Climate change was one of the most contentious issues in the 2019 federal election. Canadians are clearly concerned about the carbon footprint that we’re leaving.
While the barriers preventing work and travel amid COVID-19 give the earth a break momentarily, inevitably this is not sustainable. A solution that effectively reduces emissions in Canada is still yet to be fully seen.
Depending on where you live, our country can feel like two different worlds on the subject. Generally, people in Fort McMurray, Alberta would have a different opinion than those in Toronto.
On one hand, Canadians are pumping out oil by the barrel, and on the other, they’re scoffing when an apple core is thrown in the garbage and not the green bin.
For McGill professor Chris Ragan, bridging the ‘drill baby, drill’ people and the ‘tree huggers’ is possible if both camps are willing to compromise.
“We’ve got a developed economy that uses a lot of fossil fuels. That’s very common, but we are also one of those few economies that produces a lot of fossil fuels. And I think we actually can have it both ways,” said Ragan.
For the Director of the Max Bell School of Public Policy, the answer is ‘carbon pricing.’
For many Canadians, including Alberta Premier Jason Kenny and Ontario Premier Doug Ford, this is likely heard like a swear word. While for Ragan he hears ‘carbon pricing’ as a melodious tune that the rest of the country has yet to learn the words to.
In a previous life, as a renowned economist, Ragan would have never considered himself as an environmentalist. It wasn’t until 2009 when serving as a visiting economist at Finance Canada that his eyes were opened to just how Canada was combatting pollution. One of the tasks that he ended up working on in his 18-month term was Canada’s climate policy.
“As I spent a lot of time talking with people at Environment Canada and other parts of the government and in finance Canada about the policies that we were developing, I came to the view that we were developing policies at the time, they weren’t as good as they could have been,” said Ragan.
“They were probably higher-cost ways to reduce greenhouse gas emissions than they needed to be. And the government ended up cancelling those policies. And I went through a bit of a kind of a policy depression,” Ragan added.
While the McGill professor was initially most excited to help the government respond to the economic collapse of 2008, the inefficient and postponed environmental policies were what became his new passion.
“I actually thought that maybe having a bunch of smart, independent, economically-minded people that could think about better policies, both for the environment and for the economy, would be a good thing,” Ragan said. “And so that was really the beginning of the notion that was eventually created: the Ecofiscal Commission.”
Following his stint at Clifford Clark, Ragan went on to lay the groundwork of recruiting other economists like Stewart Elgie (University of Ottawa) and raising the necessary funds for such a project. By 2014 Canada’s Ecofiscal Commission was launched.
Until the end of 2019, the team was in the public eye, writing reports, and dialoguing with any government that wanted to discuss price pollution, and most importantly, climate change.
Early on, Ragan’s team was swayed that the most effective way to address climate change was through carbon pricing.
This means that there is an extra tax that the consumer pays when buying products releasing high carbon emissions. In applying this, the hope is to create a financial incentive for polluters to reduce their emissions.
“The point of carbon pricing isn’t to make people poor. The point of carbon pricing is to get people to change their behaviour,” Ragan explained. “If gasoline becomes more expensive then people over time will decide to go for smaller, more fuel-efficient vehicles. If home heating fuel becomes more expensive, people will decide to turn down their heat and put on an extra sweater.”
Consumer behaviour is the first principle, the second is consumer reward. Carbon pricing also funnels money back to the user through rebates that the government generates from applying the tax.
Canada’s Ecofiscal Commission is quick to defend just how such a measure impacts the economy and environment.
“We think about the role that prices play in a market economy and how people respond to price changes, whether you’re a consumer or a producer, and how price changes can drive innovation,” explained Ragan.
Despite the widely and deeply studied data, some Canadians have a tough time rationalizing that applying a tax and regaining that money could have a purpose. To them, increasing cost doesn’t seem like a good enough deterrent to change consumer behaviour, while economists are in unanimous agreement that this is the best method.
“I know no economist who disputes the claim that a carbon price will reduce emissions at a lower cost than alternative measures,” said Ragan.
Currently, there is a carbon tax in effect in Canada. Beyond that, provinces have the freedom to implement environmental policies at their discretion.
In Ontario, for example, shortly after being elected Premier in 2018, Doug Ford scrapped carbon pricing that Kathleen Wynne’s government had previously introduced.
However, as part of the federal government’s climate change plan, there is a national standard of carbon pollution that provinces must not be above. Later in 2019, Premier Ford challenged this notion that Ontarians should not have to adhere to carbon taxing. Yet, the Ontario Court of Appeal concluded that it was within Parliament’s powers to put a price on carbon pollution and to collect revenues from polluters in provinces.
Among the other strategies to reduce greenhouse gases includes subsidies which reward Canadians with rebates for purchasing electronic vehicles, for instance.
Despite Ecofiscal’s proven research that carbon pricing is far better economically and environmentally; at first glance, an immediate $5000 rebate appears more beneficial to the consumer. It’s easier for the average person to dissect.
“This is a problem and it’s taken me a while to realize that economists are not normal people. I mean we think about prices all the time,” said Ragan.
The other problem is Canada’s failure to communicate how carbon pricing works. Evidently, it takes more than a soundbite to fully unravel.
“You can build that pipeline and produce that oil and send it off to the thirsty world at exactly the same time that you are putting aggressive carbon pricing policies in place in Canada,” explained Ragan. “Those two things, 100% consistent climate policy is all about our demand for oil and pipelines.”
Currently, carbon pricing has received support from all different political parties, even from notable conservatives like Preston Manning, and Patrick Brown, yet on the whole it remains a divisive issue.
Ragan looks to the day when it will become accepted trans-nationally like it is in countries such as the United Kingdom. In the meantime, if carbon pricing is anything like free trade was in Canada, it will just take Canadians time to flush out its implications around the dinner table before history repeats itself.
Photo: “The point of carbon pricing isn’t to make people poor. The point of carbon pricing is to get people to change their behaviour,” explains McGill professor Chris Ragan.