‘Some Baloney’ in Claim That B.C. Will Pay Higher Carbon Price
British Columbia Premier Christy Clark is talking “some baloney” when she claims her constituents will pay twice as much in carbon taxes as people in Ontario, Canadian Press concludes in an assessment of Clark’s comments during the recent First Ministers’ climate meeting in Ottawa.
“You can’t have a national carbon tax where the westerners who produce the energy are paying double what the people in central Canada are paying to use the energy, in terms of an additional carbon tax,” Clark said at a crucial point in negotiations toward the Pan-Canadian Climate Framework. But on CP’s five-point scale, that comment earned a rating of “some baloney”, at the mid-point between a completely accurate statement and a proposition that is “full of baloney”.
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Clark’s ploy worked: In a last-minute concession to save the climate deal, Prime Minister Justin Trudeau agreed to an independent assessment of provinces’ and territories’ carbon pricing systems in 2020, “when the rest of the country will have theoretically caught up to the $30 per tonne of emissions that is already imposed by British Columbia,” the news agency reports. “But environmental economists say it’s misleading and simplistic to compare only the price per tonne of emissions under the two very different methods of pricing carbon.”
The grain of truth in Clark’s cost comparison, University of Ottawa environmental economist Nick Rivers told CP, is that when the national floor price on carbon hits $30 per tonne in 2020—the same amount B.C. and Alberta will be charging—permits under Quebec’s carbon cap and trade system are expected to cost $16 per tonne. But “it’s a bit misleading to compare these two systems just on that metric,” he said, given the differences in the way the two pricing systems will contribute to the country’s current goal of cutting emissions 30% by 2030.
Under a cap and trade regime, a government puts a limit on the emissions it will allow and assigns them a price per tonne. With a lower cap, the number of available permits falls and their market price rises.
Because Quebec and Ontario have already taken other steps to cut their emissions—and Ontario ratepayers, in particular, are said to be paying for those efforts through higher hydro bills—they can afford to adopt relatively relaxed cap-and-trade prices and still hit their carbon targets. B.C. could adopt a similar system if it wanted to, but Rivers explained that would end up costing the province more than its current carbon tax.
“The reason she doesn’t is that emissions in B.C. are growing much faster than they are in the rest of Canada, and if she did adopt a cap-and-trade plan in B.C., it would actually result in a higher carbon price,” Rivers said of Clark. “The other way to look at it is regions where emissions are growing really fast need…a stronger policy to reduce emissions than regions where emissions are not growing so fast.”
EnviroEconomics President Dave Sawyer agreed that “Ontario and Quebec have designed a system to generate more (emission) reductions at cheaper cost”—and that if Clark is concerned about competitiveness with other provinces, she can follow suit while still shielding big industrial emitters from costs that are high enough to harm their operations.
“Sure, it looks like B.C. is going to be paying, let’s say, one-third more by 2020,” Sawyer said. But “there are choices the British Columbia government has made [that Ontario hasn’t] that are going to increase the cost on their business…So it’s not such a simple comparison.”