Provincial government attacks federal carbon emissions reduction plan
Last week, the Ontario government finally killed Ontario’s cap-and-trade system after a long and painful death. The province’s cap-and-trade system was established in 2016 under Kathleen Wynne’s government through the Climate Change Mitigation and Low-carbon Economy Act. It was designed to lower provincial carbon dioxide emissions by setting a limit (or “cap”) on the amount of carbon dioxide companies could emit. The “trade” component came in when companies exceeded the cap and had to purchase “allowances” from other companies that had not exceeded their emissions limits.
Given the state of the environment and the rapidly deteriorating climate, having a means to reduce greenhouse gas emissions seems like a good idea — but not, apparently, to the Ford government. The 2016 act that created cap-and-trade was repealed on Oct. 31 with the passage of Bill 4, The Cap and Trade Cancellation Act, after months of delay due to legal action from environmental groups.
While this means that Ford has followed through with one of the capstones of his campaign, it also leaves Ontario subject to the federal government’s carbon tax. In June of this year, the federal government passed the Greenhouse Gas Pollution Pricing Act, which will impose a $20 per tonne charge on greenhouse gas (GHG) emissions for all provinces that don’t have their own, comparable carbon pricing scheme in place by January 2019. With the passage of Bill 4, Ontario has joined the ranks of the other renegade provinces (New Brunswick, Saskatchewan, and Manitoba) who refuse to implement a carbon pricing scheme of their own, in what was referred to by the National Post as an “escalating spat” between provincial and federal governments.
Days before Bill 4 passed in Ontario, Prime Minister Justin Trudeau revealed his revenue-neutral carbon tax rebate plan. In this plan, all of the revenue generated from the federal carbon tax (with the exception of administrative costs) will be redistributed (some say “recycled”) back to the pockets of Canadians in the renegade provinces who will be paying into the federal carbon tax. According to the Guardian, about 70 per cent of these Canadians will be directly profiting from the tax, as their rebate is expected to exceed their increased energy costs.
The idea of carbon pricing is not new. Finland was the first country to introduce a carbon tax back in 1990, and a number of countries have implemented one since then. In theory, a combination of government regulation and the free market should encourage emitters to invest in sustainable and energy efficient practices, which, in turn should result in less emitted carbon. Several provincial carbon pricing schemes have already been implemented in Canada, some well before the federal carbon tax was introduced. For example, the B.C. government was the first to introduce a carbon pricing scheme in North America back in 2008.
Why put a price on carbon dioxide emissions? After it was established that human activity is causing the climate to change, Canada signed an agreement with other parties to the United Nations Framework Convention on Climate Change (UNFCC) to reduce GHG emissions in order to avoid further damage to the climate. This agreement is known as the Paris Agreement, and includes other major countries such as China and the U.S., for now. In the Paris Agreement, Canada committed to reducing its GHG emissions to 30 per cent below its emissions between 2005 and 2030.
The federal carbon tax is simply one of many solutions to meet Canada’s Paris commitment. It also happens to be relatively easy to implement, and therefore serves as the low hanging fruit when addressing climate change. Carbon pricing should be complemented by a suite of other mechanisms to reduce emissions globally, including investments in a clean energy economy, increased vehicle fuel efficiency, and reduced deforestation. A valuable component of the Ontario government’s cap-and-trade system was that many of these complementary components were funded through the nearly $2 million in revenue generated by the program.
Economists agree that a carbon tax is one of the most simple and effective solutions for reducing carbon dioxide emissions. Furthermore, carbon taxes are not expected to harm the economy as so many critics of the federal tax claim. The Stanford Energy Modeling Forum project, which studies the economic and environmental impacts of carbon taxation, found that the economy-wide implementation of a carbon tax has long-term positive effects on economic growth while helping reduce emissions. Dale Beugin, the executive director of Canada’s Ecofiscal Commission, told Global News “the consensus is that carbon tax is going to have a small economic impact, whether positive or negative.”
Unfortunately, the Ontario provincial government seems to be on a path to reverse this progress. In addition to scrapping cap-and-trade, the province has filed arguments with the Court of Appeal to challenge the constitutionality of the Federal government’s carbon tax. Paul Romer, a renowned economist who recently won a Nobel Prize in Economic Sciences for his work on carbon pricing, said at a press conference that “one problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist. Humans are capable of amazing accomplishments if we set our minds to it.”
Writer’s note and disclaimer: My name is Ella; I’m a U of G alumna, and I intern for Elizabeth May — MP for Saanich-Gulf Islands and the leader of the Green Party of Canada (GPC). As Ms. May’s intern, I attend parliamentary committees, correspond with constituents, attend legislative affairs, and work closely with her legislative assistants. The catch is, I have no prior experience with or knowledge of politics. This column details my experiences learning about the political culture and proceedings on Parliament Hill. My views are my own, and do not represent those of the GPC or of The Honourable Elizabeth May, MP.
Photos courtesy of Wikimedia Commons