Carbon pricing drama rolls out as theatre of the absurd

Two weeks after thousands of scientists convened through the International Panel on Climate Change (IPCC) released a report warning of an impending human tragedy, Canada’s climate change drama played out as theatre of the absurd.

The Prime Minister was the lead actor, dramatically venturing into the realm of the Black Knight to unveil the carbon pricing policy to be imposed on the people of four provinces – New Brunswick, Ontario, Manitoba and Saskatchewan – whose governments have failed to implement plans to Ottawa’s satisfaction. If the measures he announced at an event in Etobicoke North succeed, they may produce reductions in greenhouse gas emissions sufficient to offset the increase from the other half of his grand illusion – that we can have it both ways, simultaneously reducing carbon pollution while promoting fossil fuel development.

Then there was the Black Knight himself, Ontario Premier Doug Ford, the member for Etobicoke North. He rode to power promising suburban commuters he would protect their pocketbooks by scrapping Ontario’s cap and trade approach to reducing emissions and fighting Ottawa’s carbon tax “cash grab.”

But like Monty Python’s hapless Black Knight, Ford’s attack is flailing.

First, it turns out that ending cap and trade could set the Ontario treasury back by $3 billion. And with the feds’ commuter-friendly promise to rebate most of the tax to individuals and families, accusations of a cash grab turned into charges of vote buying, with Ford reduced to claiming the rebates will be cancelled if the Liberals win the next election.

The promise of rebates that will leave most families better off also confounded Ford’s Conservative allies in the House of Commons. Leader Andrew Scheer opened question period one day last week bemoaning that the carbon tax “would make everything more expensive.” Moments later, his environment critic accused the Liberals of “trying to buy Canadians with their own money.” Like the Liberals, the official opposition also wants to have it both ways.

“Defies logic”

The issue was just as muddled at the provincial level. The Trudeau news clip getting top play last Tuesday was the declaration that “it will no longer be free to pollute anywhere in Canada.” The PM might have added – “although it will be almost free in Nova Scotia, Prince Edward Island and Newfoundland and Labrador.”

While Canadians in seven other provinces – the truant four plus Quebec, Alberta and British Columbia – will be paying up to four cents a litre on a tank of gasoline and almost six cents on heating oil, residents of those three jurisdictions will be paying only fractions of a penny.

The distinction of being the sole Atlantic province subject to the federal carbon tax didn’t sit well with the normally fed-friendly New Brunswick government. “It defies logic, the federal approach here,” said Andrew Harvey, the environment minister. “We don’t accept it at all.” Given the political uncertainty in New Brunswick, any resistance to the feds may be merely rhetorical. But the provincial environment minister was right about one thing – the approach to who’s in and who’s out of the federal cash grab/vote buying game “defies logic.”

On first glance, New Brunswick’s inclusion among the four is predictable. Last year the Gallant government came up with a farcical plan for imposing a carbon price – they would rename the gasoline tax a carbon tax and target some of the proceeds to green projects. It did not take a noble laureate to see through that. The price on carbon would be unchanged, so federal action was clearly required.

But here’s where it becomes absurd. Other provinces pursued essentially the same gambit as New Brunswick did, but were careful to add a penny or two to the price of fossil fuels. As a result, they not only avoided the national carbon price, they had the moxie to brag about it.

In Newfoundland and Labrador, the government repealed a temporary four-cent gas tax and replaced it with a 4.42-cent carbon tax. “If you’re burning 150 litres of gasoline a week, you’ll pay eight dollars a year difference than what you’re paying today,” the Finance Minister said proudly. Newfoundland’s case for being exempted from the federal plan is strengthened by replacement of oil-fired electricity with power from Muskrat Falls, leading not only to a significant reduction in GHG but a massive increase in power rates.

PEI has no $11 billion hydro development to point to, so the province was forced to play a shell game to keep the federal wolf from the door. The province plans to implement a carbon tax of four cents a litre, but will offset that with a three cent reduction in the provincial excise tax on gasoline and look for other ways to offset the remaining penny. And whatever the final levy turns out to be, it will not be applied to home heat and gasoline nor to  diesel used in farming or fishing.

