Polluters pay, society benefits from carbon tax

Bigland-Pritchard is an applied physicist, energy consultant and advocate for climate justice in Saskatoon. Congratulations for your editorial, Carbon taxes gain credibility (SP, Oct. 15) about the latest report by the Organization for Economic Co-operation and Development.

Carbon pricing is only one element in the portfolio of policies needed to combat climate change. However, it is an essential element, and a carbon tax is the simplest and most efficient way to achieve it.

Internationally, carbon pricing has proved to be vastly more effective than the Harper and Wall governments’ centrally directed, command-and-control approach to reducing greenhouse gas emissions.

Premier Brad Wall’s carbon policy fails because it is based on picking winners. His current favourite, carbon capture and storage, is proving more expensive than its sustainable, renewable competitors. Prime Minister Stephen Harper’s policy fails because it protects selected high-impact industries such as the Alberta oilsands from the findings of science.

Harper and Wall’s current Soviet-style policies are simply not working. They have produced no meaningful reductions in carbon emissions. By contrast, Scandinavian countries are succeeding. They have had carbon tax legislation in place for some years, and they have consistently combined declining emissions figures with buoyant economies.

To understand the need for carbon pricing, we first should recognize Canada’s current situation. Instead of paying for their emissions, our big carbon polluters actually receive subsidies from the taxes that we pay as citizens.

A 2010 report by the International Institute for Environment and Development (IIED) documented at $2.8 billion a year the direct subsidies by Canada’s federal and provincial governments to the oil and gas industries. This figure has since reduced only slightly, if at all, despite a commitment made at the G-20 meeting in 2009 to phase out the subsidies.

But that $2.8 billion does not include what economists call “externalities” — the medical, health and environmental costs from toxic emissions — and insurance and other costs resulting from Canada’s contribution to climate change.

The fossil fuel industry is able currently to use the atmosphere as a free dumping zone for waste products, some of which damage life directly and some of which add to the impending threat of climate chaos. The International Monetary Fund included these costs in its own estimate this year of fossil fuel subsidies in Canada, calculating an effective subsidy of 1.52 per cent of our 2011 Gross Domestic Product, or $24 billion. This figure includes subsidies to coal in addition to oil and gas.

That’s a Canadian average of nearly $750 per person. However, the Saskatchewan figure is higher because of our large provincial subsidy, which the IIED estimates comes to about $320 per person. So we are each paying more than $1,000 a year to prop up an already profitable and well-established industry.

Even the federal government’s recent throne speech recognized the “polluter pays” principle. The most efficient way for the fossil fuel industry to pay for the costs it imposes on society is a carbon tax, levied at the mine, the well or the import terminal. These revenues can then either be used to reduce the tax burden on low- and medium-income Canadians or, in what is known as a “fee and dividend” system, be distributed equally to all citizens and permanent residents. Most people end up better off under either option.

Then, with other energy options able to compete with fossil fuels on a level playing field, we have an opportunity to build a society based on locally produced sustainable renewable energy that provides good, satisfying, well-paid jobs and recycle wealth back into the local economy.

And we can begin, as a nation, to play our part in averting the climate disaster to which our current fossil fuel addiction would take us.