Saskatchewan Premier Brad Wall up against a Wall of Carbon Tax

by Amy Antonini

On November 20th, 2015, Canada’s Prime Minister, Justin Trudeau, attended the 21st Annual Conference of Parties, better known as COP 21 or the 2015 Paris Climate Conference.  In Canada’s National Statement, Trudeau promised that Canada, as a country, can and will do more to address the global concern of climate change, stating: “[…] we will support and implement policies that contribute to a low-carbon economy, and this will include carbon pricing […]” and, “[…] very importantly, we will work with our provinces, territories, cities and Indigenous leaders who are taking a leadership role on climate change.”

The Liberals ratified the Paris Climate Change Agreement on October 5th, 2016, before a deal was met with provinces and territories.  Trudeau has officially announced his plan for carbon pricing, and the reaction among MPs and Premiers is decidedly mixed.

What is plan of attack for carbon emissions?

Trudeau’s plan starts in 2018 with a “floor price” at $10 a tonne for carbon pollution.  By 2022, Trudeau will increase that price to $50 a tonne.  Trudeau provides no concessions for provinces stating that they must implement a carbon policy by 2018 or the government will do it for them.  He does provide provinces with two options; 1) Provinces can enforce their own carbon pricing that matches or surpasses the federal government’s nationally proposed “floor price,” or 2) implement a trade and cap system.  Any revenue collected will be channeled back into the provinces.  The plan is aimed to reduce pollution, propel Canada into a clean growth economy and create a surplus of jobs for the Canadian middle class.

Who is upset?

Well… everyone.  It seems the Liberal government could not please anyone with the new plan.  Green Party Leader, Elizabeth May, is appalled that the Liberals are not exceeding Harper’s previous emission targets, she said, “this news is nothing short of a disaster for the climate.”  Former NDP leader, Thomas Mulcair was upset that the government struck down an amendment to include Indigenous governments in the fight against climate change.  He said that the Liberal government was not only disregarding effective action against climate change, but they were sidestepping their promise to consult with First Nations. The Conservative Party also attempted an amendment to cease the implementation of the plan, but was shot down in the House during the vote.  It seems that the only support the Liberal government has garnered is from international actors that view the Paris climate agreement as revolutionary.

Saskatchewan’s premier, Brad Wall has been noticeably vocal in his disdain with Trudeau’s federal government’s carbon tax policy and his feelings of betrayal by the PM.

brad-wall-tweet

Wall says that this new carbon tax policy will cost Canadian families at least $1,250 a year and disrupt Saskatchewan’s plan to export high-quality food products to international consumers.  He also suggests that the plan will render Saskatchewan useless as a destination for business and affect the oil and gas sector, sending companies south of the border for business.  Additionally, Wall claims $2.5 billion dollars will be siphoned from Saskatchewan’s economy.

However, there is some truth in that it might affect Saskatchewan’s competitiveness, but the damage would depend on the sector.

Do Brad Wall’s claims have merit?

The Baloney Meter, a project of the Canadian Press that examines the level of accuracy in statements made by politicians, took on the case.  They say that according to experts, $2.5 billion would be generated from a carbon tax; however, because the Liberal government promised to keep all revenue in provinces and territories, it would not leave Saskatchewan.  In fact, Saskatchewan could do what it wants with the money. It could even return it to Saskatchewan taxpayers.  However, there is some truth in that it might affect Saskatchewan’s competitiveness, but the damage would depend on the sector.

David Suzuki, Canada’s favourite environmentalist, says that Wall could be easily described as a climate change denier.  Suzuki contests that Wall is unaware of the impacts of climate change even though his constituency is.  He says farmers, of which Saskatchewan is known for, can already sense the effects of climate change, and it’s only getting worse.  Also, he adds Canada’s pipelines, tar sands expansion and expanding coal sector will continue to contribute to the detrimental effects of climate change.

So what does Wall suggest?

To begin, Wall’s position is that there is no evidence that a carbon tax policy works.  In a special to the Globe and Mail he argues that Trudeau’s plan will do little to combat climate change and simultaneously will take jobs away from citizens.  Particularly, Saskatchewan’s economy is based on trade-exposed industrial sectors and its GHG emissions are a result of propelling products on the world market.  He contests that Saskatchewan’s industries, such as agriculture and energy, will be disproportionately affected by the tax.  He argues, Saskatchewan’s biggest exports, such as potash, are aimed at countries that will not impose a carbon price, and are driven to import entirely by price.  The tax will increase the price and see Saskatchewan’s exports fall in a highly competitive market.  Wall ends his editorial with a quick note: “Carbon-capture technology works.  Carbon taxes don’t.”

