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Sigh. So, once again, the carbon tax — only ever a meagre climate measure — is sucking up all the political and media oxygen at the expense of other more systemic and bold changes. It now appears we are destined to spend the next federal election, quite likely next year’s British Columbia election and possibly other forthcoming provincial elections re-prosecuting past climate fights.
This is no way to win the battle of our lives. Tackling the climate crisis requires urgent forward momentum, not relitigating the carbon tax debate. Moreover, there are a multitude of alternatives to this debacle and many other options to address affordability (more on that below).
The Trudeau government’s recent decision to exempt home heating oil from the carbon tax will be remembered as one of the great boneheaded political moves of recent years. Not only does the carveout throw the federal government’s keystone climate policy of the past 10 years into turmoil, but the announcement also blindsided the federal NDP, and in doing so, violated the Liberal-NDP supply-and-confidence agreement, one of the first provisions of which is a “no surprises” commitment.
Now the floodgates are open. The very logic of taxing pollution as a means of encouraging fuel-swapping is cast into question. And tragically, the government has reinforced the Conservatives’ effort to make the carbon tax a core ballot question, yet again.
For the record, I support carbon pricing, and at this late stage, we mustn’t jettison it. It is a useful policy tool in keeping with a basic “polluter pay” principle that seeks to capture what economists call “externalities.” To put it bluntly, neither households nor industry should be able to use our shared atmosphere as a free toilet. It makes sense to raise revenues from carbon pollution and use that money to tackle the climate emergency. And it can be designed in a manner that, with well-targeted carbon tax credits, ensures fairness and equity.
That said, the carbon tax was never going to be our primary path to climate safety. It is an incremental market-based measure that merely incentivizes households and businesses to modestly shift their consumption and investment choices.
Yet, the policy landscape has been overly fixated on it for years. Politicians, academic economists and even many environmental organizations have placed great stock in carbon pricing, expending huge political capital in its defence. Even, in the case of the Trudeau government, trading oilsands and pipeline expansion for agreement on a carbon tax.
British Columbia is lauded for first introducing a carbon tax in 2008, and I support the tax. But a distressing truth is that B.C.’s greenhouse gas (GHG) emissions in 2021 — the last year for which we have data — stood at about 59 megatonnes, a mere two megatonnes less than in 2007, the year before the tax was introduced. True, emissions would have been higher still without it, especially given population and economic growth. But that’s 14 years with precious little progress to show. Ultimately, the planet does not care if our GHG emissions are relatively lower than might have occurred under status quo conditions. It’s time to dramatically bend the curve.
Simply put, the carbon tax will not get us where we need to go at the speed and scale the climate emergency demands — and I believe much of the public suspects as much.
Another path to affordability
Notwithstanding the above, the impetus for this political blunder was a real need to address the affordability challenges of lower-income people.
Yes, low- and modest-income households are hurting and need help. And those who heat their homes with oil have been particularly hard hit by rising prices (in contrast, those who heat with “natural” gas, in most cases, receive more from the carbon tax rebate than they pay in the tax itself).
But the kicker is that much better options exist to extend support to those who need it. For example:
- The government could have further boosted the carbon tax credit for lower-income households and/or increased the GST credit, using programs already in place to focus support on those who actually need it (regardless of how they heat their homes or where they reside across the country).
- The federal NDP, in a motion that sadly failed earlier this month, tried to change the script with a call to eliminate the GST from all home heating and “make eco-energy retrofits and heat pumps free and easy to access for low-income and middle-class Canadians, regardless of their initial home heating energy source.”
- We could eliminate the GST from all electricity bills, further encouraging people to electrify their homes and vehicles.
- The federal government has sweetened the rebates for heat pumps for those who currently heat with oil, but why complicate things? Why not just give people a heat pump? Heck, in P.E.I., under a Conservative provincial government no less, if your household income is under $75,000, they just give you a heat pump. Let’s do that!
- In welcome news, a new Affordability Action Council has launched, bringing together climate and anti-poverty experts in an alliance that is advancing a suite of policy initiatives that marry action on both climate and affordability.
- Efficiency Canada has proposed a comprehensive strategy to provide energy efficiency retrofits to lower-income renters.
And how might we pay for these measures? For starters, with a windfall profits tax on oil and gas companies. As the Parliamentary Budget Officer has calculated (prompted by a motion from Green MP Mike Morrice), if the federal government extended the excess profits tax it has already instituted for financial institutions to the record profits of the oil and gas sector, the tax could generate $4.2 billion over five years. More if the rate was set higher.
