Carbon Pricing

Policy Discussion Brief

Glen’s Policy Discussion Briefs are a springboard for generating ideas about important policy issues. They provide an overview of an issue, like food nutrition and food security, and describes options for responding, including how Glen could implement policy as leader of the Green Party of Canada. To engage in the conversation, email us at policy@glenmurray.ca or register for a town hall Zoom call at https://www.glenmurray.ca/.

The issue: Carbon pricing

 As Greens, we accept carbon pricing is one option to lower greenhouse gas emissions. Greens also know, however, that carbon pricing is a necessary but insufficient condition of a comprehensive climate-change strategy. 

Combined with regulation, carbon pricing must support deep and economy-wide greenhouse gas (GHG) reductions, ensure polluters pay their fair share, and provide dividends for households and society. 

The federal Government’s current approach to carbon pricing includes a consumer charge and tax rebate, and a charge on industrial emissions above a set level (the performance standard).  Households in provinces regulated under the federal carbon pricing system receive a tax rebate equal to or exceeding what they pay in carbon charges on fuel. 

Companies operating under the federal system that exceed their performance standard have credits they can sell to companies doing worse than their performance standard. Provincial carbon-pricing systems approved by the federal government similarly treat industrial emissions (although performance standards may vary, trading of credits is consistent). In other words, emissions trading is part of Canada’s carbon-pricing system, whether regulated under federal or provincial systems. The national carbon-pricing system is a start, but is not strong enough to cut Canada’s greenhouse gas emissions by more than half in ten years, and get to zero within 30 years. 

To achieve science-based greenhouse gas targets, we need regulations that are more stringent, while we protect consumers and generate social dividends.

Glen Murray says

“Greens are calling for legislation committing Canada to reach zero greenhouse gas emissions by 2050, broken into five-year increments. That is a national and declining cap on greenhouse gas emissions. Greens also support maintaining the existing federal system that includes emissions trading and revenue recycling to protect consumers. We also need to ensure carbon-pricing revenue generates social dividends. I want to talk to Greens about how best to do that.” 

“Canada can fill gaps in the social safety net, including providing guaranteed livable income, and transform our economy from a make-use-dispose system to a make-use-recover system. We need a polluter-pay carbon-pricing system that generates rebates to consumers but also spurs innovation and generates social dividends.”

 

“As Minister of the Environment and Climate Change in Ontario, I put in place a cap-and-trade system. It wasn’t perfect, no policy ever is, but executing that policy gave me the experience Canada needs now to achieve deep, sustained greenhouse gas reductions.”

What would Glen do? 

Glen proposes to expand Green Party policy to ensure carbon pricing generates household and social dividends. Current policy calls for maintaining the federal carbon-pricing system with revenue neutrality achieved through carbon fee and dividend. 

Consistent with Green Party policy, I would cancel fossil fuel subsidies, implement legislated greenhouse gas (GHG) reduction caps, create an annual carbon budget, adopt a "Drawdown" detailed implementation plan for national GHG reductions, phase out polluting technologies and fuels and create zero-emissions vehicle, energy and building mandates with a schedule for technology transition. 

I would also introduce market mechanisms to accelerate the rate of GHG reductions as outlined by the World Bank in the reports of the Carbon Pricing Leadership Coalition of which I was a founding member. I would press for rules-based, ecologically sound international mechanisms under Article 6 of the Paris Agreement.

To work effectively as an essential part of a GHG reduction strategy, a carbon price or market instrument must include the eight “E”s of GHG reduction mechanisms:

  • Economical: Affordable to all and provides good value, enhances prosperity and good careers. Drives the efficient deployment of capital, talent, and technology. Improves per capita gross domestic product (GDP) and household incomes.
  • Equitable: Fair and considerate of ability to pay.  Able to provide for the needs of vulnerable and marginalized communities and works to address the UN social development goals (SDGs).
  • Effective: Provides GHG reduction certainty.  Can achieve the required reductions within the specified time-period as determined science. 
  • Efficient: Uses the least amount of resources at the lowest cost possible to achieve the greatest amount of GHG reductions.
  • Electable: It is political saleable and supportable and enjoys reasonable support in the public square.
  • Environmental: The system does not increase other types of pollution and addresses the need for regenerative processes and development and the restoration of ecological services and health.
  • Enabling: Drives innovation and productivity. Creates pools of capital and pushes market demand for clean technologies by removing barriers, and countering and eliminating perverse subsidies. 
  • Empowering: The social dividend must be more than sending tax rebates and/or cheques to Canadians. Canadians reap greater benefits from social dividends. We need the dividend to generate benefits from investing in active transportation, renewed public housing, green jobs and careers, rapid public transit, retrofitted homes, clean energy and more. The massive transformation needed to achieve zero-greenhouse gas emissions, and be poverty-free Canada requires greater dividends than an occasional rebate cheque or tax credit.

The Green Party is an evidence-based party. The evidence shows policies, including the federal carbon-pricing system, are not driving emissions down to levels needed for a safe landing on climate change. We need to rethink our approach and adopt more effective and economically positive approaches. Carbon budgets and effective carbon-pricing strategies that generate social dividends and a circular economycan be part of our new approach. 