What does work?

Carbon Tax

Pricing carbon has been hailed as the preferred strategy to encourage governments to crack down on pollution.  It has been considered an effective method to have companies and households choose greener choices.  While making pollution more expensive, it also works to make clean energy more affordable.  Sweden is a perfect example of the proper implementation of carbon taxing.  Beginning in 1991, Sweden introduced a carbon tax to combat greenhouse emissions.  Sweden now sees reduced emissions by 20%.  Consistently, critics argue that carbon taxes detrimentally affect the economy, however, Sweden’s carbon tax of $140 per tonne has not negatively affected the economy; in fact, by 2006, Sweden’s economy had grown by 44%.

carbon-tax-pic

 

Cap-and-trade

In the cap-and-trade strategy, governments start by implementing a cap on the overall level of carbon pollution from industry.  As time passes, that cap decreases to reach a certain pollution goal.  It thus attempts to align industry’s greenhouse emissions to regulations and pressures polluters who exceed their emissions to purchase unused emissions from other companies.  This creates room for firms to reduce emissions and in turn sell pollution quotas.  It works as an incentive for companies to discover new ways to implement clean energy.  The United States implemented cap-and-trade in the 1980’s to combat sulphur dioxide and nitrous oxides, ingredients for acid rain.  Since implementation, acid rain-forming emissions have decreased by nearly half leading to a cleaner environment.

cap-and-trade-pic
Source: CBC News

Carbon Capture and Storage (CCS)

There is considerable research that points to CCS as an alternative to climate action.  CCS involves taking carbon dioxide and storing it in places that will not enter the atmosphere, normally the ground.  However, CCS has been criticized for being expensive and high risk.  Due to its demand for coal, it could actually end up increasing emissions.  It has been highly touted as a response to climate change, however, the technologies involved are not yet fully formed.  There are several technological risks and costs associated with this strategy that have not been tested or analyzed.  While it has been considered an alternative to carbon tax, there is nothing that actually proves it will work, in fact, several states, such as Norway, the U.S., the E.U., and the United Kingdom have pulled out of CCS projects.

Wall is valiant in his efforts to protect the citizens of Saskatchewan.  Carbon tax does have the potential to disproportionately affect low-income households.  However, if revenue is siphoned back to families, it can offset higher prices.  CCS has potential, but needs further study, as it could be environmentally and financially risky.  Currently, it seems that a carbon tax is the best option to reduce Canada’s emissions.

Is there some other way to please Brad Wall?

Christ Bataille and Dave Sawyer, from EnviroEconomics, think they have the policy solution.  They know that for Canada to reduce its emission by 2030 the western energy producing provinces need to be on board and the solution has to address economic performance and regional fairness.  They suggest that a hybrid model, “a broad-based carbon tax paired with output based allocations and trading opportunities for large industrial emitters,” will lighten the economic strain on Saskatchewan while only slightly affecting other provinces.  In fact, their model suggests that it would improve economic performance in Saskatchewan by 4.23% and encourages the provinces and the federal government to work together.

Speaking of walls, does President-elect Trump, trump Canada’s carbon tax?

To our South, President-elect Donald Trump has gone on the record saying that climate change is a hoax and that the U.S. will rightfully “cancel” the Paris Climate Agreement.  Does Trump’s win have an effect on Canada’s carbon tax policy?  It certainly cements premier Wall’s position on a carbon tax as he recently stated: “It makes no sense for our federal government to push ahead with imposing a national carbon tax, when our biggest trading partner – and our biggest competitor for investment and jobs – is not going to have one.”

Critics argue that Canada’s carbon tax implementation comes with significant costs across the country and it makes no sense to move forward if the U.S. will continue to increase carbon emissions through new economic policies.  Policymakers in Ottawa are scrambling to come up with something that will not rattle the Trump administration.

How does Canada move forward from here?  Do they attempt to influence the U.S. in aligning against the fight against climate change?  Do they sit back and just keep Canada’s neck of the woods clean?  The answer is up in the air, but what is certain is that in regards to carbon emissions and climate change, it better be quick.

 

Amy Antonini is an MA candidate at the Norman Paterson School of International Affairs specializing in international development policy. Her research interests include demographics, empowerment of women in developing countries and climate change. She was born and raised in Saskatchewan.

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