Tracy Snoddon's commentary on the Globe and Mail website this morning argues that the economic modelling study we published with the David Suzuki Foundation this fall ignores the "basic truth" that climate policy requires co-ordination between the federal and provincial governments.
Snoddon erroneously claims we advocate that "Ottawa" spend the bulk of the money collected through carbon pricing, the central policy needed to cut emissions.
In fact, we never said that carbon price revenue would all go to Ottawa before being redistributed. We deliberately avoided specifying which order of government would implement the various policies in our package, because our focus was on the nature and strength of the policies, not who will implement them. Indeed, the macroeconomic model we used does not separately represent federal and provincial governments.
Snoddon also states: "This combination of carbon pricing and revenue disbursement leads to a substantial wealth drain-out of energy-producing provinces. Alberta would experience a significant decline in its economic growth."
It seems she is confusing wealth transfer with a shift in private investments. In fact, we took care to minimize what she calls "wealth drain-out." In our main scenarios, the "Canada Goes Further" ones, 90% of the carbon price revenues stay in Alberta — in part because we reimburse households for energy cost increases on a regional basis. It's true that some private investment migrates from Alberta to other regions, resulting in a reduction in economic growth in Alberta (although it would still have the fastest growth in Canada). If we put a price on emissions in a market economy, private investments are going to shift to lower-carbon activities, which may initially have a different geographic distribution. But that's different from a "wealth transfer" — a term that suggests Albertans will be handing over money to others.
Of course Snoddon raises a crucial issue, which is how to get federal and provincial governments to work together to implement adequate climate policy. But there's no need to misrepresent our study in the process.
