As one may or may not recall, I was and continue to be a strong advocate for economy-wide carbon pricing signals, particularly in the form of a carbon tax. That said, given the results of the last election, I have understandably seen the Liberal Party of Canada distance itself from the policy and adopt the less politically volatile, but much less preferable (so far as I am concerned at least) policy of cap-and-trade. Of course it does not have to be a case of either/or, but that is what the conversation around carbon pricing in this country has unfortunately turned into: recognition that a carbon tax would be the more efficient and preferable policy, but acknowledging the political difficulties, emissions trading has become the widely-accepted option.
With that, I was happy to see the subject of carbon-pricing emerge once again during the panel on “Energy, Environment, Economy: Growth and Responsibility in 2017″ at Canada at 150. The panel was the one that I was most looking forward to, and in my (biased?) opinion, was one of the liveliest and most engaging panels of the weekend.
One particular exchange that stood out to me was between a former Quebec minister in the audience and panelist Steven Guilbeault. Guilbeault is an ardent supporter of carbon taxes, and has been critical of the LPC’s recent repositioning, but also acknowledged that there are political obstacles that are not easy to overcome. However, Guilbeault also pointed out that a consensus appears to have emerged around the issue of carbon taxes, with economists, policymakers and even industry coming onside, as even companies like Exxonmobil have now publicly expressed their support for a carbon tax.
Indeed, often if an issue gains enough public salience and acceptance, industry and companies will find that it is no longer in their interest be on the outside, resisting. Once industry begins to recognize that hard policies, regulations and pricing is inevitable, it will be in their in interest to get on-side with government and regulators to help shape the policy from the inside, rather than be left outside the decision-making process.
That said, though there were many supporters of a carbon tax among the panelists and the Liberal membership in Montreal, in the aftermath of the last federal election, it has become rather apparent, particularly among the party brass, that a carbon tax is no longer considered to be a politically-viable option for the Liberal Party of Canada. Furthermore, with the commitment from the Obama administration towards a cap-and-trade system, all major federal parties have signalled that they would like to pursue the same system of carbon pricing to work in harmony with an American system.
Though I continue to be a strong supporter of a carbon tax, I have also come to terms with the fact that we are operating in a context of nation-wide agreement (among the major parties, federal and provincial governments) about implementing a cap-and-trade system. With that, I think it is important that the Liberal Party of Canada move beyond the rhetoric of cap-and-trade and start to articulate what kind of emissions trading system that they would like to see Canada push forward. As the panel pointed out, for too long Canadian governments have been passive participants in the global effort towards creating a low-carbon world. We have made empty promises while waiting for Washington and the rest of the world to act, and this reluctance has only turned into obstruction under Stephen Harper and his Conservative government.
If we are going to implement a cap-and-trade system we need to set up the foundation and framework. Will this be a downstream or upstream system: will we be putting a cap on emissions (like the European Union’s Emissions Trading System) or will we be putting a cap on carbon content that Canadian energy producers and importers can sell? It appears most discussions around a cap-and-trade system indicate that it will be emissions-based, but the benefits of an upstream system is that affects the very producers of fossil fuels and covers nearly all energy-based emissions that a downstream system can often miss.
Nevertheless, if we are to move towards an emissions-based cap-and-trade system, we also need to ensure that we have verified emissions data for the firms that will be included in the system, as well as a national greenhouse gas emissions registry to track this information and progress. As signatories of Kyoto, we should have already established national GHG registry; however, like much of everything else, we have been laggards in getting anything done.
That said, these are only some of the questions and details that we need to discuss. It is well and good to say that we will move to put a price on carbon and pursue a cap-and-trade system; however, it is time to move on to the next stage and have a real conversation about what kind of system and complimentary policies that we want to be putting forward to counter anthropogenic climate change. We simply cannot afford to drag our feet anymore on this issue.
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