|The perils of too low a carbon price.
Persistent high Liberal showings in opinion polls seem to have conservative punditry worried, as they’re already trying to discredit anything that looks like a Liberal policy a year before the next federal election.
The current target is carbon pricing, about which Liberal leader Justin Trudeau has mused. Of course, he’s not alone; carbon pricing has been a Green Party central plank for many years, and is supported by most environmentalists and mainstream economists in Canada and around the world, and even now by many oil companies themselves.
What is carbon pricing? Quite simply, it addresses our market failure, which promotes the excess extraction and burning of fossil fuels, by ensuring prices include full costs.
A key aspect of any well-functioning market economy, one which includes fair prices as a goal, is to avoid unaddressed externalities. An externality is when a transaction between two parties creates an extra benefit or harm to a third party not involved in the transaction. Externalities send wrong signals to markets.
Something that seems obvious is that you shouldn’t dump your garbage in my space without compensating me. You see this principle at work when you pay to take trash to the dump. Yet today we let people and corporations use our shared atmosphere as a free dump for fossil carbon and other pollutants. In letting them off without paying to cover the harms they create, we are in effect giving them a huge, market-distorting subsidy.
Now, I always thought conservative thinkers were against huge, market-distorting subsidies. But Canada’s political right-wing is captive to the fossil industries, so that rather than express a true conservative, market-based philosophy, they instead press for continued privileges for fossil extractors and burners. On top of that, they have been hacking away a century’s worth of prudent regulations, precautions, and basic scientific observation that serves to protect us from harms to natural systems and human health.
But back to carbon pricing, or what right-wing pundits call “a tax on everything”. It would seem that to them, burning carbon is everything. For the rest of us, huge sectors of our economy are low- or no-carbon. The value added to the economy by skilled workers is mostly carbon-free.
Even better, under most carbon pricing schemes, revenue from carbon fees is returned to the public either as tax breaks, like in British Columbia, or as a direct payment, under an equal dividend plan. Either way, the average person is actually better off, because the weight of a few carbon-intensive industries draws more fees, leaving less for the rest of us to pay.
Oh, and did I mention British Columbia? I can’t understand why these anti-carbon-price pundits always fail to mention that BC implemented a supposedly job-killing carbon tax shift 6 years ago. Since then, their government has been re-elected twice, their economy has grown faster than the national average, their greenhouse gas emissions have dropped while the nation’s have risen, while they have Canada’s lowest personal income tax rate and one of the lowest corporate taxes. To acknowledge all this carbon price success would totally undermine the pro-fossil position.
On second thought, I guess I do know why they always forget to mention it.
Published as my Root Issues column in the Barrie Examiner as "The great, ongoing carbon pricing debate"