We need to align climate plans with wellness outcomes, recovery and efforts to complete the social safety net to provide guaranteed liveable incomes and pharmacare. We can do that and value years of input from businesses, Canadians, and experts. We can do better than Stephen Harper’s greenhouse gas targets and ineffective Liberal climate plans. Let’s open a conversation about effective solutions based on evidence and experience. 

Background

The three tables below show that Canada has a dismal record of setting pollution reduction targets and failing to meet them. Canada’s most recent greenhouse gas inventory report shows emissions up 15 million tonnes in 2018 over 2017 and that since 2005 emissions are essentially unchanged (Table ES-4).  

The country’s biennial report to the United Nations shows we are not on track to reach the 2030 target of 30 per cent below 2005, let alone getting on track to our fair share of 60 per cent by 2030 (Table 5.27). With current measures in place, Canada will only be 16 per cent below 2005 by 2030.  Canada needs to do more, much more to get on track.

We need a climate law that establishes our carbon budget and ensures we implement plans to stay within our five-year allocations. Flexible regulation, including carbon pricing as one part of a comprehensive climate plan, is essential to harnessing innovation and financing economic transformation.

National Inventory Report 1990–2018: Greenhouse Gas Sources and Sinks in Canada, p.11.

Canada’s Seventh National Communication on Climate Change and Third Biennial Report—Actions to meet commitments under the United Nations Framework Convention on Climate Change (2019), p. 150.

Table 5.27 displays projected provincial and territorial GHG emissions from 2005 to 2030. The projected emissions reflect a diversity of economic factors and government measures to reduce GHG emissions. These include energy efficiency and renewable electricity programs, carbon taxes or levies (i.e., British Columbia, Alberta, Ontario, and Québec), regulatory measures, and legislated renewable electricity targets.

Canada’s Seventh National Communication on Climate Change and Third Biennial Report—Actions to meet commitments under the United Nations Framework Convention on Climate Change (2019), p. 153.

A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life. http://www.wrap.org.uk/about-us/about/wrap-and-circular-economy#:~:text=A%20circular%20economy%20is%20an,end%20of%20each%20service%20life.

Green Party policy

I support Green Party policy as it evolves to accommodate the latest scientific evidence and implementation experience.

2019 Green Party of Canada Platform

Maintain a broad-based, revenue neutral carbon fee on all sources of carbon dioxide pollution. Revenues from the carbon fee would be returned to Canadians as a dividend.

Mission Possible (2019)

  1. Declare a Climate Emergency
  2. Establish an inner cabinet of all parties 
  3. Set stringent new targets: 60 per cent GHG reductions against 2005 levels by 2030; zero emissions by 2050. 
  4. Assume leadership
  1. Respect evidence: Restore funding of climate research within the Government of Canada and in the network of universities that received financial support before 2011. 
  2. Maintain carbon pricing:  Revenue neutrality will be achieved through carbon fee and dividend and we will eliminate all subsidies to fossil fuels. 
  3. Ban fracking: No exceptions. It destroys ecosystems, contaminates ground and surface water, endangers our health and it’s a major source of GHGs. 
  4. Green the grid: By 2030, remove all fossil fuel generation from our national east-west electricity grid.  
  5. And modernize the grid: By 2030, rebuild and revamp the east-west electricity grid to ensure that renewable energy can be transmitted from one province to another. 
  6. Plug in to EVs: By 2030 ensure all new cars are electric. By 2040, replace all internal combustion engine vehicles with electric vehicles, working with car makers to develop EVs that can replace working vehicles for Canadians in rural areas. Build a cross-country electric vehicle charging. 

Re-imagining our Future (2020): Climate lessons from COVID-19

  • Canada needs a Chief Climate Science Officer to whom we defer, just as political leaders have deferred to chief health officers in every province and federally.
  • Scientific advice is not negotiable.
  • Set Canada’s required 2020 [update to its] GHG reduction target for [2030] at a level that reflects Canada’s fair share of holding global average temperature increase to no more than 1.5°C, and take into account our emissions relative to other countries.
  • Pass legislation committing Canada to reaching net zero carbon by 2050 with five-year increments.
  • Canada needs an all-party Climate Cabinet, working together as we did during the pandemic.
  • Canada needs a Just Transition Act to protect oil and gas workers as they move to other jobs and careers. 

Learn more

International Emissions Trading Association (IETA): https://www.ieta.org/

Canadian Institute for Climate Choices: https://climatechoices.ca/taking-stock/

Intergovernmental Panel on Climate Change Emissions Pathways for 1.5 degrees: https://www.ipcc.ch/site/assets/uploads/sites/2/2019/02/SR15_Chapter2_Low_Res.pdf

Ecofiscal Commission: https://ecofiscal.ca/reports/10-myths-about-carbon-pricing-in-canada/

Corporate Knights: https://www.corporateknights.com/reports/green-recovery/building-back-better-bold-green-recovery-synthesis-report-15934385/

Circular economy

Kate Raworth:
https://www.kateraworth.com/doughnut/# 

http://www.wrap.org.uk/about-us/about/wrap-and-circular-economy#:~:text=A%20circular%20economy%20is%20an,end%20of%20each%20service%20life

Project Drawdown: https://drawdown.org/

Carbon Pricing Leadership Coalition: https://www.carbonpricingleadership.org/

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