Recently, the Conference Board of Canada released its report The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions. This report, which comprehensively examines the economic impacts of a carbon tax on the Canadian economy, proves that an adult conversation on hydrocarbons is long overdue.
For me, this report also confirms what oil and gas advocates have been saying for years: a tax on carbon is not the answer to reducing global emissions. The report’s conclusions support the common sense climate policy of targeted deregulation and tax incentives. (http://questerrestage.wpengine.com/mike-blog/2017/04/19/common-sense-climate-policy/)
Firstly, the human cost is just too high. The report finds that by 2025, an $80 per tonne carbon tax will cost the average Canadian family close to $2000 per year. This decline in individual purchasing power will ricochet across the whole economy, as businesses suffer and are forced to reduce their investments into Canada’s economy.
The result? Canadian standards of living will drop, with Canadian workers and businesses sustaining most of the damage as wealth is transferred from individuals and households to the government sector.
The irony is, a carbon tax doesn’t even guarantee a greener future. The Conference Board finds that even with a $200 per tonne price on carbon, we’ll only reduce 12 Mt of emissions – well short of the 219 Mt reduction needed to reach our 2030 targets.
This negligible impact on emissions isn’t even the whole story. The report has a discussion on how carbon pricing in Canada may result in increased carbon leakage to other jurisdictions. While it was beyond the scope of the report to quantify the amount, we can sure the global impact of a Canadian carbon tax is much smaller than 12 mT.
That’s because a price on carbon will force many Canadians to substitute Canadian products and energy for cheaper alternatives from across the border and overseas. As a result, we’ll be importing energy from countries with less efficient reservoirs and less stringent environmental protections than we have here. This bit smoke and mirrors may appear to reduce Canada’s emissions, but in certain sectors could end up increasing emissions globally.
That’s right. Canada takes the economic hit, our trade balance will suffer, and Canadian exporters will struggle to compete internationally. All so our emissions can leak over our borders to other countries, along with our jobs and tax revenues.
Canada isn’t an island by itself, and we can’t unilaterally enact carbon policies without considering their impact on the rest of the world. As I’ve argued before, doing the right thing means doing things right[1]. In this case, doing the right thing for the planet means putting Canada at the forefront of global energy production worldwide, ensuring that the energy the world needs is produced by the world’s best, not the world’s worst.
It’s obvious that the world needs more Canada. It doesn’t even make common sense that less Canada would be the solution for the planet.
Please read the report for yourself here.
[1] “But it’s not enough anymore to merely do the right thing. We also have to do things right.”
http://questerrestage.wpengine.com/mike-blog/2017/02/07/with-trump-now-in-office,-canada-needs-to-build-a-carbon-wall/