We are past debating it. Climate change is real and it’s arguably the greatest threat facing the world today. Countries have finally started taking measures to reduce greenhouse gas emissions. But this is just a start.
As part of its commitments under the 2016 Paris Agreement, the federal government has announced it will begin pricing carbon emissions in 2018 and will also need to introduce additional industry-specific measures and consumer regulations.
In a market economy like Canada’s, pricing carbon is the most effective way to push consumers away from products that require a lot of carbon emissions to be produced. It also encourages producers to minimize carbon emissions and become more energy efficient.
While some may just see this as another tax, climate change is already hitting Canadians in the wallet in other ways. Pollution is damaging our environment, threatening our communities and creating a health hazard. It’s only fair that the market put a price on the emissions that contaminate the air we all require and that might eventually require public funds to fix.
Last month, Environment and Climate Change Minister Catherine McKenna released a plan that outlines this carbon pricing plan’s objectives. In effect, the federal government will only institute its own carbon-pricing program in provinces which do not adopt their own regimes.
All revenue generated by the tax would then be returned to the provinces from which they were collected, to be redistributed as the provinces see fit. In theory, they could even decide to return the money to the same people who paid it in the first place. I suspect that most provinces will direct some of the revenue to those bearing significant carbon costs but of lesser means and who would be hurt badly by the carbon tax. For example, the government could reimburse the tax on fuel used by certain farmers and to those in the Northern regions who have limited alternatives. Most likely, provinces will also reinvest in clean energy so that carbon-intensive companies and citizens alike can reduce their carbon footprints.
The carbon-pricing structure outlined by the federal government also shows a sensitivity to potential negative economic impacts. Canadian industries that are heavy emitters of greenhouse gases such as aluminum or steel manufacturers could be unfairly affected compared to their competitors outside of Canada who are not subjected to carbon pricing. That’s how it works under Alberta's carbon pricing regime — employers receive credits for their existing volume of carbon produced with an incentive to gradually reduce their carbon production through more efficient technologies.
All in all, this approach will ensure a level playing field for our businesses with increasing incentives to cut carbon production and consumption — all without seriously damaging our economy. This goes hand in hand with a current study we are working on with the Senate Committee on Energy, the Environment and Natural Resources on transitioning to a low-carbon economy.
I applaud these recent efforts by our government. Depending on how successful this plan ends up being, carbon pricing alone could lead to greenhouse gas reductions of up to 95 million tonnes per year.
This is progress, but it’s not enough. We will still need additional measures to reduce our emissions by another 219 million tonnes per year to meet our 2030 Paris Agreement goals.
According to research released at a recent United Nations’ climate conference, China and India are likely to exceed their own carbon reduction goals. With climate change skeptics in power south of the border, now is the time for Canada to lead. We must do our fair share.
Paul J. Massicotte is a senator representing De Lanaudière, Quebec. He is deputy chair of the Senate Committee on Energy, the Environment and Natural Resources and sits on the Senate Committee on Modernization.
This article appeared in the June 7, 2017 edition of the Hill Times.