A rough guide to the Conservatives’ carbon tax farce

Have you been afraid to ask? Here’s what you need to know

Herein, everything you need to know to understand the Harper government’s latest attempt to attack the NDP.

So what is the basic issue here?

In terms of public policy, this is a debate about putting a price on carbon. There are two ways to do this. You can directly tax major emitters for the carbon they release into the atmosphere. This is generally referred to as a “carbon tax.” Or you can set a limit on the amount of carbon a company can release into the atmosphere and then issue permits to exceed that limit which companies can sell amongst each other. This is generally referred to as “cap-and-trade.” Either way—either set by the government or the open market—a price on carbon is established. And if it costs money to release carbon into the atmosphere, companies will have an incentive to produce less carbon. That incentive will presumably encourage companies to find ways to pollute less (consumers will also presumably have an incentive to seek more environmentally friendly options). And that will presumably help counter the problem of climate change. If the government takes in revenue as the result of a carbon tax or cap-and-trade, that revenue can be used to fund green energy and emission-reducing policies and initiatives, as well as reducing income taxes to counter the impact of the higher costs that impacted companies might pass on to their customers. Here is the Pembina Institute’s briefing on carbon pricing, here is the OECD’s briefing on carbon markets and here is the Environmental Protection Agency’s guide to cap and trade. Here is Wikipedia’s rundown of countries and states that have considered or implemented carbon pricing. And here is Stephen Gordon’s guide to the economics of pricing carbon.

What has the NDP proposed?

In its 2008 and 2011 platforms, the NDP proposed a cap-and-trade system. When he was seeking the leadership of the NDP, Thomas Mulcair presented his own cap-and-trade proposal. (Brian Topp quibbled with Mr. Mulcair on one aspect of Mr. Mulcair’s proposal.)

What do the Conservatives say about what the NDP has proposed?

The Conservatives say the NDP proposal is a terrible, ruinous thing.

That sounds very serious. But your use of the word “farce” seems to suggest something silly is going on here.

You are very perceptive. There are at least three parts to the farce.

First, the Conservatives previously supported and promoted cap-and-trade. And they did so repeatedly and over a number of years. In their 2004 election platform, the Conservatives said they would “investigate a cap-and-trade system that will allow firms to generate credits by reducing smog-causing pollutants.” The commitment was repeated in the party’s 2005 policy declaration. In 2008, the Conservative party’s policy declaration expressed support for “a domestic cap-and-trade system that will allow firms to generate credits by reducing smog-causing pollutants.” In May 2008, John Baird celebrated the launch of a carbon market in Montreal. “Carbon trading and the establishment of a market price on carbon are key parts of our Turning the Corner plan,” he explained. In their 2008 election platform, the Conservatives promised to help “develop and implement a North America-wide cap and trade system for greenhouse gases and air pollution.” The Harper government repeated the pledge in the subsequent Throne Speech. In June 2009, Jim Prentice announced an offset system that would “generate real reductions in greenhouse gas emissions … by establishing a price on carbon.” In September 2009, Mr. Prentice lobbied the Alberta government to support cap-and-trade. In December 2009, the Harper government claimed to be “working in collaboration with the provinces and territories to develop a cap and trade system that will ultimately be aligned with the emerging cap and trade program in the United States.”

During the 2011 election, the Conservatives decided they opposed cap-and-trade. But what’s more, the Conservatives decided that cap-and-trade and a carbon tax were the same thing. And they have maintained this stance in attacking the NDP. Any attempt to establish a price on carbon, Conservative MP John Williamson informed the House of Commons on Monday, is a tax on carbon. Here then is part two of the farce. Because while the Conservatives were proposing cap-and-trade in 2008, they were loudly opposing Stephane Dion’s proposal for a carbon tax. If cap-and-trade is the same thing as a carbon tax, then the Conservatives were both proposing and opposing a carbon tax in 2008.

Finally, there is the lingering possibility that a Conservative government might implement a cap-and-trade system someday. When cap-and-trade legislation stalled in the American Senate in 2010, hope of a continental cap-and-trade system was stymied and Environment Minister Peter Kent said the Conservatives weren’t prepared to go it alone. But—speaking just two weeks after the 2011 election, during which the Conservatives declared cap-and-trade a terrible thing—Mr. Kent allowed that cap-and-trade was still a possibility in the future. I followed up with Mr. Kent’s office in July  and Natural Resources Minister Joe Oliver earlier this month and, despite its strident objections to the NDP’s cap-and-trade proposal, the Harper government remains unwilling to definitively rule out pursuing cap-and-trade if the United States decides to pursue cap-and-trade.

How has the Harper government explained these discrepancies?

It hasn’t. The Conservatives have tried to assert a couple nuances—see here and here—but neither were particularly persuasive. Alternatively, the Prime Minister’s Office has tried to assert a statute of limitations on the human memory. No explanation has been offered for how the Conservatives went from proposing cap-and-trade to opposing cap-and-trade or how they reconcile their current position on cap-and-trade with their 2008 election campaign.

What are the Conservatives doing instead of putting a price on carbon?

The Harper government is gradually moving forward with regulations for each carbon-emitting sector.

Oh, but since there’s no price on carbon involved, there won’t be costs associated with this approach, right?

There will be costs associated with any approach to reducing greenhouse gas emissions. The Canadian Press recently tallied billions in costs for the regulations announced by the Harper government so far. The Conservatives are also investing heavily in developing carbon capture and storage technology. But the Canadian president of Royal Dutch Shell recently argued that CCS won’t be widely adopted unless a price on carbon is established.

Where do things stand in the United States?

Both Barack Obama and John McCain endorsed cap-and-trade during the 2008 presidential election, but, as mentioned, cap-and-trade legislation stalled in the Senate and there has been little movement since. Democratic Congressman Jim McDermott has introduced carbon tax legislation in the House and former Republican congressman Bob Inglis is advocating for a carbon tax. The Washington Post’s Ezra Klein has this theory that a carbon tax could be part of a grand bargain between Democrats and Republicans to fix the American federal budget.

So if the United States doesn’t move forward with cap-and-trade does that mean there won’t be a price put on carbon here so long as the Conservatives are in power?

First of all, we probably shouldn’t underestimate a Conservative government’s ability to completely reverse its position on this subject. Second of all, British Columbia and Alberta already have carbon taxes, while British Columbia, Manitoba, Ontario and Quebec are signed on to the Western Climate Initiative, which intends to establish a co-ordinated cap-and-trade system. Quebec is supposed to launch its own cap-and-trade system next year.

Well this is quite a situation.

Indeed. And we haven’t even talked about the torturous existential questions about politics and journalism this raises. We’ll save that for next week’s “A rough guide to things that should inspire profound reflection on the part of all of us.”