Such a move could be a win-win-win. Politically, a windfall profits tax is hugely popular (two years ago, Abacus Data found 87 per cent of Canadians support an excess corporate profits tax). With respect to the climate, the tax could help finance the energy transition. And economically, it would help to ease inflation; according to the Canadian Centre for Policy Alternatives, over 40 per cent of the recent rise in prices can be attributed to corporate profits, and the industry that leads the pack in hoovering up these excess profits is the very industry fuelling climate chaos — oil and gas companies. By taxing those windfall profits, we simultaneously discourage inflationary price increases while putting the money to use helping households switch to electric heating and improving public transit, liberating them from rising gas prices in their monthly utility and transportation bills.
I’ve said it before — we aren’t going to incentivize our way to victory in this task of our lives. To get this job done in the most equitable manner, we need to spend what it takes to win. As people across Canada face genuine affordability challenges, politicians should be advancing climate solutions that make life more affordable today, and more livable into the future.
Comments
Hurray, give everyone that wants one a heat pump and tax the oil and gas industry enough to pay for it. Simple and effective. Take the GST off electricity and tax the oil and gas industry enough to pay for that. Again, simple and effective. Thank you Seth Klein.
yes yes yes
The Trudeau Liberals have sabotaged their own climate policy, particularly carbon pricing, from the get-go. The Liberals have also failed to defend carbon pricing from misrepresentation by the opposition.
The Alberta NDP's tiny carbon tax was a fig leaf — a cynical quid pro quo in exchange for new pipelines. Hopelessly contradictory climate policy.
Big Oil is fine with a tiny carbon tax that has no real effect and does not hurt its bottom line. Especially if they can trade it for new export pipelines that enable oilsands expansion.
A piece of political theatre for a new pipeline.
O&G companies pay pennies on the dollar in carbon costs. Federal and provincial carbon pricing systems do not impair their profits — or reduce their emissions.
Fossil fuel subsidies, visible and invisible, undermine carbon pricing. Subsidies for carbon capture (CCS) and small modular reactors (SMRs) also violate the polluter-pay principle.
Carbon pricing is intended to make it more expensive to emit carbon. CCS subsidies offset companies' higher carbon costs, blunting the financial incentive.
Carbon pricing is supposed to make it more expensive to emit carbon. Carbon pricing is intended to discourage fossil fuel production and consumption — and make the alternatives more attractive.
CCS subsidies relieve industry of the costs of reducing emissions. Making it cheaper and more profitable to produce and sell fossil fuels. A CCS tax credit makes fossil fuels cheaper to produce and sell, and therefore cheaper and less expensive to buy and consume. Self-defeating. These savings go straight to the company's bottom line. Into shareholders' pockets.
But the NDP continues to stand firm on the agreement, thereby impressing more of us than the party ever has before in its entire political history.
So under the current uniquely binary political circumstances I'm wondering WHY such a cogent and respected environmental writer as Seth Klein remains a tribal ANYTHING politically, even a respectable "NDP'er?" Where's the talk about formalizing a union of us progressives? The topic used to be commonplace and recurring, but somehow the animosity between the two parties has increased along with that narcissism of small differences. Why, and especially why NOW of all times?!
Considering this AND that this article is primarily about criticizing Liberal strategy, have you considered that the toxic, disruptive, purely obstructive but still perplexingly and persistently EFFECTIVE conservative narrative is also affecting YOU?
And since Stephen Guilbeault comes from your environmentalist ranks, is the gold standard in fact, but was selected by and has joined the Liberals as the vehicle to address climate change, where in hell are the rest of you now?
Having never experienced federal governance and with the likelihood of that changing anytime soon being low to say the least, isn't it clear now that REALITY dictates binary choices? Isn't that what you're saying about the climate crisis, that it should be framed as the life or death of our species, which is heartbreakingly true?
So rather than jump on the rotten, festering conservative bandwagon in any way, shape or form, even inadvertently, or give one more warning about the dire nature of precious Nature, wouldn't a new advocacy of uniting those of us who GET it be the best thing to do now?
Then that shining ray of light fed by the Liberal/NDP agreement could flood us with desperately needed HOPE.
Liberals still aren't progressives, so a "union of progressives" is still not a theoretical possibility. A union of the sane, perhaps.
But the results would be pernicious. In terms of policy, the only reason the NDP can successfully get some useful policies out of a minority Liberal government is precisely because they are separate. Combine them and even if the theoretical math worked (which it quite likely wouldn't--I, for instance, would not vote for the new Frankenparty), what you'd have is just a majority Liberal government, with a powerless subsection that wished it would do some progressive things. But it wouldn't, it would be back to Liberal business as usual.
