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Canada must rise to the occasion and price carbon nationally

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Keep Karl on Parl

The United Nations Conference on Climate Change is underway in Paris and there is reason to hope that the global community will, at long last, take steps toward reducing the enormous risks associated with greenhouse gas emissions. 

What about Canada, which does not yet have a concrete plan moving forward? It also seems to be facing an uphill battle. Despite provincial actions on climate change, Canada's emissions reductions have been deemed inadequate by Carbon Tracker, an independent scientific analysis by four research organizations. And, even if the world adopted Alberta's recently announced carbon reduction standards, it would not hit the greenhouse gas reduction targets necessary to avert global climate catastrophe.

Prime Minister Justin Trudeau is proposing a national strategy for climate change within 90 days of returning from Paris with the premiers. There is a concern that the federal government may favour a piecemeal approach of provincial systems of varying stringency, which will likely not reduce greenhouse gas emissions to levels scientists say are needed to avoid dangerous global climate change.

It is therefore imperative that the federal government enact a minimum rising fee on greenhouse gases that integrates with provincial carbon prices. This fee must be coupled with rebates to households, via provincial treasuries, to protect Canadians.

If the federal government is looking for political will in support of a national carbon tax, it does not have to look far.

The Clean50, a group of corporate leaders, and Sustainable Canada Dialogues, a consortium of 70 academics, both called for a national carbon price, as well as Ecojustice, Canadian Federation of University Women, KAIROS Canada, Canada 2020, and Canadians for Clean Prosperity. The Canadian Medical Association endorses carbon pricing, citing the B.C. carbon tax as a good example. Citizens' Climate Lobby, The Canadian Unitarians for Social Justice and the Green Party of Canada specifically support a rising fee on carbon with revenue returned to households in the form of dividend cheques, called carbon fee and dividend.

The arguments for a national price on carbon are compelling.

One of the biggest concerns regarding a carbon tax is what's referred to as 'leakage', when businesses relocate to jurisdictions with weak or no carbon prices. A national tax would prevent this leakage from one province to another. It would also protect trade exposed industries. Only the federal government can impose a border tax adjustment to ensure that carbon intensive imports, not subject to a carbon tax at home, are not competing unfairly with their Canadian competitors. This should encourage Canada's trade partners to adopt similar carbon pricing measures, to avoid paying the fee to Canada and other trade partners with carbon prices.

In order to be economy-wide, the fee should be placed on carbon-based fuels at the source, such as the well, mine or port of entry. The fee should increase by a minimum of $10 per carbon ton each year to ensure that clean energy is cheaper than fossil fuels within a decade. 

Often we hear the argument that revenue from the carbon tax should fund clean energy development. However, a predictably increasing carbon price sends a clear market signal to invest in energy efficiencies and clean energy. Governments specialize in taxation. The private sector specializes in innovative technologies. This is an important symbiotic relationship in the transition to a clean energy economy.

A steadily rising fee on carbon can negatively impact Canadians and the economy if it is not returned to households. 

By returning the revenue to Canadians on an equitable basis, most Canadians would break even or receive more in their dividend cheque than they would pay for increased costs associated with carbon-based energy. This will protect primarily low and middle income people, allowing the government to raise the carbon fee as high as $200 per carbon ton to help keep global temperatures from rising above 2 degrees C. 

Once upon a time, Canada used to be considered an environmental darling, shepherding in the Montreal Protocol (1989) for ozone destroying chemicals and the Acid Rain Treaty (1991) for sulfur dioxide pollution. Canada can lead again with a first class carbon pricing system that drives down greenhouse gas emissions while driving up clean technology development.

Cathy Orlando, National Manager, Citizens' Climate Lobby

Cheryl McNamara, Founder and Co-Leader, Toronto Chapter, Citizens' Climate Lobby

 

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