Front Burner - The political cost of carbon taxes

Episode Date: December 4, 2018

As COP24 tries to set rules for how the world deals with environmental issues, we look at why the Canadian government has chosen carbon pricing as a key tool in addressing climate change. CBC reporter Nahlah Ayed gives us an overview of what's happening at COP24, and energy economist and Simon Fraser University professor Mark Jaccard explains why carbon pricing is a costly political move.

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And it is important because without this document, essentially, there is no Paris Agreement. That's my colleague Nala Ayad. She's in Poland today. So are leaders from about 200 countries. There's a big, important climate change conference happening right now. Hi, Nala. Hello, Jamie. Thanks so much for joining us.

It's a pleasure. Nala, everything I've read today says this is the most important climate summit since the Paris Agreement was signed. Why is that? Back in Paris, after that landmark breakthrough, leaders agreed that this month in this year would be the deadline to agree on a set of guidelines or a rulebook, as they call it, that would govern how to implement the Paris Agreement and to make it a reality. So it's important because without that rulebook, Paris is basically an agreement in name only. And as the president of the conference said, if there's no Katzawite, there's no Paris. Can you just remind us what the Paris Agreement was?

So I was there when it happened, Jamie, and I almost fell over because it was really hard to believe that 180 countries could come to an agreement on such a divisive issue. Today, with my signature, I give you our word that Canada's efforts will not cease. you our word that Canada's efforts will not cease. And basically what they agreed is to try to cut greenhouse gas emissions in each country to a level that would prevent global warming from exceeding 1.5 to 2 degrees by the year 2030. This conference that you're at right now in Poland, it comes on the heels of two very dire warnings that we've seen over the last two weeks. One was American, the other by the Lancet countdown on health and climate change. Can you give us a sense of what they said?

In a nutshell, they're all essentially saying the same thing. And that is this, that the global temperature is rising faster than anything the world has seen, and that the effects will be devastating if something radical isn't done to stop it. That even if emissions are cut completely and everywhere, the temperature will still go up. Also, that science is now showing that what was agreed to back in Paris isn't good enough to mitigate the worst effects of climate change. That not a single G20 country is on track to meet the targets they set in Paris. I could go on, but I think you get the picture.

That is really astounding to hear that not a single G20 country is on track to meet their Paris targets. These reports, the sort of long list of reports that you're talking about, and some of the information that you've just told us now, how is that impacting what you're seeing or what you're hearing at this conference? What's the tone there? Well, even though it's only been a couple of days here, all of these warnings are already hanging over this meeting. So there's pressure to ensure that this rulebook that I mentioned actually gets done. There's pressure on major emitters to take drastic action, not only to lower their emissions, but also to put more money on the table to help countries that are on the front lines of climate change effects, like the low-lying island nations, for example, who have

to adapt to that reality. And there's a lot of talk about something they call ambition, about pushing countries to aim higher for their national targets, to try to cut emissions sooner and much faster than they're planning now. Even faster than they had agreed to back in 2015 during the Paris Agreement. Exactly. I know that this is early days in this summit,

but can you give me a sense of what you think might unfold there? It ends December 14th. So what might we see in the next two weeks? Well, it would take a lot of work, but at minimum, what people want to see here is the implementation or an agreement over this rulebook that I mentioned. But success here is important not only for the benefit of the climate, essentially, but also because for many people, it's also an opportunity to demonstrate

that multilateral cooperation on the global scale actually works we're told that that is a huge motivator especially because the u.s administration seems so allergic to working within multilateral international organizations so to show success on that, the biggest thing is to agree to the rulebook, despite all the competing interests of more than 200 countries represented here. And for many people, that's achievement enough because it makes Paris official. But the other thing they're looking for, Jamie, is to persuade countries that they need to go back home and return to next year's meetings with some new targets in mind for cutting greenhouse gases. As the historian and naturalist Sir David Attenborough

put it when he spoke on behalf of the people on Monday, he said that what we're facing is a man-made disaster of global scale. If we don't take action, the collapse of our civilizations and the extinction of much of the natural world is on the horizon. And he said time is running out and that people want the decision makers to act now. Nala, thank you so much for this brief update today. I know that we could do a whole podcast on the role of the U.S. in this conference,

and I hope that this is something that we can talk to you about as this unfolds over the next two weeks. Well, the next time we talk, I'll tell you what Arnold Schwarzenegger said. Oh, I look forward to that very much. Thanks, Jamie. Thank you so much. As Nalim mentioned, leaders are currently focused on setting rules to combat climate change at COP24. One tool to combat climate change that we hear a lot about is carbon pricing. Either a cap-and-trade system on carbon or a tax on carbon polluters.