In effect, all a merger would do is kill the NDP. And really, I think you know that perfectly well, so your frequent calls for it strike me as disingenuous and cynical. If it happened, shortly someone would have to invent a new one which would have to start from scratch; it might in the end regain the NDP's position, but the Liberals would enjoy having no competition for a while, during which time they would kill many of the more progressive policies they had ever enacted.
I don't agree. The evidence from Germany proves coalitions work well to strike the middle ground, in their case between Social Democrat and Green policies. The Greens are whole, healthy and separate and are not a dead limb hanging off a larger "Frankenparty."
The progressive and middle ground in Canada is not as pure and undiluted as you might assume. It's not divided into neat little compartments called "Liberal" or "NDP" or "Conservative." It is a genetically healthier mongrel, a work horse, not a thoroughbred, a melange of seasonings that are greater together than the sum of their separate parts, and as flexible as having dozens of recipes for a good curry.
The difference between the minority government we have today and a Liberal Democratic coalition is that some NDP MPs will be in cabinet and run actual ministries instead of perpetually occupying critic's armchairs on the sidelines and becoming lazy in some respects. I'd love to see NDP MPs in the health and housing minister positions. Liberals would continue in big finance and defense positions. Environment could go either way, but it is necessary to dramatically step climate policy up no matter who occupies that chair.
The current German Green leader is the Foreign Minister. The first such coalition (same two parties) started the ball rolling on renewable energy in Europe 20 years ago, a policy that survived and now thrives, a policy that China jumped on (entirely in their self interest, of course) and ramped up to massive levels of research and production giving the world cheap solar panels and the best batteries. This didn't start with a "Frankenparty." It was a wise, well thought out and far reaching seed policy by intelligent Social Democrsts and Greens in Germany which has grown into a huge net benefit for the planet, and not merely for myopic political gain.
A coalition will not necessarily be governed by anything but a simple agreement to a timeline, say three years in government with a review process to renew it, and to focus mainly on their points of policy overlap.
Personalities and egos will probably undo all of this in the end, but that is prevalent in every party. Without a serious discussion on uniting progressives and centrists, there is now the distinct possibility that the Poilievre demolition derby will wreck everything and have the better part of a decade to do so.
It is dismaying that some on this forum actively promote punishing the Libs, who so richly deserve it in many respects, but then go on to actively promote the elevation of Poilievre, thinking naively that he'll be limited to a single term in power and that a Liberal renewal and return to power will be quick and clean.
That is not our political history.
I fully agree with the thrust of this article. I would only add that more direct government investment in renewables is necessary and can seriously catalyze climate action.
In addition, an analysis of world trends in the transition could give us a realistic timeliness of when to make the heftiest investments into wind, solar, geothermal, EV charging networks, battery plants, efficacy in urbanism and graduated grants for domestic transition tied to income and types of equipment (no grants for SUVs, 100% cost coverage for low income households).
1/4
Having recently opened a short subscription to Netflix, I find myself inspired by the astute observations of one Lady Whistledown. Whilst I will never reach the good lady’s level of witty snark, an analogy of her much anticipated newsletters in Bridgerton is sorely needed to highlight the gaslighting, grandstanding, glibness, gasconade, vainglory, sanctimony, deceit, hypocrisy and mere greed as regards the global energy system. (I realize there is some superfluity in that list, but they are fun words!).
I don’t agree with all of Mr. Klein’s views; I do think, however, we sing from the same hymnal -- if different editions with, perhaps, covers adorned in slightly different hues -- which includes the tune, “Carbon, to what end be ye so woefully taxed?”
“And it can be designed in a manner that, with well-targeted carbon tax credits, ensures fairness and equity.”
IMO (but I will happily defer to knowledgeable poverty experts), people don’t like being reminded they are poor or simply less well off, and such reminders hit them every time they make a purchase. I imagine they also don’t like the uncertainty of being beholden to ethereal policy programs that are political footballs. Further, the greater the time lag between paying for something (let’s say, a carbon tax) and receiving an offset (let’s say, a carbon rebate), the less the two are connected, the more lingering and more acute becomes the cost anxiety, and the greater the tendency to think, “it seemed a good idea at the time.”
In any case, do carbon taxes actually work, as a policy, to a degree equivalent to the hype (or the degree necessary)? As the author suggests, looking at the BC example, the answer is, clearly, they do not.
The Guardian published an article, November 20, stating that the, “Richest 1% account for more carbon emissions than poorest 66%”.
https://www.theguardian.com/environment/2023/nov/20/richest-1-account-f…
The same day, it also reported, “Twelve billionaires’ climate emissions outpollute 2.1m homes, analysis finds”.
https://www.theguardian.com/environment/2023/nov/20/twelve-billionaires…
cont...
