A plan to make a plan

It would be, as a Canadian Press dispatch put it, “easy to mock” the results of this week’s first ministers’ conference on climate change, and the inevitable portentous communiqué ( the “Vancouver Declaration”) that issued from it.

For example, it would be simple to point out that the Liberal election promise to “establish a pan- Canadian framework for combating climate change” with the premiers “within 90 days” remains unfulfilled, that the best one can say is that first ministers have made a plan to make a plan.

It would be child’s play to demonstrate that the premiers failed to agree to the promised national minimum carbon price, or even provincial carbon pricing, and that the only way in which they were able to leave the meeting with an agreement that even mentioned it was by redefining carbon pricing to mean just about anything.

Thus, Saskatchewan’s Brad Wall, who has many times declared his opposition to carbon pricing as the term is conventionally understood — a carbon tax, or cap and trade scheme — was able to tell reporters that because crude oil in his province is extracted using carbon dioxide captured from coal- fired power plants, that counts as carbon pricing. In the same way, Nova Scotia’s Stephen McNeil was able to claim the exorbitant price of the hydroelectricity the province buys from Newfoundland is not a testament to the project’s famously poor economics, but is instead — presto! — carbon pricing.

Indeed, by this definition, the Harper government’s explicit refusal to entertain any form of carbon pricing, in favour of sector- by- sector regulations, was also a form of carbon pricing, since the costs to industry would inevitably be passed on to consumers. So it would be easy to say that the premiers’ agreement to adopt “a broad range of domestic measures, including carbon pricing mechanisms, adapted to each province’s and territory’s specific circumstances,” is essentially an agreement to do pretty much whatever they like.

In the same vein, it would not be difficult to suggest that the new, Liberal target for reductions in greenhouse gas emissions — a 30 per cent reduction below 2005 levels by 2030 — is looking increasingly indistinguishable from the old, discredited Conservative t arget. While the communiqué still talks of “meeting or exceeding” the target, the stronger likelihood is that we will do neither: on current trends, emissions are projected to rise to at least 765 megatonnes in 2030. Not only is that 46 per cent over target, it’s actually higher than in 2005.

As I say, it would be easy to mock the agreement. In truth, it would be harder not to mock it. But let us try. For example, the first ministers are meeting, which they did not under Harper. And they are all at least saying the words carbon pricing.

It may even be that eventually all the provinces will come around to some sort of genuine carbon pricing. After all, four provinces already do so, in one form or another. That is not really at issue. The issue, rather, is what form or another, and how many of each, and whether whatever is put into effect is likely to get us anywhere near our targets, at anything like an acceptable cost.

All these concerns are linked. The more efficient the scheme adopted, the greater the amount of reductions per dollar of income forgone, the more likely a political consensus can be formed, and maintained, in favour of the kind of action that will be required. But we are far from the most efficient scheme, and in fact the Vancouver Declaration may be taking us further.

The consensus of economists, f or example, now strongly favours the carbon tax approach, as opposed to cap and trade. Yet two provinces, Ontario and Quebec, have already opted for cap and trade: the very things that make it unattractive to economists — the narrow focus on heavy industry, rather than consumers at large, the ability to carve out exemptions for favoured sectors — make it attractive to politicians. Among carbon tax schemes, economists prefer the version adopted in British Columbia, in which the revenues from taxing carbon were offset by cuts in income taxes. Yet Alberta, the latest to go the carbon tax route, instead used the revenues to pay for industrial subsidies.

And whatever approach is adopted, it would be best if we had one national plan, rather than a patchwork of different provincial and territorial schemes. Ideally, we’d have a uniform national carbon tax, though not necessarily a federal one: politically, it would be best if the revenues remained within each province. Second best would be a carbon tax with varying provincial rates. Even a national cap and trade plan would be acceptable. But what we are instead likely to get is 13 different regimes, with 13 different sets of rules and exceptions. The costs, especially for businesses operating nationwide, will be vastly higher than they need be.

The argument for pricing carbon, what is more, is that it is less costly and more effective than the sort of regulatory and subsidy schemes all the provinces already have in place. Yet the Vancouver Declaration plainly sees carbon pricing, not as a replacement for these, but as something to be added on top, just one of that “broad range of domestic measures.” Under the circumstances, it’s not clear which we should dread more: that first ministers will not live up to it, or that they will.

But then, it’s easy to mock.

IDEALLY, WE’D HAVE A UNIFORM NATIONAL CARBON TAX.