New carbon tax report unrealistic: expert

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This article was published 27/11/2019 (2299 days ago), so information in it may no longer be current.

OTTAWA — A report this week suggesting Ottawa would have to charge drivers an extra 40 cents per litre of gas to reach its carbon-reduction goals doesn’t paint the full picture, according to the architect of Manitoba’s own carbon plan.

The Ecofiscal Commission suggested quadrupling Canada’s carbon price by 2030 would be the easiest and most cost-effective way for the country to meet its climate targets. The non-partisan think tank compared the option with new regulations, as well as subsidies to encourage greener behaviour.

What Canada actually needs is a mix of all three, according to sustainability expert David McLaughlin, who crafted Manitoba’s plan and contributed to the Ecofiscal report.

“What they don’t say is, what is the optimal way; the most realistic way of doing it, with all of these measures,” he said. “This is an economist’s roadmap, and not a political roadmap.”

The think tank’s final report comes from five years of analysis on how to meet Canada’s 2030 goal of cutting greenhouse gas emissions by almost one-third from where they sit now.

The report warns carbon taxes are likely the toughest plan to sell to the public, because the costs of such levies are highly visible — even though they permit the most economic growth.

Meanwhile, regulations and subsidies are less visible, but also lead to Canadians spending more, in less equal amounts, to achieve the target.

The federal price, which applies to Manitoba, currently sits at $20 per tonne and is going up $10 a year in each of the next three years.

All of the money from that tax is remitted to the province from which it was collected, mostly through income tax relief.

Ecofiscal chairman Chris Ragan said further hiking the carbon price $20 per year between 2022 and 2030, until it hits $210 per tonne, would get Canada to its targets under the Paris Agreement on cutting emissions — without any of the existing and planned regulations and subsidies.

“It’s crazy to use high-cost policies if you know that lower-cost policies are available,” Ragan told reporters.

The rebates would also grow to keep the tax revenue-neutral, he said, although the cost at the gas pump would jump by about 40 cents per litre.

However, McLaughlin said that is all theoretical, due to provincial and federal actions such as clean-fuel regulations, requirements for landfills to limit methane, subsidies to help companies buy electric cars, and stipends for schools to retrofit drafty windows.

All of those lead to reducing emissions outside the carbon tax, making unnecessary to raise the carbon tax so high.

“These things are not mutually exclusive, although they’re treated as such in the debate,” he said. “You have to stack them up, a whole bunch of measures, and not just one. That’s the political reality. But that modeling is not done here.”

Ecofiscal also found using the carbon-tax revenue to cut corporate and personal taxes would spur more economic growth than the current system of remitting it directly to Canadians — though McLaughlin said it’s one of the government’s key methods of trying to make the program politically viable.

McLaughlin also said Ecofiscal intended to publish its study this spring with a chapter on political implications, to which he and three other experts contributed, but the group ultimately scheduled its report for after the Oct. 21 federal election.

Under the Paris accord, Canada committed to cutting greenhouse-gas emissions to 511 million tonnes by 2030. In 2017, the most recent year for which data is available, Canada emitted 716 million tonnes.

— with files from The Canadian Press

dylan.robertson@freepress.mb.ca