Winnipeg Free Press, Posted: 08/16/2018 3:00 AM
Climate change policy was a key issue in the 2010 Australian federal election. Liberal leader Tony Abbott, similar in temperament and political philosophy to Stephen Harper, opposed a carbon tax, describing it as "a great big tax on everything." The election ended in a dead heat, with the balance of power held by a handful of independent and Green MPs.
The price of their support was a carbon tax. Julia Gillard brokered a deal to form government and quickly introduced the tax. She and the carbon tax, however, did not survive long. Unrest in her own Labour Party led to her replacement by former prime minister Kevin Rudd. Climate change policy featured prominently in the next federal election, with Tony Abbott promising to repeal the carbon tax if he was elected. He was, and he did. The carbon tax was repealed his first day in office.
Similarly, Premier Doug Ford in Ontario has wasted no time dismantling Kathleen Wynne’s climate change policy. And federal Conservative leader Andrew Scheer would surely do the same to Justin Trudeau’s carbon tax.
The major flaw in carbon taxes is that they are politically toxic, especially if they are to be effective. Climate economists argue that the tax rate has to exceed $300/tonne to achieve their goal, far more than the Trudeau carbon tax of $50/tonne or Premier Brian Pallister’s $25/tonne.
But the Trudeau tax hits the sweet spot of ineffective policy: too small to achieve the objective, but more than large enough to inflict significant economic harm. Well done!
A carbon tax reduces economic growth. That is by design. Indeed, reduced economic growth is the fastest route to greenhouse gas reduction. Greenhouse gas production fell in Europe fastest, not because of green energy policy, but because of the 2008 global economic crisis. It fell even faster after the outright economic collapse of the Soviet Union in the early 1990s.
A carbon tax works by creating incentives for virtuous behaviour, making the use of fossil fuels more costly. You pay more to do the same as you did before. It reduces fossil fuel consumption, but also economic productivity.
Progressive politicians promise that no economic harm will arise from a carbon tax. Instead, we all benefit by growth in the new green economy. Oilsands workers will transition into jobs as solar panel installers, Tesla mechanics or electric airship captains. Perhaps these green jobs will eventually emerge in a utopian future. But back in the real world, right here, right now, carbon taxes impair economic growth.
With a carbon tax, our products become more expensive and less desirable when competing with the same products produced elsewhere, especially the U.S., where there is no carbon tax. It’s the equivalent of a tariff on exported products. Ask American soybean farmers how that’s working out for them. Answer: not well.
But even worse, Trudeau’s carbon tax is a one-size-fits-all model that simultaneously fails to meet Paris Accord targets while inflicting disproportionate harm on Manitoba. Greenhouse gas production in our province already falls below the national average, due largely to our reliance on hydro power.
Curbing Canada’s greenhouse gas production cannot be done without recognizing that all provinces are not equal contributors. Two provinces with just 15 per cent of Canada’s population (Alberta and Saskatchewan) produce half the greenhouse gases. One-tenth of Canada’s greenhouse gases come from the oilsands.
Instead of virtue-signalling without material benefit, Trudeau could adopt effective policy that would rapidly reduce greenhouse gas production. Start by replacing the natural gas used to extract heavy oil with clean hydro power from Manitoba and B.C. That would mean a transmission line extending west from Manitoba. And continue by building the national east-west electricity grid so that fossil fuels can be replaced with renewable hydropower.
It would be Canada’s quickest and most cost-effective way — at least among the politically viable options — to reduce greenhouse gases.
Instead, the approach of Trudeau and his ministers is to vilify the opposition who do not accede to his ineffective and increasingly conflicted environmental policy: care to buy a slightly used pipeline, anyone?
This is unfortunate. As long as climate-change policy remains so highly politicized, the underlying problem will remain unsolved.
As it stands, it looks increasingly likely that Trudeau and his "great big tax on everything" will join Gillard and Wynne on the sidelines watching helplessly as political foes dismantle cherished but costly climate-change initiatives.
Scott Forbes is an ecologist at the University of Winnipeg.