Let’s revisit a question I raised in passing last time: How much of Canada’s reduction in greenhouse gas emissions can be attributed to carbon pricing, and how much to other measures?
The question is germane. Before we can discuss what policy the government ought to pursue, it helps to know what policy it is actually pursuing.
If you were to ask most Canadians to describe the Liberal government’s approach to fighting climate change, they would say: carbon pricing – carbon tax, a “price on pollution,” call it what you will. The policy of the government is carbon pricing, and carbon pricing is its policy.
Oh sure, it has also implemented a lot of other emissions-reduction measures. But the centrepiece, the showcase, the thrust of Liberal policy is carbon pricing. It has been a central issue in the past five national elections. It was the subject of a historic Supreme Court decision. And, as we have seen at the COP26 conference, it is the government’s calling card to the rest of the world. “Hi, we’re from Canada – you know, the country of carbon pricing?”
So it is interesting to discover that it is not, in fact, the policy. It is, to be sure, a policy. But it is not the means by which the government of Canada has chosen to achieve the bulk of its emissions reductions. Measured by what it does, rather than what it says, its policy might better be described as “not carbon pricing.”
I said in my last column that carbon pricing accounted for only “a part” of the government’s total planned emissions reductions. But I had not until now been able to nail down just how small a part. Not many people have: The figure is not readily available.
However, with the help of analysts at the Clean Prosperity organization, which advocates for carbon pricing and other market-based solutions to climate change, I’ve been able to piece together a figure. It turns out carbon pricing is projected to account for just a third of the overall emissions reductions, actual and projected, under this government – perhaps as little as a quarter.
How did we get that figure? In 2015, the year the Trudeau government took power, Canada’s emissions were projected to grow to 815 megatonnes in 2030. That was if no further actions were taken, beyond those already in place: the “business-as-usual” scenario. But of course we did take action, or at least promised to: At that year’s Paris climate conference, we committed to reduce our emissions by 30 per cent from 2005 levels (730 MT).
Six years later, Clean Prosperity now projects emissions will fall to 458 MT by 2030 – beating our Paris commitment (if still short of the 40-per-cent to 45-per-cent standard more recently adopted). More to present purposes, it is a reduction of 357 MT from the “business-as-usual” number. That’s if this and future governments do not backslide, enact every currently planned measure, etc. But somewhere in that neighbourhood.
And how much of that 357 MT can be attributed to carbon pricing? The government has previously projected the first wave of carbon pricing, during which the price rose from an initial $30 a tonne to $50 in 2022, would reduce our emissions by 50-60 MT. Clean Prosperity estimates the second wave, announced in December of last year, in which the price will rise by $15 a tonne in annual increments to $170 in 2030, will cut emissions by a further 63 MT.
Total: about 120 MT. Divided by 357, equals roughly one-third. Arguably it’s even less than that.
That 2015 “business-as-usual” projection – 815 MT by 2030 – was substantially lower than projections made earlier in the century, reflecting measures enacted by previous governments. If we rewind to before those measures were taken, if the “business-as-usual” scenario in fact looks more like 900 MT – the National Energy Board, in 2007, predicted it would be more than 1,000 – that would imply a reduction of more than 450 MT. Of which carbon pricing would account for roughly a quarter.
This is extraordinary. Two-thirds to three-quarters of our emissions reductions by 2030 will have been achieved, not by carbon pricing, but by other measures – by “not carbon pricing,” if not by “anything but carbon pricing.”
It’s hard to square this with the government’s repeated pronouncements, not only that carbon pricing is its policy, but that carbon pricing is the best policy: as the Prime Minister told COP26, the “most efficient and powerful” way to cut emissions. He’s right – the evidence on this score is overwhelming. And yet the policy he is actually pursuing is, for the most part, to use other, less efficient ways – the usual mixture of subsidies and regulations.
This is of some political significance. For all the while the Liberals have been supporting carbon pricing, the Conservatives have been opposing it. And while the Conservatives have offered many objections to the policy, the core of their opposition, it is safe to assume, is that it is Liberal policy. Had the Liberals never adopted it, the Conservatives probably would have.
One suspects Liberal support for carbon pricing was also mostly for show: they were for it, mostly because the Conservatives were against it. What really gets Liberal hearts pumping, after all, is not the abstract contemplation of market-based approaches to the environment – or market-based approaches to anything – but the more earthly pleasures of personally directing economic activity this way and that. Hence the bulk of their program.
So, if carbon pricing is not Liberal policy – again, measured by what they do rather than what they say – then the way is open for the Conservatives to adopt it as their own. If the Liberals prefer to reduce emissions mostly by other means, the Tories can be the party that wants to reduce them mostly by pricing carbon. Indeed, the Conservative should aim to use carbon pricing to replace those other policies.
The Liberals’ half-hearted embrace of carbon pricing is, after all, not merely a crime of inconsistency: it comes at great and growing cost to the economy. Ecofiscal Commission, another environmental economics outfit, has calculated that the current Liberal plan would reduce economic growth from an already sickly 1.7 per cent a year to less than 1.4 per cent. Compounded, that adds up to a loss of 7 per cent to 10 per cent of GDP by 2050, versus a pure carbon-pricing approach, whose economic costs are basically rounding error.
That’s not only an economic matter. To say that carbon pricing achieves the same reductions in emissions at lower cost than the alternatives is also to say that it could achieve greater reductions at the same cost. Or some combination of the two – faster economic growth, and a more ambitious emissions reduction plan. If the Tories can’t see the opportunity in that, they deserve to spend the rest of their lives in opposition.