Carbon taxes, they've become this political flashpoint. In Paris this week, people are literally rioting in the streets, in part over a green tax on fuel. And they become really divisive here in Canada. Four provinces are now very much against Prime Minister Trudeau's national carbon pricing plan. Saskatchewan and Ontario will continue to be strong allies in the fight against a destructive, made-in-O in Ottawa carbon tax that does nothing for our environment. And for all the contemporary political debate about them you'd think they were a new idea. Carbon taxes have been in the debate the policy greenhouse gas climate

debate in Canada since 88-89. That's Mark Jackard. He's a sustainable energy economist who's studied carbon pricing for decades. He even helped the B.C. government bring in its carbon tax. Even the British Columbia carbon tax and all the ones since then have been politically constrained so that they're at very low levels. They're not the things that are going to make you not build a coal plant or not buy a gasoline car. While Jocker thinks carbon taxes are effective, he also thinks they're just one option when it comes to reducing greenhouse gas emissions.

And frankly, Mark thinks they're not really worth it politically. And that's what I'm most curious about. Mark, can you give me a sense of why, in the last couple of years in Canada, we start to see politicians choose this approach of a carbon tax? Economists who really care about economic efficiency harp on carbon pricing because they say this is the most economically efficient way to reduce emissions. And I agree with them. I'm an economist. So they try to talk politicians into doing this. Now, the economist that's trying to talk the politician into this doesn't need to get elected. You know, so they're basically trying to talk a politician like Kathleen Wynne or Rachel Notley or Justin Trudeau to put a bullseye, a political bullseye on their back.

And that's the big challenge. So that's why someone like me, I come out and say, come on, economists, don't trick poor Justin Trudeau into doing carbon pricing if you don't need to. Be a little bit astute about the real world of politics and policy. And guess what? Trudeau has put in a policy to phase out coal plants. That's enormous. Methane regulations, that's enormous. New energy efficiency standards, that's enormous. This clean fuel standard, that will be enormous. So the irony is that the carbon pricing is going to do none of the heavy lifting least outwardly, sort of the centerpiece of how they're communicating, dealing with climate change to the Canadian people. Right. So they haven't been.

Because it's a bullseye on your back, as a politician, you might want to get out there and talk about the coal plant phase out and the methane regulations and blah, blah, blah. But that's not what the opposition politicians will talk about. And therefore, the media will only ask about the carbon price. So it's partly your fault. I'll take that. I'll take that. It is possible that it's possible. But could I push back on that a little bit? I mean, there was a huge announcement in October where Justin Trudeau got up and talked about this national carbon pricing plan and was touting it as sort of the centerpiece of fighting climate change in this country moving forward. Putting a price on pollution is the best way to tackle climate change because it works. In B.C., pollution is down, jobs and growth are up. And people around the world have caught on. Well, of course, no, he was, I'm going to push back.

He didn't want to be talking about that. He had to because other politicians, the premier of Saskatchewan initially, said we're going to take you to court on that. I would argue, no, it unfolded exactly the way I'm describing to you. They talked proudly about their whole slate. It mentions carbon pricing and it proudly mentions all the other things. We just announced our intention to phase out coal-powered electricity in Canada by 2030, all while expanding clean power sources.

Since then, the discussion has entirely been on carbon pricing for the reasons that I mentioned. It's a bullseye on your back. Opposition politicians or opposing premiers will make a big deal about it. You can be for manufacturing jobs or you can be for the carbon tax, but you can't be for both. The media, in fairness to the media, has to follow where that kind of story is. Therefore, we end up with this delusional perception that I'm, you know, sort of hopefully not too aggressively trying to correct.

No, it's, yeah, I appreciate it. This is the big issue. This is the big issue. And in climate policy, it is not the big issue. But unfortunately, in climate to introduce any kind of carbon pricing considering the political pitfalls around this? Yes. Carbon pricing is a symbol, I think, for urban millennials that you are serious about climate policy. So I'm not saying it's all negative, right, for a politician

like Trudeau. But unfortunately, it's probably going to help him to get, you know, votes that he might have got anyway. They must have done some kind of political calculus, although my own view before they did it and now in hindsight is that they were naive and got it wrong. But I don't blame them completely. They're earnest. They're trying to do the best thing. But they also should have seen, oh, yeah, we need to win the election in the outer Toronto suburbs, which tend to swing with the party that wins. And what if there's like two to five percent of people there that an opposition politician can say,in trudeau is trying to make it more expensive for you to get the kids to the hockey practice and so you should vote as many

canadians do on a single issue this should be enough to make you swing your vote you voted liberal last time vote conservative next time so there's the there's me i spend a lot of time now even though an economist talking to political scientists and they, they know a lot. And so yes, my, my long-winded answer to your question is that he made a mistake. I want to get to sort of what some of the solutions are or like where we go from here. But if you could just indulge me for one second, I just want to try and wrap my head around everything you've said. and wrap my head around everything you've said. For decades, Canadian politicians and politicians the world over have talked about carbon pricing and carbon taxes and cap and trade.

