OTTAWA: In the Ontario Progressive Conservative leadership race, all four candidates hoping to replace Patrick Brown oppose carbon taxes, a centrepiece of Brown’s platform. The federal Conservative Party also opposes carbon taxes.
But in reality, Canadians have been offered no such choice. We face the Conservative option of costly and inefficient regulations, and the Liberal package of even costlier and more inefficient regulations, with new taxes on top.
It’s dismaying how many commentators who should know better think that the shiny paint of carbon taxes somehow fixes the underlying policy defects.
I can think of just one instance when a Canadian politician proposed an actual system of carbon pricing. In December 2002, while the government of Jean Chretien was promulgating a vast regulatory hodgepodge called the Climate Change Plan For Canada (which, mercifully, was soon abandoned), then-Natural Resources minister Herb Dhaliwal wrote to the Canadian Association of Petroleum Producers to add a little footnote. He assured them that, regardless of the requirement of the climate plan, the industry would have the option of buying emission credits for no more than $15 per tonne.
This was an economically valid approach, because the price acted as a ceiling on compliance costs, not a floor. Efficiencies arise when emitters, facing a price, identify the abatement options that cost less than the charge and reject the rest. Most provincial and federal packages don’t do this; instead, they use the pricing tool as a revenue measure to fund government programs that subsidize the costly strategies the market rejected. This destroys the economic logic of the policy and justifies Conservative charges that carbon taxes (and cap-and-trade) are just revenue grabs.
