By Caterina Lindman
At last! Now that Quebec and Ontario signed a cap-and-trade deal, Canadians can begin in earnest to have adultlike conversations about carbon pricing.
Ontario’s announcement is good news because we are actually putting a price on carbon. Glen Murray, Ontario’s minister of the environment, clearly cares about climate change and I appreciate his leadership on this issue. At the same time, I’m concerned that carbon pricing at the provincial level is not as effective as at the national level.
In order to keep the agricultural and manufacturing sectors of the Canadian economy competitive, we need national carbon pricing because under the North American Free Trade Agreement and the World Trade Organization rules, national governments can implement border tax adjustments to prevent industries from going to places with a weak or non-existent carbon pricing policy, while subnational governments cannot.
With provincial carbon pricing, provinces will need to provide exemptions to vulnerable industries or keep carbon prices low, to prevent industries from fleeing. This weakens the effectiveness of the carbon price. We need a meaningful, steadily rising carbon price to transition to the low-carbon economy of the future, and therefore, this needs to be national in scope.
Canadians want a national climate and energy strategy. In a July 2013, Harris-Decima Poll, 87 per cent of Canadians agreed with this statement: “We need a Canadian climate and energy strategy to plan our nation’s energy future.” In March 2015, Sustainable Canada Dialogues, a consortium of 70 academics released a paper “Acting on Climate Change: Solutions from Canadian Scholars,” calling for a national carbon price.
Earlier in April, Canada’s Ecofiscal Commission released a report called “The Way Forward.” Their economic modelling study compared the impact, as measured by growth in gross domestic product, that there would be in 2020 if regulation or market-based carbon pricing were used to manage carbon pollution and Canada was to meet our current greenhouse gas reduction targets. The market-based carbon pricing mechanism could be either a well-designed cap-and-trade or an efficient carbon fee. Ecofiscal’s economic model showed that gross domestic product in 2020 is approximately 3.8 per cent better under carbon pricing than it is under a regulatory approach.
Yet, Prime Minister Stephen Harper’s plan for Canada is a regulatory approach. It’s odd that a Conservative government is embracing regulation rather than market-based carbon pricing. This may be due to the desire to follow the policy of the United States. The U.S. is our biggest trading partner, and our energy systems are intertwined. President Barack Obama is proposing regulations, while the U.S. Congress appears to be uncomfortable with both regulations and cap-and-trade.
A compromise may be available with carbon-fee-and-dividend. It is a market-based climate change solution that avoids job-killing regulations and does not grow the size of government, all of which are important to Republicans. There are over 250 Citizens’ Climate Lobby local chapters building the political will in the U.S. for carbon-fee-and-dividend by researching the issues, writing letters to the editor and building relationships with their members of Congress.
Citizens’ Climate Lobby volunteers are also at work in Canada. Recently, volunteers in Nova Scotia and Ontario attended roundtable discussions conducted by their provincial governments. Our volunteers reported that citizens did not champion cap-and-trade; instead they discussed at length carbon-fee-and-dividend and other types of carbon taxes. There was also negligible grassroots support for cap-and-trade online at the Ministry of Ontario’s Environment and Climate Change website. This should not be surprising, carbon fees are more transparent and much less expensive for the consumer and taxpayer compared to cap-and-trade.
In summary, the cap-and-trade deal between Ontario and Quebec is a good first step and it should be celebrated because it has opened up the dialogue on carbon pricing. We need a national strategy to reduce emissions, and carbon pricing is better than “job-killing regulation” as proposed by the Harper government. We need a national carbon fee-and-dividend system, which is more transparent and less costly than cap-and-trade, and has grassroots support in both Canada and the U.S.
– See more at: http://m.therecord.com/opinion-story/5564142-ontario-s-cap-and-trade-deal-a-good-first-step/#sthash.jcr0K9Ss.dpuf
Caterina Lindman is an actuary, mother of four and the Waterloo Region leader of Citizens’ Climate Lobby.