Exclusive: While the gridlocked U.S. political process freezes progress in the fight against global warming, Canada is considering a national tax on carbon emissions to give a boost to renewables, writes Jonathan Marshall.
By Jonathan Marshall
Canada can take credit for many great innovations, from insulin and peanut butter to Trivial Pursuit and basketball (Dr. James Naismith was Canadian). But one of its best may be a bold new nationwide policy of taxing carbon emissions to fight global warming.
The new plan, applauded by environmentalists, requires provinces and territories to begin imposing a tax of at least $10 (Canadian) a ton on carbon emissions by 2018, rising to C$50 by 2022. (In the United States, a tax of $20 per ton of emissions would raise the price of gasoline by about 20 cents per gallon.)
It’s a tried-and-true — if highly controversial — means of creating market incentives to shift consumer behavior and promote innovations that are needed to rescue humanity from the dire prospects of climate change.
More than a dozen leading Canadian CEOs — including a former president of Shell Canada — endorsed the proposal, calling it “the most economically effective way to reduce emissions and stimulate clean innovation – which will be critical to Canada’s success in a changing global economy.”
The United States has ducked the issue ever since anti-Obama Republicans and industry-funded lobbyists killed national legislation to develop a “cap-and-trade” system to limit unsustainable emissions from the burning of fossil fuels for electricity, transportation, industry and other sectors of the economy. House Republicans followed up in 2013 by voting to prohibit the government from putting any kind of price on carbon emissions.
Instead, President Obama has had to fall back on clumsy regulatory initiatives, still tangled up in the courts, to press states to reduce their carbon emissions by unspecified means.
Many experts across the political spectrum, including conservatives, business leaders and environmentalists, agree with four former Republican heads of the Environmental Protection Agency that “A market-based approach, like a carbon tax, would be the best path to reducing greenhouse-gas emissions.” They lamented that such an efficient policy was “unachievable in the current political gridlock in Washington.”
Like them, President George W. Bush’s former chief economic adviser, Harvard University’s Greg Mankiw, declared that taxing carbon emissions to curb global climate disruption is “largely a no-brainer.”
“One of the beauties of a carbon tax, for me, is that it makes a lot of other policies [and regulations] less necessary,” Mankiw told an interviewer last year. “You let the market work it out. . . A carbon tax automatically incentivizes low-carbon forms of energy, so . . . wind and solar and technologies we haven’t even heard of yet are going to have an advantage relative to coal. People will automatically start thinking that electric cars are better than gas-powered cars. . . [But] the private market won’t do the right thing unless we put the price on this scarce resource.”
Carbon emissions are now priced, one way or another, in Finland, Great Britain, Ireland, Sweden and the state of California. Carbon taxes also had a brief but effective life in Australia, until repealed in 2014.
Success in British Columbia
Canada is home to one of the greatest success stories for carbon taxes. In 2008, British Columbia, the country’s third-largest province, introduced a tax on carbon dioxide of C$10 per ton, which rose to C$30 by 2012. It covers all major fuels, including natural gas, coal and gasoline.
To make the tax political palatable, even popular, the provincial government cut business and personal income tax rates and provided tax credits for many low-income residents. By 2012, British Columbia had the lowest personal income tax rate and one of the lowest corporate income tax rates in Canada.
The environmental results were striking. Over the period 2008 to 2013 (the last year for which data are available), per capita carbon emissions plummeted 13 percent compared to the baseline period 2000 to 2007. That drop was three-and-a-half times greater than the reduction across the rest of Canada.
Following introduction of the tax, British Columbia enjoyed slightly faster economic growth than the rest of Canada as well. And a team of economists concluded in 2015 that the net impact of the tax on income distribution in the province was “highly progressive.”
For the 10 years that Canada was ruled by the Conservative Party, which drew much of its funding from Alberta’s oil and gas industry, the national government rebuffed every call to emulate British Columbia’s success.
Since the Conservatives were trounced in the last national elections, however, “ever-wide cracks” have developed “in the Conservative facade of opposition to a proactive climate change strategy,” according to Toronto Star columnist Chantal Hébert.
Ontario’s conservative leader, Patrick Brown, told a congress of party delegates in March, “Climate change is a fact. It is a threat. It is man-made. We have to do something about it, and that something includes putting a price on carbon.”
Beholden to the oil, gas and coal industries, and billionaire petrochemical producers like the Koch brothers, U.S. Republican leaders continue to insist, with Donald Trump, that global warming is a “hoax” or a matter of natural weather changes. The overwhelming consensus of climate scientists, of course, refutes their toxic disinformation and discredits their political obstructionism.
Scientific facts may not sway Washington, but if Canada makes as great a nationwide success of carbon taxes as British Columbia achieved, its example may yet trickle down south to the United States. Then, if history is any guide, Americans will embrace the policy as a smart innovation that was invented in Canada first. Just like basketball.
Jonathan Marshall is author or co-author of five books on international affairs, including The Lebanese Connection: Corruption, Civil War and the International Drug Traffic (Stanford University Press, 2012). Some of his previous articles for Consortiumnews were “Obama Flinches at Renouncing Nuke First Strike,” “Dangerous Denial of Global Warming,” “How Arms Sales Distort US Foreign Policy,” “The US Hand in the Syrian Mess”; and “Hidden Origins of Syria’s Civil War.”