Nova Scotia 

And then there is Nova Scotia. As discussed here and here the provincial Liberals have strip-mined the carbon-reducing successes of previous governments to find ways to avoid any increase in energy costs, especially for gasoline. They worked out a deal with the feds to delay shutting down coal plants. And to avoid a direct carbon tax, they embarked on a drawn-out process – including legislation and consultation – to fashion a cap and trade regime for a couple of dozen large emitters.

After what they came up with last week, the best that can be said is, to paraphrase the fabulist Aesop, “they labored mightily and brought forth a mouse.”

Assuming that large emitters pass on the cost of staying within their caps, consumers will pay about a penny more a litre for gasoline and heating oil and see a rise of about one percent on electricity bills. But when it comes to reduced emissions, the environment gets what consumers will pay for. The estimate is that cap and trade will cut emissions by a mere 600,000 tonnes – about four cent from 2016 levels. And there’s nothing in the plan to address the possibility of significantly increased emissions from the LNG plant the government is ardently pursuing.

The rationale for exempting Nova Scotia from the federal scheme recognizes that through a combination of green energy and hard caps on NSP’s emissions Nova Scotia has already reduced GHG emissions below the current national target – 30 per cent less than 2005 by 2030. For the record, the table shows where each province stands relative to that target.

GHG emissions by province (millions of tonnes)

Source: Environment Canada

As the table shows, Nova Scotia was 32.8 per cent below 2005 levels in 2016. But here is where the logic again becomes shaky – two provinces subject to the federal tax can also boast significant reductions over the period. New Brunswick cut emissions by 23.9 per cent and Ontario by 21.5 per cent over the same period.

And whether Ottawa is being unfair to the residents of those provinces by treating them differently from Nova Scotians may depend on whether the carbon tax is a cash grab or a vote-buying scheme. There’s confusion on that point in New Brunswick as well as in Doug Ford’s Ontario. And who knows – come election time Nova Scotians may be wondering why they aren’t getting rebates like their neighbours? Would-be premier Blaine Higgs who once vowed to join Ford to fight the tax changed his tune when he found that many New Brunswickers may receive more in rebates than they pay for the tax. “If New Brunswickers are getting more money than they’re being taxed, then I’d have a hard time arguing about it.”

Much more needed

Some national political observers have been predicting that carbon pricing will be potential ballot issue when Canadians vote in a federal election next fall, even comparing it with the free trade election of 1988. That could still happen, but it looks less probable, given the confused responses to the roll out of the federal plan, complete with attractive rebates. The issue could get even more muddled when the Conservatives take away the main Liberal talking point – the Conservatives have no plan for reducing emissions – by presenting their own plan, likely to involve something new and complicated, like a carbon tariff on imports.

In any case, the debate as currently framed between the Liberals and the Conservatives and the feds and the provinces is akin to a dispute over the arrangement of the deck chairs on the Titanic.

The Intergovernmental Panel on Climate Change was asked to assess the difference between keeping the global temperature rise to 1.5 degrees versus 2.0, the range agreed to under the 2015 Paris Agreement. The IPCC concluded that environmental damage at 2.0 would be much worse, and we should strive for 1.5. Unfortunately, there is a very small window for keeping 1.5 degrees in play. Keeping it open will require governments to adopt more ambitious targets and begin immediately implementing them.

In Canada’s case, the government’s targets to 2030, inherited from the Harper Conservatives, are inadequate. And because of the Liberals’ insistence that we can have both oil sands expansion and emission reductions, even those modest targets are unachievable on current projections.

If Canada is going to have a meaningful debate on climate change between now and the next election it will be up to the NDP and the Green party. Green leader Elizabeth May, reflecting on the IPCC report during a lengthy but quickly forgotten emergency date in the House of Commons earlier this month laid out the challenge facing humanity.

“You’ve got one chance to protect your kids’ world, you’ve got one chance, and it’s expiring in about 10-12 years, to hold global average temperature to no more than 1.5 degrees and if you miss that … you end up in a situation where the worst case scenario isn’t bad weather, it’s the collapse of our civilization and the extinction of millions of species, potentially including us.”

If we do have only a few years left to avert the worse case scenario, it would be a continuation of the absurdity to spend one of those years, leading up to the next election, debating the difference between the do-little plan of the Liberals and the do-less approach of the Conservatives. Our children and grandchildren deserve better.

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