Say, politicians, is there a cost to your climate change policies?
The answer is yes. Don’t try to avoid that fact. You can’t. The costs are coming one way or another. The real question is whether those costs bring benefits.
The failure to acknowledge the cost side of the calculation amounts to fantasy thinking, and it’s one of the reasons that Environment Minister Steven Guilbeault, a life-long environmental activist, fails miserably every time climate policy debates are translated into dollars.
The magical thinking exists across party lines – Conservative Leader Pierre Poilievre seems to promise he’ll have a cost-free emissions reduction policy one day.
But the funny thing is that the reluctance to accept that there are costs actually undercuts proposals for real climate change measures – because politicians keep failing to argue that the costs are worth it.
Last week, when Parliamentary Budget Officer Yves Giroux’s office published a paper on how a proposed Clean Fuel Regulations could affect Canadian households, Mr. Guilbeault spent an afternoon taking issue with the PBO.
For the most part, it amounted to a complaint that the office only analyzed costs, not all the potential benefits.
That’s essentially blaming the PBO for doing what the PBO does. The budget officer’s analyses are often limited to a few aspects and focused on the cost side. Mr. Guilbeault obviously wanted someone to talk about the benefits, too. But that’s his job.
In this case, Mr. Giroux’s office did only basic calculations of the potential maximum impact on different income groups of the Clean Fuel Regulations, based on overall costs identified by Mr. Guilbeault’s department.
The regulations would force producers of liquid fuels – gasoline and diesel – to lower the carbon content or buy credits, reducing Canada’s greenhouse gas emissions by 26.6 million tonnes. The PBO, unsurprisingly, found the cost would be a bigger proportion of the budget of a low-income family than an affluent one.
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But the thing that really bugged Mr. Gulbeault was that the PBO’s report had figures: $531 per household, on average, by 2030, and that it would increase the cost of gasoline by 17 cents a litre.
Mr. Guilbeault knew that Mr. Poilievre would jump on those figures as a new cost for Canadians – and Mr. Poilievre did.
But instead of picking fights with Mr. Giroux, Mr. Guilbeault should simply make his case. As the PBO noted, the $531 per household is not the expected cost, it’s the maximum cost – if Canadians don’t buy electric vehicles and producers don’t find less expensive technology to reduce the carbon.
Mr. Poilievre plastered the figures over social media without making that distinction. He doesn’t have to worry about anyone criticizing the cost of his emissions reduction proposals, because he doesn’t have any.
Instead, he labelled the Clean Fuel Regulations as “Carbon Tax 2″ – a catchy way to attack it.
But the Clean Fuel Regulations are regulations, not a tax. In applying the tax moniker, Mr. Poilievre is effectively saying that any emissions reduction measure that carries a cost is a tax. Which means that any emissions reduction measure is, in Mr. Poilievre’s eyes, a tax.
And if that’s the case, Mr. Poilievre seems to favour expensive carbon taxes.
He told reporters he will adopt “technology not taxes” and “lower the cost of carbon-free energy rather than raising the cost of energy that Canadians continue to rely upon.”
But lowering the costs to get people to switch extensively to carbon-free energy has to be widespread, and that’s costly. It means paying sums to people would already use those alternatives, which makes it more expensive than smart regulations or carbon pricing, said Stewart Elgie, professor of economics and law and director of the University of Ottawa’s Environment Institute.
“It would be at least 50 per cent more expensive, maybe double the cost, he said.
Mr. Poilievre doesn’t want to talk about what his still-unspecified policies will cost. Mr. Guilbeault doesn’t seem to like it, either. But the magical thinking doesn’t help anyone.
Debate about the costs of emissions reduction measures should not be about comparing them to the costs of doing nothing. According to a report issued by the PBO last year, those costs are already $20-billion. Eventually, they would be enormous.
The real question is which measures to reduce emissions are less costly, and which bring the most benefits. In the never-never world where costs are avoided, we don’t focus on the answers.