Bringing back the bronze medal for climate

Written by Dr. James Tansey, CEO, NatureBank Asset Management and Sauder School of Business, UBC for the Vancouver Sun

The heats for the men’s 200m in the Rio Olympics are now famous for the smiling bromance between Andre DeGrasse and Usain Bolt. Bolt crossed the line almost shoulder to shoulder with his protégé. In the finals, he showed his dominance by crossing the line a couple of lengths ahead and still made it look easy. Sometimes you lead through encouragement, sometimes by just taking the gold.

The Province of BC released its long anticipated Climate Leadership Plan on Friday. As a member of the panel that was convened to create to list of recommendations, it is worth noting that it has been a year since the process was initiated by the Minister. The advisory board process ran for five months and resulted in 37 recommendations; far more than was originally anticipated. It is fair to state that there have been good reasons to wait to finalize final Climate Leadership Plan: the LNG industry has been shuffling around possible investment decisions and the Federal Government commenced a national climate strategy. 

From a carbon pricing perspective, when it was introduced, a carbon tax of $30/ton originally positioned BC as the clear leader in Canada and we demonstrated that smart climate policy can be introduced with no negative economic impacts: BC has consistently been the fastest growing province in Canada. But it is clear now that the rest of the pack will now catch up. Alberta has committed to carbon pricing at $30 per ton, in a province where emissions per capita are much higher and both Quebec and Ontario are locked into cap and trade systems that will result in prices of at least $20 per ton. The Federal Government continues to work on a national climate policy that may change the playing field for all the provinces and territories.

The downside of a report with 37 recommendations is that many of them were going to have relatively a relatively minor impact. The plan to reduce emissions through improved forestry certainly makes sense in a jurisdiction with a vast land base and upstream regulation of natural gas emissions also makes sense. Both policies will have a significant impact on emissions. But otherwise, there is little that is new or ambitious about the plan.

The real workhorse from a climate policy perspective was to increase the carbon tax by $10 per year, matched by reductions in other taxes to maintain revenue neutrality. This approach is really a tax shift: reduce negative impacts in business investment and consumption while taxing a pollutant. Because it is revenue neutral, the economic modelling behind the recommendation suggested that the impact across the economy would be almost too small to measure. Along with many other members of the panel, I was a strong advocate for increasing the carbon tax year on year. 

Unfortunately, studies from around the globe have shown that there is a real paradox about carbon pricing: it is consistently the most effective way to reduce emissions at the lowest cost to the economy and its consistently the most unpopular climate policy with voters. Next year, BC will go to the polls and the legislature is won or lost in a relatively small number of ridings. Climate change remains a fiercely divisive issue across the political spectrum. It is one of those wedge issues in politics that is not influenced by evidence or research and the negative view was reinforced by the previous conservative government, who scaremongered around any debate related to carbon tax.

The best hope now for strong leadership on climate change is from the Federal Government. Trudeau promised action on climate change as an election platform. The best approach is a national carbon tax that not only matches the highest prices for carbon but establishes a long term predictable roadmap for the country. Given that the conservative government’s reductions to GST reduce annual revenues by as much as $10bn, a comprehensive carbon tax could be allocated to support green infrastructure projects across the country and to support adaptation to climate induced changes that are becoming more frequent every year.

 

A gold medal is never out of reach.