2/4
Clearly, consumption by the rich isn’t terribly affected by incremental increases in energy costs and carbon taxes. Yet, the poor are hugely – sometimes existentially, one might say – affected by such increments. It is, in fact, conceivable that carbon taxes will simply put certain staples of quotidian modern life, and the services they provide, completely out of reach for many. But never the rich. Are the 99% to become mere consumers of rebates arising from the travels and consumption of the very wealthy, even while, perhaps, no longer being able to enjoy those same pursuits ourselves, due to necessarily high carbon taxes?
I agree with many of Mr. Klein’s prescriptive suggestions – particularly on windfall profits, gov’t assistance in personal fuel transitioning and efficiency improvements, and public transportation* – and ensuring energy costs are not anxiety-inducing; however, the frequently-stated, received wisdom (i.e. sacred cow) of keeping “per unit” energy costs low (forever) is, IMO, at odds with the frankly more pressing matter of sustaining the biosphere**.
On the matter of energy supply, I happened across a NY Times article not 10 minutes ago, dated today, entitled "How Electricity of Changing Around the World”. In that article is a fascinating graph which speaks directly to my demand-side concerns.
https://www.nytimes.com/interactive/2023/11/20/climate/global-power-ele…
The graph shows that -- notwithstanding the hyperbole of recent years regarding renewables which, by now, must have many readers convinced that, at this juncture, the switch to a boundless renewable supply requires only that someone find the switch and trip it – Inasmuch as the supply of wind/ solar-generated electricity has, indeed, grown from, essentially, nothing in the year 2000 to about 4 million gigawatt hours last year-ish, fossil-fuel-generated electricity grew, in the same period, from ~10 million gigawatt hours to ~17 million gigawatt hours, and continues to climb.
Looking more broadly, at the total global energy supply, as of 2019*** (the most recent data available), wind & solar are included in that very lonely statistic referred to as “other”. In 2019, “other” amounted to a grand 2.2% of global total energy supply. EVERYTHING WE HAVE HEARD, to date, about wind & solar refers to a mere one-fiftieth of the global energy supply. The IEA is predicting that total, combined fossil energy supply will peak before 2030 before commencing a long descent****. Only in hindsight will we be able to look at that prognostication as prescient, or yet more fairy dust.
Is there any question why I concern myself with demand-side considerations?
cont...
3/4
Let me repeat the phrase, “Personal Carbon Allowance”*****. If we Canadians are seeking fairness while we seek to cap the total national emissions, it is certainly fair that every Canadian receive an approximately equal share in that capped emission total, to do with as they choose, including selling it other Canadians. Of course, the implementation would undoubtedly be difficult, not least apportioning between personal and commercial consumers, but the idea is very simple.
REFERENCES
* Transit improvements are, however, neither a standalone solution nor solely a federal responsibility. Unless we have an endless supply of cash, improving transit begins with improving the design of our settlements to actually facilitate effective transit. That is, transit catchments need to: be denser to shorten average trip distances/ durations; enable an effective, interconnected transit network; make transit preferable to private vehicles; and increase ridership. Transportation subsidies must also shift more from private vehicles (taxes given to “free” roads) to common transport (taxes given to “free”(?) transit).
Not to mention increased facilitation of active transportation.
cont...
4/4
** Further explanation is needed. I differentiate between the cost, for example, of a kWh of electricity, and the total monthly electricity bill. I’m in favour of actually increasing the per unit costs while concurrently decreasing the units needed per month (by way of, for example, efficiency improvements).
Example:
5 kwh at $0.20 per = $1.00
10 kWh at $0.10 per = $1.00
Lacking per unit cost increases, as efficiency improves, consumption will, necessarily and counter-intuitively, also increase (search for “jevons paradox” for an explanation). Replacing an incandescent 60W bulb with a luminescence-equivalent LED bulb is great; replacing one incandescent with 10 LEDs, not so much.
I also favour progressive increases on taxes applied to energy bills. Beyond a reasonable level of consumption, taxes become increasingly punitive with each increment of consumption.
We need more thought given to demand-side considerations.
*** https://www.iea.org/reports/key-world-energy-statistics-2021/supply
**** https://www.iea.org/reports/world-energy-outlook-2022/executive-summary
***** https://search.brave.com/search?q=defra+personal+carbon+allowance
I recommend the Nature article, “Personal Carbon Allowances Revisited”, and references to the DEFRA study in the UK.
Thank you for all the links! Much appreciated