Justin Trudeau came to COP26 with a pitch for other countries: Follow his government’s lead on carbon pricing.
After broadly making that case during his speech at Monday’s opening of the United Nations climate conference, the Prime Minister used his second and final day in Glasgow to begin trying to mount a more specific international effort to have the bulk of the world’s greenhouse gas emissions covered by pricing mechanisms.
“If we recognize that right now only about 20 per cent of global emissions are covered by a price on pollution, we should be ambitious and say here today that we want to triple that,” Mr. Trudeau said while playing co-host of a panel on the subject. “Sixty per cent of global emissions should be covered by a price on pollution in 2030.”
It promises to be an uphill battle. Carbon pricing has much less momentum at COP26 than environmentally crucial but less politically challenging policy initiatives, such as a global pledge to reduce methane emissions 30 per cent below 2020 levels by 2030, which Mr. Trudeau also joined other leaders in announcing on Tuesday.
There is no serious expectation – including among the Canadian delegation – of exiting the two-week conference with a global pricing pact, despite Mr. Trudeau’s bravado. And while it would take only a few of the world’s top-emitting countries to reach his proposed 60-per-cent threshold, some of their national governments – including those of the United States and India – have yet to show much interest.
A skeptical response from some participants here is that Mr. Trudeau is pushing this policy largely because it’s an area of comfort for him. “It’s a record he can boast about,” said Aaron Cosbey, an economist with the International Institute for Sustainable Development, while Canada has been criticized for moving slowly on some other aspects of its climate strategy.
But Mr. Cosbey and others also say that, while Mr. Trudeau’s Liberals will not singlehandedly change the opinions of other governments averse to imposing carbon pricing, they might be able to help move the needle among those already considering it by highlighting how they were able to introduce it in Canada without it costing them power.
“Canada is a real model in many respects,” said Ian Parry, the principal environmental fiscal policy expert for the International Monetary Fund. “It provides a good example, sort of like a demonstration technology.”
Mr. Trudeau’s officials say he has also been pointing to that example in private meetings with other leaders, and will continue doing so well past the summit’s conclusion, as he apparently tries to make this a signature international push.
He has some high-profile company in that effort, albeit with some possible differences of opinion in how it should be pursued, as evidenced by the event he helped lead on Tuesday.
One such difference is over what exactly qualifies as a carbon price. Appearing on the panel, IMF chair and managing director Kristalina Georgieva said she favours a relatively loose definition, in which countries could qualify for pricing pacts by introducing a relatively wide range of regulations that met equivalency standards. World Trade Organization director-general Ngozi Okonjo-Iweala expressed a similar view, emphasizing the need for flexibility for developing countries, in particular.
Mr. Trudeau also acknowledged there are “different ways” of going about it, which he knows well from the domestic front, where provinces have met the criteria to avoid the federal backstop carbon price through a mix of mechanisms. But he is somewhat more narrowly calling for either carbon taxes or cap-and-trade carbon markets, the two primary models in Canada, partly to make it simpler to avoid competitive imbalances between different jurisdictions with different regimes.
While Mr. Trudeau is trying to establish the 60-per-cent target, international bodies, including the IMF and the Organization for Economic Co-operation and Development, are making their push around what Ms. Georgieva called an “international carbon price floor.” The idea is that, to avoid prices being set too low to significantly reduce emissions, countries in a pact would have to agree to a minimum per-tonne price, with some differentiation based on those countries’ level of development.
Mr. Trudeau expressed some support for that as well, saying that “a clearer call to create a global standard around putting a price on pollution” is an agreed-upon hope coming out of COP. But he is emphasizing getting other countries to start by adopting any price at all – in keeping with the Canadian experience that he is encouraging other countries to learn from.
As the IMF’s Mr. Parry observed, Mr. Trudeau managed to avoid the plight of other leaders who had to face defeat or back away from attempts to quickly and aggressively impose a carbon price – France’s Emmanuel Macron being offered as an example – by instead introducing it “in a progressive way over time.” Although the initial price of $20 a tonne was not very impactful, it more easily earned some public buy-in, before subsequent increases that are now meant to have it go to $170 a tonne by 2030.
The other aspect of Mr. Trudeau’s strategy that seems to draw international interest is the rebate system returning almost all revenue directly to taxpayers. There are mixed views on whether that’s actually the best use of the money policywise, as opposed to investing more of the funds into programs that help transition to a clean economy or reducing other taxes, but it’s recognized as a possible solution for governments wary of being accused of a tax grab.
None of this is quite the talk of the conference just yet. And if carbon pricing becomes more of a hot topic over the remainder of COP26, it may have more to do with the looming spectre of jurisdictions that price carbon penalizing those that don’t with tariffs known as carbon border adjustments – a model that the European Union is already moving toward and Canada, among others, is considering.
That messy prospect is at least partly what is driving some of the international bodies to push for minimum pricing pacts, and to suggest flexible standards for what counts as pricing.
But whatever the cause, Mr. Trudeau will leap at the opening to play up his record while trying to point the way.
The Globe and Mail
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