing targets chastises the provinces for failing to meet theirs.
The opposition Liberals take the Conservatives to task for doing too little to fight climate change, which, while true, is more than the Liberals ever did while they were in power. The two parties, meanwhile, have more or less converged on a policy of leaving a problem confronting the entire planet to the provinces to solve. And the premiers? Why, they’re holding a summit.
A summit, if you please: the Climate Summit, convening in Quebec City. It used to be the premiers just held meetings. Later, after they renamed themselves first ministers, they became conferences. Eventually they took to calling themselves the Council of the Federation, apparently under the influence of Star Wars. Now it’s a “summit.” Just like Reagan and Gorbachev.
But why shouldn’t the provinces act like sovereign states, given the government of Canada’s abdication from the job? A quick recap, for those just joining us: Is climate change happening? Yes. Are we, as a species, responsible? Probably. Can we do something about it? So it seems. If the rest of the world takes action, as at the Paris climate conference later this year, is Canada obliged to? Of course. There’s no point in us acting alone — we produce just two per cent of global emissions — but there’s no defence for not acting at all.
So if we must do something, what should we do? Most environmentalists and every economist will tell you the same: Put a price on carbon. Rather than regulatory edicts (we order you to reduce your emissions by precisely this much in precisely this way, no matter whether there are less costly means at hand) or subsidies (we’ll pay you to reduce your emissions in precisely this way, even if you were going to do so anyway), prices give every economic agent the incentive to search for the most efficient means of cutting emissions — not just the ones that occur to the planners — and even to exceed the required amount if they are able.
And if a price on carbon is what is required, it only makes sense to do it nationally, rather than subject businesses to 10 (13, counting the territories) different carbon regimes, each with their own set of rules and exceptions. Actually, it makes the most sense to do it globally, since that is the scale of the problem. Realistically, however, in the absence of a world government, that’s not going to happen. But we have a federal government. So what’s our excuse?
Still, if the feds can’t or won’t do it, the provinces will have to step into the breach. Indeed, a new study by Canada’s Ecofiscal Commission — another grand name, this time for a group of economists — suggests the extra costs of applying 13 different pricing regimes in place of one are surprisingly small: just 0.4 per cent of gross domestic product. (Well, “small”: on a $2-trillion economy, that’s $8 billion in needless expense, every year.)
But there are a number of assumptions built into that comforting second-best scenario. It assumes, first, that the provinces are any likelier than the feds to get the job done — to set serious targets and stick to them; second, that they will, in fact, take the carbon pricing approach, in place of the usual failed regulatory/subsidy schemes (and not, say, on top of them); third, that the revenues from pricing carbon would be used to cut taxes, rather than to spend on, well, those same failed schemes.
Which brings us to Ontario, and crushing reality. The premier, Kathleen Wynne, announced Monday the province would be joining Quebec and California in imposing caps on carbon emissions, allowing firms to buy the right to emit a certain amount and sell any unused permits on the market — a system known as “cap-and-trade.”
This is one form of carbon pricing; the more familiar carbon tax is the other. Conceptually they’re more or less identical: Both result in a higher price for carbon and a lower quantity produced. But in practice they work very differently, and it’s not hard to see why Wynne, like most politicians, favours capand-trade. Carbon taxes are visible to consumers, where the impact of cap-and-trade tends to be buried in the final prices of things. Carbon taxes typically apply across the board, whereas cap-andtrade is most easily applied to a relatively small number of large emitters.
And that’s where the trouble starts. Not only does that narrow the scope for reducing emissions, but it invariably opens the way for business to lobby for special treatment. Wynne didn’t reveal any details of her plan, but if it’s anything like Quebec’s, a few pet industries (cough, autos, cough) will be spared their share of the burden via a boatload of free emissions credits.
Worse, it seems already clear that Wynne has no intention of using the revenues from the sale of emissions permits, expected to be as much as $2 billion a year, to cut taxes.
Rather, the government will “reinvest” them, as a background document put it, in “projects that reduce greenhouse gas pollution” — hello, failed schemes! — “and help businesses remain competitive.” Interesting word, that: “remain.”
This, rather than the fantasy of all provinces adopting a carbon tax on B.C.’s model — and at a common price! — is what we will really get from leaving climate change to the provinces: widely varying targets, generally inadequate and largely unenforced, pursued by the stupidest, costliest means possible.
The status quo, in other words, only times 13.