But there has been a lot of reticence in implementing these policies because they are controversial, because we're talking about taxes here. We're talking about raising prices for regular people at gas pumps. And in the last several years, here in Canada at least, as like calls for this impending climate catastrophe have become louder, we see the carbon tax become a real issue that politicians start talking about as a tool, one tool in climate change policy. And because this is such a controversial tool, it takes up a lot of the air politically. It can become like the center of sort of a contentious debate around climate. And you think that that was probably a mistake for this government to go that route

because this is all anybody can talk about right now when really they're doing some other good stuff that is probably doing more to fight climate change. more to fight climate change. Yes, that was an excellent summary. Well, in fact, even your last point, I was going to jump in, but you got that one too. Well done. Which was that other policies are doing more. And so that doesn't mean, and the reason is not that carbon prices are ineffective, it's that there's a political constraint there so quickly they are toxic politically. And so it doesn't mean we'll never get there. In fact, I point out that as you do policies like California is doing, like flipping the electricity sector, flipping the transportation sector, then when, you know, when 40 percent of people have an electric car or an ethanol car,

it gets harder for people to complain about a rise in the price of gasoline due to a carbon tax. When all their neighbors and friends are like, well, duh, why are you still stupid enough to be, you know, buying gasoline? You had just as equally cheap option, which was to get an electric car. It has lower operating costs and so on and so forth. an electric car, it has lower operating costs, and so on and so forth. And so can we talk about what you think Canada is doing right now that is really good policies to address climate change, and what other tools do you think could be implemented here? What we really can work on is electricity generation. And we're lucky because Canada's, you know, with all the hydropower and some nuclear in Ontario, we're a long ways there. So we need to phase out coal plants and make sure we don't replace it only with natural gas. You can use some natural gas, but renewables are cheap.

And so like wind, solar. So just one policy, and that would be the – it's called – in BC, the way we design it, it's called the Clean Electricity Standard. And in California, it's called the Renewable Portfolio Standard. It's called the Clean Electricity Standard. And in California, it's called the Renewable Portfolio Standard. And then in vehicles, in transportation, you don't even need the Zero Emission Vehicle Standard, but you could do that one. So you could do just the Zero Emission Vehicle Standard or just something called a Low Carbon Fuel Standard.

If your listeners want to look that up, LCFS. It's in California and British Columbia. And that's it. No other climate policy, no government spending whatsoever. There should be no government budget line. It's you and me buying different cars. And when you put in something like a zero emission vehicle standard, then vehicle manufacturers have to hit sales targets. And they do that by charging more money for the person buying, you know, a $70,000 Audi. They'll charge them an extra 500 bucks. The person will never notice it. And they do all that so that they can subsidize the price of electric cars in order to sell more, you know, get the price down to $30,000 instead of $35,000 or $40,000 for an electric car and an SUV, an electric SUV,

and then get more of those sales. And there's no government money involved, nothing. You just regulate them. And this is what's been going on. And that's the policy in Quebec today. So you're saying we have to start looking for these creative ways to regulate. Yeah. And we don't even have to look very far. They've been implemented. They've been successful. We know what all the effects are. So it's not even, oh, we got to go and do some research. It's just, it's obvious. And maybe us media have to stop talking about carbon taxes all the time, hey? Well, exactly. I'm not putting all the blame on you, but yes, good point. I think that's a good place for us to leave our conversation. Very good. Yeah, I'm very happy. Thanks very much. Thanks so much, Mr. Jacker. We appreciate good place for us to leave our conversation. Very good. Yeah, I'm very happy.

Thanks very much. Thanks so much, Mr. Jacker. We appreciate you taking the time. You're welcome. That's it for today. I'm Jamie Poisson. Thanks so much for listening to FrontBurner. At the beginning of the show, Nala was talking to us about Arnold Schwarzenegger. Well,

we found that clip that she was talking about. And here it is. I wish that I could be the terminator in real life to be able to travel back in time and to stop all fossil fuels when they were discovered. For more CBC Podcasts, go to cbc.ca slash podcasts. It's 2011 and the Arab Spring is raging. A lesbian activist in Syria starts a blog. She names it Gay Girl in Damascus. Am I crazy? Maybe. As her profile grows, so does the danger. The object of the email was, please read this while sitting down. It's like a genie came out of the bottle and you can't put it back.

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