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That was quite a performance Justin Trudeau put on the other day at COP26, the global climate change conference. Speaking before an audience of world leaders, the Prime Minister pitched Canada’s carbon pricing regime as “one of the most globally ambitious” and called on the rest of the world to follow Canada’s lead.

The Prime Minister deserves great credit for bringing in a national carbon pricing policy, and for sticking with it against sustained opposition. But we’re not actually a world leader on this. More than 60 countries and sub-national jurisdictions around the world have some form of carbon pricing in place; at $40 per tonne, the federal carbon price is currently lower than that charged in several countries, including Iceland, the Netherlands, Ireland, South Korea, France, Norway, Finland, Switzerland, and Sweden.

True, Canada’s carbon tax applies more broadly than most, with more than 70 per cent of greenhouse gas emissions now covered. Still, if the Prime Minister believes as passionately in carbon pricing as he says he does – “putting a price on pollution is the most efficient and powerful way” to reduce emissions, he told a panel discussion at the conference – it’s a mystery why his actions do not more fully correspond with his beliefs.

What is COP26? A guide to the Glasgow climate talks – the world’s most consequential environment conference

Over the next decade, carbon pricing is projected to account for only a part of Canada’s projected reductions in greenhouse gas emissions. The rest is to be delivered by an assortment of literally hundreds of different programs, federal, provincial and municipal.

The same federal document that announced, late last year, the federal carbon price would increase to $170 a tonne by 2030 (that’s good, but Sweden is already there) also contained more than 60 other initiatives – the usual mix of subsidies for this and regulations forbidding that. Some of these are probably unavoidable: pricing methane gas emissions is next to impossible, for example.

But most are demonstrably less efficient or powerful than carbon pricing. That the federal government continues to champion them nevertheless is in some part due to ideology, in some larger part due to politics. But they add up.

We have just spent the past several years in a furious national debate over whether to impose a price on carbon. Critics, led by the federal Conservatives, have raised many objections, but were most adamant about its alleged cost to economic growth.

Yet study after study has shown that the cost of carbon pricing is negligible: even at $170 a tonne, roughly a 20th of a percentage point of GDP annually. If the economy would otherwise have grown at 1.7 per cent, it might instead grow at 1.65 per cent.

On the other hand, the costs of other approaches to reducing greenhouse gas emissions are quite large. In a 2019 report, the Ecofiscal Commission, a group of economists and climate experts, calculated the costs of three such bundles of policies – one modelled on the existing federal plan, two others relying even more heavily on subsidies and regulations (as, for example, the Conservatives propose).

It found they reduced annual economic growth by anywhere from one-quarter to four-fifths of a percentage point – that is, they cut the rate of growth from what it would have been under a pure carbon pricing scheme by as much as a half. That was based on the emissions target to which we were then committed, a 30-per-cent reduction from 2005 levels by 2030. But what happens as the years pass, and the climate crisis worsens, and we are challenged to set, and hit, still more ambitious targets?

At present we are nowhere near our 2030 target – not even the 30 per cent to which we agreed at the Paris climate conference, never mind the 40-45-per-cent reduction to which we have more recently committed ourselves. Perhaps current policy will get us there – but that still leaves us a long way from “net zero” in 2050.

So the likelihood is that between now and then we are going to see wave after wave of new policies layered on top of existing and planned policies. The more that we rely on subsidies and regulations, the greater the hit to economic growth.

And economic growth was dangerously low to start with! At a projected long-run rate of 1.7 per cent per year, it is barely half what it was a generation ago. That’s a crisis on its own, with an aging population, and the soaring health care costs that go with it.

How we address the climate crisis, in short, has critical implications for how we weather the demographic crisis. What target we choose matters far less than how we go about reaching it.

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