Trudeau’s carbon price is too low to do the job

The downside is that the price he set is too low to be effective.

In announcing Ottawa’s unilateral decision on Monday, Trudeau signalled that, on the climate change file at least, his quixotic attempts to achieve federal-provincial consensus have come to an end.

Ignoring resistance from Saskatchewan, Alberta, Newfoundland and Nova Scotia, Trudeau told the Commons that by 2018 all Canadians must face a price on carbon emissions of at least $10 a tonne.

That price will then increase by $10 a year until it hits $50 in 2022.

If territorial and provincial governments aren’t willing to impose this price, either directly through a carbon tax or indirectly through a so-called cap-and-trade system, then Ottawa will do so.

The theory behind all of this is that if the costs associated with greenhouse gas emissions are made explicit — and are high enough — then individuals and businesses will pollute less.

And there’s the problem: The carbon-price minimums Trudeau announced are just too low to work on their own.

“Not even close,” York University environment professor Mark Winfield said in an email.

Winfield and other climate-change experts calculate if Canada is to meet its promised emission target through carbon prices, it would have to impose one of $30 a tonne now, rising to $200 a tonne by 2030.

As well, there is the question of the target itself. First enunciated last year by Stephen Harper’s Conservative government, it would have Canadian emissions reduced to 30 per cent below 2005 levels by the year 2030.

The Liberals used to say this target was insufficient. Now they have adopted it.

Politically, it is easy to see why. While Canadians insist they want their governments to combat climate change, they are not always as agreeable when they realize that this might cost them something.

That’s why British Columbia has frozen its path-breaking carbon tax at $30 a tonne for the past four years. The tax isn’t universally popular.

It’s also why Ontario proposes to exempt politically sensitive electricity generation from its cap-and-trade scheme.

The proposed federal carbon price of $10 a tonne may be too low to do much good. But it is politically acceptable to B.C., Ontario and Quebec, all of which have instituted, or are about to institute, carbon prices that are higher than this.

Alberta Premier Rachel Notley says her province won’t co-operate unless Ottawa approves a pipeline that can bring tarsands bitumen to the sea.

But given that Alberta is already committed to instituting a $30 per tonne carbon tax within two years, Notley’s conditional opposition won’t have any practical effect until 2020, when the proposed federal levy hits that level.

That’s well after the next federal election.

In short, the politics of Trudeau’s move are rather clever. He can legitimately claim his government is playing a leading role in the fight against climate change. But at the same time, he’s not doing enough to offend too many voters.

If economist Mark Jaccard is right, this tiptoe approach may be the best way to proceed. Jaccard and two graduate students at Simon Fraser University argue in a just-published paper that while overt carbon pricing may be the most efficient way to curb greenhouse gas emissions, it is also politically the most problematic.

The authors say combining minimal carbon pricing with what they call flexible regulation may, in the long run, accomplish more.

That’s because the costs involved in regulation aren’t as visible to voters — which means they don’t complain as much.

I don’t know if the Trudeau Liberals have a Jaccardian scheme up their sleeves. Environment Minister Catherine McKenna did say this week the government is looking at more than carbon pricing.

Certainly it will have to do something more if it is serious about taking on climate change.

Trudeau may be right when he says his carbon-pricing scheme is midway between those of the Conservatives and the New Democrats. But in this case, moderation is not a virtue. By itself, the current Liberal climate-change plan just won’t work.