A protester carries a sign during the "People's Climate March" in the Manhattan borough of New York September 21, 2014. REUTERS/Carlo AllegriCARLO ALLEGRI/Reuters
If the planet fails the climate-change challenge, there will be global consequences – eventually. But eventually is, in political time, a long way away. Good policies offer no immediate rewards; bad policies no immediate punishment. The cost of steps undertaken to lower greenhouse-gas emissions will be instantly felt and quantifiable in dollars and cents; the benefits, if any, will be hard to measure for years, if ever.
No wonder the leaders of the Liberal and New Democratic parties, who want to be seen to be doing something about climate change, are at the same time wary of being too specific on exactly what they would do, or how much voters would pay.
If one wants to get serious about reducing carbon emissions, the most economically efficient way is this: Put a price on carbon. Look to British Columbia's revenue-neutral carbon tax. It hits gasoline with a charge of 6.67 cents per litre, and taxes other fuels, such as diesel, relative to their carbon content. The revenue raised, more than $1-billion a year, is returned to taxpayers, mostly through cuts in personal and corporate income-tax rates. As a result, B.C.'s middle class enjoys the country's lowest income-tax burden.
Economists like carbon taxes for two reasons.
The way to reduce demand for something is to raise its price, and taxing carbon would make fuels like gasoline more expensive. Millions of consumers and businesses would react to those price signals by trying to figure out how to cut their costs.
Economists also favour carbon taxes because the tax revenue can be matched, dollar for dollar, with lower taxes on the things we want more of: income, savings and investment.
A pro-market party should be the most favourably disposed to a market-based plan. In reality, the Conservatives have been the least comfortable with carbon taxes, and with greenhouse-gas reduction. In 2009, Mr. Harper committed to cutting emissions by 17 per cent by 2020. In May, he promised reductions of 30 per cent by 2030. But after a decade in office, there is still no realistic plan or sense of urgency.
Mr. Harper has been eager to talk about carbon taxes – but only to accuse his opponents of wanting to introduce them. "A carbon tax is not about reducing emissions. It's a front," he said at the Maclean's debate. "It is about getting revenue for governments that cannot control their spending."
Mr. Harper's chief opponents, NDP Leader Tom Mulcair and Liberal Leader Justin Trudeau, have responded by treading carefully. Both want to put a price on carbon, but neither wants to open himself to Mr. Harper's attacks.
Mr. Mulcair's NDP, for example, wants to bring in a national cap-and-trade mechanism. Cap-and-trade is basically the more complicated, less transparent, nobody-can-figure-out-who's-paying cousin of the carbon tax. It is possible to design an excellent cap-and-trade system; it's also possible to design its opposite.
The model the NDP appears to want to expand on is Quebec's cap-and-trade system, which Ontario is about to emulate and link up with. Quebec's scheme is modest, and modestly successful. And it has the political virtue of not containing the word "tax."
In the Maclean's debate, Mr. Mulcair implausibly defended cap-and-trade as a way to make polluters pay, without businesses passing these costs on to consumers. The fear of how voters will react to the truth can make politicians say strange things.
In a speech earlier this year in Alberta, Mr. Trudeau said, "Canada needs to have a price on carbon." But the model proposed by the Liberals is not a national carbon tax, or even a national cap-and-trade system. Instead, Mr. Trudeau models his carbon policy on Medicare. The federal government would set some kind of national emissions goals, but would leave it up to the provinces to decide how to meet them, with carbon taxes – or without them.
Like Mr. Mulcair's plan, it's hard to know exactly what to make of this. Both plans could yield substantial cuts in greenhouse gases. Both could also end up accomplishing far less. In Mr. Mulcair's case, that will be determined by his cap-and-trade scheme's carbon-reduction targets and design – which have yet to be revealed. For Mr. Trudeau's plan, it will depend on whether he negotiates national standards low enough to accommodate limited provincial efforts, or high enough to push the provinces. Again, that's unknown.
There are also legitimate questions about where the money raised by carbon taxes or cap-and-trade would go. Neither Mr. Trudeau nor Mr. Mulcair has made a clear statement that the B.C. model, which mostly returns the money to taxpayers, is their preferred model.
The party that has been the clearest is the Green Party. Leader Elizabeth May's platform promises something close to the B.C. model. The Greens call it a "carbon fee and dividend system." A carbon tax would be levied on fossil fuels at source. The Greens make no bones about who would ultimately pay the tax: consumers. Raising the price of carbon-laden goods, thereby giving people an incentive to change their behaviour, is the point.
The other half of Green policy is the "dividend." The platform says the billions of new carbon-tax dollars flowing in would be recycled and returned to Canadians in the form of lower taxes or tax rebates.
The Green Party's plan is largely straight out of the economics textbook. It isn't perfect – its goal of pushing the carbon tax ever higher may be too ambitious, and its plans to use some of the carbon cash for income redistribution is questionable – but we're grading on the curve. As such, the Greens get the highest mark.
The Liberal and NDP plans, in contrast, have substance and specifics, but also a fair bit of deliberate vagueness. They get a passing grade, with marks deducted because they won't show voters their workbooks. The Conservative plan, which rejects the textbook's lesson on using markets to achieve environmental goals, gets a fail.