Editor's note: The following blog post is part of a series written during a conference on carbon pricing held at Wesleyan University in Connecticut late last year.
When James Hansen says there's a "silver bullet" in the fight against climate change, I'm inclined to keep listening.
The author, professor and NASA climatologist is world-renowned for both his scientific expertise and his outspoken views on the need for world governments — particularly his own — to take strong and swift action to deal with climate change by curbing fossil fuel use. He's also well aware of the economic forces driving nations to develop their natural resources.
"You can't force other countries not to develop their [fossil fuel] resources," Hansen said late last year, during his keynote address at a weekend conference at Wesleyan University in Connecticut. "The only silver bullet is a price on carbon."
Other leading thinkers on climate policy would be quick to challenge the concept of a "silver bullet" to deal with such a complex problem; however, putting a price on greenhouse gas pollution is generally considered to be the centerpiece of any serious plan to reduce emissions in Canada. Perhaps silver buckshot would be a more appropriate metaphor for what's needed to stop growing greenhouse gas pollution in its tracks — referring to a set of solutions that includes a carbon price, but also complementary regulations and investments working together to produce the needed results.
As Hansen's comment suggests, a carbon price can help shape what types of resources companies choose to develop, and at what pace. If the full costs of fossil fuel production — including the costs of managing greenhouse gas pollution — are factored in, the market will make it more attractive to develop lower-carbon energy resources, or find innovative ways to limit greenhouse gas pollution.
A meaningful carbon price is especially critical in Canada, where the oilsands represent the fastest growing source of greenhouse gas emissions on Canada's horizon — and, if expansion continues as planned, potentially a real barrier to meeting the government's 2020 emissions reduction target.
The economic case for putting a price on carbon in Canada has been made time and time again. A recent version comes from the federally appointed National Roundtable on the Environment and the Economy (NRTEE) in their "Parallel Paths" report. (Those who missed our response to the report can catch up here.)
NRTEE chair Bob Page previously explained the value of a carbon price this way: "We see an opportunity for Canada to position itself for a sustainable economic recovery based in part on a unified, carbon pricing policy that prepares us positively for the transition to a low-carbon global economy. The time to act is now."
That was in 2009, deep into the recession — and potentially the worst time, from a communications point of view, to have to "sell" policies that would kick-start a major change to the way our economy produces and uses energy.
Yet nearly two years later, public support for an economy-wide carbon price in Canada is strong, and industry leaders have already begun planning for a time in which a cap-and-trade system or a carbon tax is up and running. In fact, a recent report by Sustainable Prosperity indicates that virtually every major resource-based industry in Canada supports a carbon price, and many of those industry leaders are more concerned about the uncertainty resulting from the lack of carbon pricing policy, than about minimizing the economic impacts of a price on greenhouse gas emissions.
While the federal government has yet to move forward with a national carbon pricing system, some provinces are taking action to price emissions in their jurisdictions. B.C. provided a potential model for the country when it implemented its carbon tax in 2008. As one of the most comprehensive carbon taxes in the world, the tax applies to almost three quarters of provincial emissions and is currently set at $20 per tonne of carbon dioxide (although the price would need to reach $200 per tonne by 2020 to effectively limit emissions). Revenues from the carbon price are used to reduce other taxes and provide some protection to low-income families.
Alberta also has a form of carbon pricing in its baseline and credit system — but given a price of just $15 per tonne of greenhouse gas emissions (payable only on emissions that exceed a firm's intensity targets), the price is far too low to slow the growth in Alberta's emissions. Further east, Ontario and Quebec could begin limiting emissions as early as next year if they move forward with their proposed participation in the Western Climate Initiative's cap-and-trade system. (B.C. is the other Canadian partner ready to participate in that system in 2012.)
The incentives for putting a price on carbon pollution and cutting greenhouse gas emissions in line with our targets are compelling: pricing carbon would create jobs for developers and suppliers of "clean energy" technologies, while raising revenue that could be invested to ensure Canada is ready to participate in a carbon-constrained global marketplace.
It seems one critical factor that's missing, both here and south of the border, is political will.
"There's a huge gap between the rhetoric and the reality," Hansen said. "The politicians say the right words — they say 'we have a planet in peril'."
Canada's environment minister, Peter Kent, described climate change in a recent speech as "one of the most serious environmental issues facing the world today." Unfortunately, as Hansen pointed out, there's still a gap: the federal government's current plans for climate policies don't convey the same level of concern.
It's now time for our leaders to back their climate rhetoric with action. On its own, a price on carbon may not be quite the pollution-cutting, economy-boosting, polluter-penalizing "silver bullet" Hansen argues it could be. But it is an essential ingredient to building a strong, sustainable Canadian economy in a world where our economies will increasingly need to be low-carbon to compete.
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