Carbon tax unnecessary to reach greenhouse reduction targets: SFU report

A recent report out of SFU suggests that Canada could achieve its emissions targets without implementing carbon taxes.

This comes after Canada’s Environment Minister, Catherine McKenna, said the federal government is ready to introduce provincial carbon prices.

The report, titled Is Win-Win Possible?: Can Canada’s Government Achieve Its Paris Commitment . . . and Get Re-Elected?, was authored by Mark Jaccard, Mikela Hein, and Tiffany Vass from the School of Resource and Environmental Management. It caught national headlines after it was released last week.

Jaccard has a PhD in economics, is a Fellow of the Royal Society of Canada, and has served on the Intergovernmental Panel on Climate Change, and BC’s Climate Action Team.

Jaccard said, in an interview with the CBC, that his question for investigation was “how big would that [carbon] price have to be” to achieve the 2030 Paris Agreement targets?

Jaccard reported that it would start at BC’s price, $30 per tonne of CO2 — or seven cents per litre of gasoline — and would eventually rise to $200 by 2030. That would be the equivalent of adding four cents per year per litre of gasoline for the next 14 years. The report argues this would be politically untenable.

The Canadian government has committed to ratifying the Paris Agreement by April 2017. This would mean reducing greenhouse gas emissions by 30 percent below 2005 levels within the next 14 years.

“We have to reduce emissions, which means that we must have effective policies that succeed politically,” Jaccard wrote.

Canada has “widely missed emission targets for 2000, 2005, and 2010,” continued Jaccard. He remarked that the latest government reports show “the 2020 target will also be widely missed.”

Jaccard told the CBC that the motivation behind the report was “frustration with [. . .] energy-climate economists” who tell politicians “the only way to reduce greenhouse gas emissions is to ‘price carbon,’ meaning a carbon tax like we have in BC and in Alberta, or the cap-and-trade in Quebec and Ontario.”

Politicians like Prime Minister Trudeau and Minister Catherine McKenna “buy into that language,” according to Jaccard.

Economists’ message to governments is to “do things as cheaply as possible, and emissions price [. . .] is the best policy — it is the most economically efficient policy,” said Jaccard. But research from political science and sociology explains “distortions of reality” when carbon taxes are imposed.

Jaccard’s report drew from behavioral economics, political science, and social psychology to present alternatives to pure carbon pricing.

BC is often looked at as a success story of carbon tax implementation, suggesting it could happen anywhere. “In fact, it’s happened nowhere else,” as Jaccard told CBC. Former BC premier, Gordon Campbell, lost 20 points in the polls after his Liberals introduced the tax, according to Jaccard.

California is reducing its emissions through “regulations that are quite flexible” on car and fuel retailers, Jaccard said.

This means that car retailers have to sell a certain percentage of cars that are electric, or else pay fines. For example, if Tesla sells only electric cars, they can trade their extra sales over the quota to other retailers like Chrysler, which sells primarily gasoline vehicles.

As Jaccard writes, flexible regulation also avoids the “temptation” for governments to use emissions pricing revenues inefficiently.

“The goal of climate policy is to transition our economy away from devices that burn coal, oil, and natural gas. We already have all of the technologies and energy forms needed to achieve near-zero emissions economy-wide,” the report said. The transition, however, will increase costs of energy services like heating, vehicle use, and electricity.

Because electricity prices vary significantly between provinces and regions, data showed it would be best for the federal government to implement the flexible regulations along with “modest assistance” to a few provinces with high electricity costs.

As stated early on in the report, “Carbon pricing is a choice, not a necessity, for effective emissions reductions.”