Forget federal leadership, blue-chip panel urges provinces to price carbon now

The least costly, most efficient and effective way to reduce Canadian greenhouse gas emissions is by putting a price on carbon — and the provinces are best situated to make the move, says a blue-chip panel of Canadian economists.

OTTAWA — The least costly, most efficient and effective way to reduce Canadian greenhouse gas emissions is by putting a price on carbon — and the provinces are best situated to make the move, says a blue-chip panel of Canadian economists.

In fact, provincial leadership is “the way forward,” according to the inaugural report of the same name from Canada’s Ecofiscal Commission, an independent, privately funded, non-partisan think-tank.

Perhaps most surprisingly, the study’s economic modelling determined that federal co-ordination, including a common carbon price across the country, is actually the least important piece of the policy puzzle and can be negotiated down the road.

“Provinces don’t have to wait for anybody, and they’re not,” Chris Ragan, a McGill University economist and the commission’s chairman, said in an interview prior to Tuesday’s release of the 53-page report.

“There is momentum. Let’s build on that momentum.”

It’s a sunny, yet hard-headed, antidote to the current climate policy gridlock in Ottawa, where the federal Conservatives continue to rail against “job-killing carbon taxes” — despite all evidence to the contrary — while refusing to regulate the oil and gas sector.

The policy prescription comes from a commission, funded by five family foundations and two corporate sponsors, comprising 10 nationally recognized economists and backed by a cross-partisan advisory board that includes the likes of Reform party founder Preston Manning, former Alberta finance minister Jim Dinning, tax specialist Jack Mintz and Suncor CEO Steve Williams.

The commission’s first report lays out in cogent detail the costs of climate inaction, the market efficiencies of carbon taxes or a cap and trade system (it declines to pick a favourite) and the benefits of “recycling” the resulting revenues in the economy.

It looks at existing carbon pricing policies in Alberta, B.C. and Quebec and assesses provincial differences in economic activity, emissions profiles and energy mixes.

“To us, the big, big argument is that provincial action is in our view the practical way to do it,” said Ragan, who has served as an adviser to the governor of the Bank of Canada and at Finance Canada.

“To us it’s not a political argument, it’s an economic practicality argument to say: if you want to design systems that work, how would you do it best?”

Any federal government of any political stripe that hoped to impose a national carbon pricing policy “would actually confront very serious challenges,” that have nothing to do with partisan rhetoric, he said.

That’s in part because carbon pricing generates government revenues, which in a centralized, top-down system would presumably flow to federal coffers for redistribution — conjuring memories of the hated national energy program from the 1980s.

Any national program also must confront the regional economic complexity of the country.

“Provinces could avoid those two problems in one fell swoop,” said Ragan.

Under the models used in the commission report, provinces could meet their current 2020 targets for reducing greenhouse gas emissions more efficiently by pricing carbon than through any other regulatory means.

The report supposes that all revenues generated would go to income tax reductions, although in reality provinces could use those revenues as they saw fit.

The analysis found that by pricing carbon, recycling the revenues into tax cuts, and harmonizing the carbon price across provinces and territories, the country could meet its current 2020 emissions targets while collectively enjoying a 3.7 per cent bump in GDP compared to taking a regulatory approach. Individual provinces would see higher or lower GDP gains, with the biggest relative gains going to oil-and-gas-producing jurisdictions.

Some economists have suggested a quilt of separate provincial carbon pricing systems would be an “inefficient hodgepodge,” said Ragan.

What surprised the commission authors was that pricing carbon, plus recycling the revenues, accounted for most of the relative GDP gains — 3.3 per cent. Just 0.4 per cent would come from establishing a single, pan-Canadian carbon price, making it the least important element of realizing efficiency gains from carbon pricing.

“The kinds of arguments we are making need to be made by economists,” said Ragan.

“The mindset out there is that you can’t have a better environment without paying the economic price. I think that’s wrong — if you do it right.”

Just Posted

Flooding potential within Red Deer, Lacombe and Stettler to be assessed

Federal-provincial projects will do mapping, forecasting

Red Deer Housing Authority hires local manager

Franklin Kutuadu starts as CAO in February

Olympic ski run designer creates upgrades at Canyon Ski Resort

Jeff Ihaksi says free-style and alpine ski venues are Canada Winter Games-worthy

WATCH: More than 100 protest UN migration pact, carbon tax in Red Deer

Chants of “Trudeau must go” echoed through the streets of downtown Red… Continue reading

Report: China is driving use of armed drones in Middle East

BEIRUT — The use of armed drones in the Middle East, driven… Continue reading

Speaker at rally says Alberta oil ‘puts tofu on the table in Toronto!’

GRANDE PRAIRIE, Alta. — A rally in support of Alberta’s oil industry… Continue reading

Brazil police say faith healer has turned himself in

RIO DE JANEIRO — A celebrity faith healer accused of sexually abusing… Continue reading

B.C. hockey coach creates ‘gear library’ to remove cost barrier of sport

VANCOUVER — Nicola Froese says she has always loved playing sports, but… Continue reading

Canada’s Kim McRae finishes seventh at luge World Cup in Lake Placid, N.Y.

LAKE PLACID, N.Y. — Canada’s Kim McRae finished in seventh place at… Continue reading

Jeff Bridges to receive Cecil B. DeMille Award at Globes

LOS ANGELES — Jeff Bridges may have once been considered as one… Continue reading

Top of mind: ‘Justice’ is Merriam-Webster’s word of the year

NEW YORK — Racial justice. Obstruction of justice. Social justice. The Justice… Continue reading

Man who demolished landmark house ordered to build replica

SAN FRANCISCO — A man who illegally demolished a San Francisco house… Continue reading

Giuliani: ‘Over my dead body’ will Mueller interview Trump

WASHINGTON — With a number of probes moving closer to the Oval… Continue reading

Quebecers criticize western oil but buying more gasoline, SUVs, bigger homes: report

MONTREAL — Quebec’s premier is quick to reject “dirty” oil from Western… Continue reading

Most Read