No outs: If you sin, you pay

The Protestant Reformation was a revolt against a clergy that used Latin, a language their flock did not understand, to discuss extraordinary abstract concepts such as the Holy Spirit. It was also a revolt against the church's sale of indulgences, a practice that finds uneasy parallels in today's climate change debates.

When policy wonks gather to discuss how best to tax carbon emissions, they resemble medieval monks speaking in Latin to their English or German flocks about the Holy Spirit, something those in the pews could neither see nor touch.

Today we have policy debates on the appropriate price for a tonne of carbon, and yet most Canadians would not recognize a tonne of carbon if it strolled in their front door and settled down on the couch to watch TV. It is a meaningless abstraction, and to discuss whether the appropriate price should be $10 or $50 a tonne is equally meaningless to most people. Proposals for cap-and-trade systems therefore have limited public resonance because what is being traded is not understood.

Moreover, such proposals create the impression, and to a degree the reality, that companies can still produce excessive amounts of green house gases as long as they can trade their excesses with someone who is more efficient and has credits to burn.

This seems a lot like when sinners, during the time of the Reformation, could buy indulgences from the church and thus be spared eternal damnation. Nice if you could afford it, but it may have encouraged rather than reduced sinful behaviour.

The parallel with indulgences also comes into play when firms or individuals purchase carbon offsets. In practice, this means you can still sin as long as you are prepared to pay for it. Thus a rock star, for example, is able to fly his entourage around the world while retaining his green credentials by paying for trees to be planted somewhere in the developing world.

The problem is not that offsets fail to produce real benefits, for in many cases they undoubtedly do. The irksome thing is that the wealthy can pay to pollute, just as wealthy individuals in the Reformation era could, through indulgences, pay to sin.

I would argue that we need a better language and policy framework. If consuming fossil fuels poses a threat to the environment, then use carbon taxes as a deterrent, using the new revenues to develop less energy-intense forms of resource extraction and consumption.

A tax designed to reduce energy consumption fits within our long history of sin taxes on alcohol and tobacco. Another sin tax is readily understood and does not require that citizens come to grips with the meaning of a tonne of carbon. You sin, you pay.

The tax, moreover, is paid across the board. Wealthy motorists are not exempt if they or an intermediary promise to plant a tree. No offsets, no indulgences.

This approach was taken last year by the B.C. government when it introduced a carbon tax on energy consumption. Residents were not told that a tonne of carbon was worth $10, but rather that they would have to pay three to four cents more per litre of gasoline. They were also assured that the new tax revenue would be used to reduce other taxes, or would be applied to environmental objectives. This is good public policy because it is simple.

Maybe the climate change policy debate needs its own Reformation to ensure that we all understand this critically important debate and its possible consequences. We won't get the policy right unless we get the language right first.

Roger Gibbins is president and CEO of the Canada West Foundation.

Republished from the Winnipeg Free Press print edition July 2, 2009 A11