Carbon price wars–BC, Ontario or Quebec?
The question of how the Canadian provinces should deal with the issue of greenhouse gas emissions continues to be contentious and occasionally acrimonious.
The new provincial government of Ontario has declared its intention to cancel that province’s cap-and-trade system—referring to it as “a punishing, regressive tax that forces low-and middle-income families to pay more.” A week ago the province of Alberta threatened to pull out of the Federal government’s carbon pricing scheme after progress on building the Trans Mountain Expansion pipeline ground to a halt. Progressive Conservative leader Andrew Scheer has vowed to shut down carbon pricing asserting: “Conservatives know that carbon tax isn’t just bad for big business; it’s bad for everyone. And that’s why, come 2019, my first act as prime minister will be to get rid of it once and for all.”[1]
So is it? Bad for everyone?
There is no question that pricing carbon works. Over 51 countries and subnational jurisdictions are now operating carbon pricing systems, or planning to do so.[2] A report last year by two of the world’s top economists was clear: “A well-designed carbon price is an indispensable part of a strategy for reducing emissions in a efficient way.”[3]
Earlier this year, Environment and Climate Change Canada published the results of a modeling exercise which showed that a carbon pricing system applied across Canada would reduce greenhouse gas pollution by between 80 and 90 million tonnes by 2022–making a significant contribution to meeting Canada’s Paris Agreement target of a 30% reduction over the period 2005 to 2030. [4]
But some forms of carbon pricing systems seem to work a lot better than others. Can we learn a few lessons and draw some conclusions by looking at the performance of the four Canadian provinces where carbon prices have been introduced: Quebec, Ontario, Alberta and British Columbia? Of the four, British Columbia’s revenue-neutral carbon pricing system is widely regarded as a major success.[5] But the latest data on Canada’s greenhouse gas emissions paint a rather different picture.
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