Can Canada fight climate change without a carbon tax?

Thestar.com
October 19, 2018
Alex Ballingall

Who needs a carbon tax?

Not Andrew Scheer.

Federal Conservative Leader Andrew Scheer has promised a plan to cut Canada’s greenhouse gases but without resorting to a carbon tax.

The Conservative leader is a fervent opponent of the Trudeau government’s plan to slap a price on greenhouse gas emissions that cause global warming.

But Scheer says his opposition to the tax doesn’t preclude action on climate change. He told the Star last week that, sometime before the next federal election, he will propose a climate plan based on “a variety of measures” to reduce emissions without resorting to the dreaded carbon tax.

“I’ve always believed that meaningful action is required,” he said, without providing specifics.

So as Canadians await the details of Scheer’s plan to curb emissions, it may be worth asking: does Canada actually need a carbon price to slash its emissions?

Mark Jaccard, a professor of sustainable energy at Simon Fraser University, is unequivocal that it doesn’t. He and other experts who spoke to the Star Monday said emissions reductions are possible through the alternate path of government regulation -- though most doubted that a plan without a carbon price would be the better option, because pricing carbon is less restrictive to business activity and more economically efficient.

“Any honest economist will tell you that you don’t need any emissions pricing,” Jaccard said. “Andrew Scheer is correct.”

Jaccard pointed to past examples like the elimination of substances that were depleting the ozone layer -- that was accomplished through regulatory bans, not a tax on destructive pollution. Ontario also decided to phase out coal-fired power plants between 2004 and 2014, another regulatory move that reduced emissions without a carbon tax, he said.

Like the previous Conservative government under Stephen Harper, some provinces are pursuing this regulatory path to emissions reductions. Saskatchewan -- which is challenging the federal government’s carbon price plan in court -- says its slate of climate policies will reduce emissions “more effectively than a carbon tax.” These include regulations on coal-fired electricity, performance standards for industrial emitters, and public investments in carbon capture technology that have already been employed at one of the province’s hydroelectric dams.

But Jaccard was quick to question Scheer’s intentions on emissions reductions, because the Conservative leader appears in no rush to outline exactly how a Conservative government would make them happen.

“It doesn’t require saying, ‘I’ll get back to you on this,’” Jaccard said.

For Christopher Ragan, chair of the Ecofiscal Commission in Montreal, sector-by-sector regulations are too “prescriptive and intrusive.” Governments would need to develop and enforce different standards for transportation fuel, building codes, industrial processes, vehicle efficiencies and more. This forces all firms in each sector to adhere to potentially expensive new rules to curb emissions, he said.

A carbon price, on the other hand, simply puts a tax on emissions or sets a price for companies to buy greenhouse gas permits. Ragan said this approach ends up being less expensive to the economy as a whole, because entire sectors aren’t forced to invest in ways to reduce emissions to line up with new regulations. Individual firms can decide if it’s better for them to find ways to reduce emissions, or if it makes more sense to just pay the tax.

“That’s the beauty of a carbon price. It’s that people facing the carbon price have an incentive to figure it out, and we can trust them to figure it out,” Ragan said.

The difference could be costly, too. The Ecofiscal Commission put out a report in 2015 that estimated the benefit of enacting a nationwide carbon price instead of taking a strict regulatory approach could be worth as much as $75 billion to the Canadian economy.

Aaron Henry, director of natural resources and environmental policy at the Canadian Chamber of Commerce, said part of the problem with the regulatory approach is that it’s more complicated than a carbon price -- especially given Canada’s differing regimes of federal and provincial authority in certain sectors. He also questioned whether other regulations like a tax reduction for companies that reduce emissions would lead to economy-wide incentives that would come from a carbon price.

And while Henry said big emissions reductions could be made by banning combustion engines, for example, doing so too quickly could result in a significant economic shock.

Jaccard, however, said he believes regulations can be crafted so they’re flexible. An example is California’s longstanding zero-emissions vehicle regulation, which requires manufacturers to sell more of these cars, but does not mandate whether they need to be electric, hybrids or vehicles that use greener biofuels. This allows the market -- and manufacturers themselves -- to determine how to fit with the regulations, Jaccard said.

Whatever the case, Henry said the most prudent approach would be carbon pricing in combination with regulations for industry efficiency to reduce emissions. “This is not something that can simply be solved by regulations alone,” he said.

Indeed, while the carbon tax gets most of the attention, the federal government’s Pan-Canadian Framework for Clean Growth and Climate Change centres also includes regulatory measures to curb emissions, said Merran Smith, executive director of the think tank Clean Energy Canada. These include ongoing consultations to set a standard for how much of the fuel Canadians use should come from renewable or zero-emissions sources, as well as the Liberal plan to phase out coal-fired power across Canada by 2030.

“We need all of the tools in the toolbox to avoid dangerous climate change,” Smith said.

She said this is all the more apparent in the wake of the United Nations report, issued last week, that spelled out the dramatic action required over the next 12 years to prevent the most destructive consequences of global warming.

Canadians will just have to wait to see what Scheer wants to do about it.