A major flaw in our economic system is that polluters rarely have to pay for the damages they cause. For the coal, oil and gas industries, this means the public must bear the immense costs of pollution and related health-care costs, land degradation, water contamination and climate-altering emissions.
Carbon pricing targeting large emitters doesn’t fully address those costs, but it creates an incentive to shift to cleaner energy sources. The federal government’s commitment to strengthening the industrial carbon pricing system in its recent budget is an important step. The budget also contained disappointments for those who understand the severity of the climate and biodiversity crises, including support for the fracked gas industry and a lack of continued commitment for nature protection.
The industrial carbon price is an important way for the federal government to reduce greenhouse gas emissions while keeping costs low for businesses. Canadian Climate Institute research shows that industrial carbon pricing — also known as “large-emitter trading systems” — will do more to reduce emissions up to 2030 than any other policy. It also creates more certainty for businesses and keeps them competitive in global markets. And it has little or no impact on the cost of living.
As the government states, “Industrial carbon pricing rewards innovation and spurs investment in cleaner technologies — helping Canada’s industrial sectors to grow and compete.”
But it needs work. That’s especially true when it comes to provincial plans. Provinces can design their own carbon pricing systems if they meet the federal minimum standard. If they don’t, the federal government can impose its own system, known as the “backstop.”
Alberta and Saskatchewan have largely gutted theirs while Ottawa looks the other way. Alberta froze its price at $95 per tonne and weakened its rules, creating a glut of cheap credits that wipe out the price signal, while Saskatchewan scrapped its industrial carbon levy and is extending the life of its coal plants instead of investing in its vast wind and solar potential.
This is unacceptable — and stupid. We must do everything we can to bring emissions down and to transition to cleaner energy. The benefits of doing so far exceed pollution and climate concerns. Renewable energy is much more efficient, cost-effective and secure. The sector is growing rapidly, creating good jobs and inspiring innovation. Governments that don’t ride the wave will miss out on tremendous opportunities, leaving their citizens to rely on increasingly expensive, volatile, polluting energy sources.
The Canadian Climate Institute’s research found that industrial carbon pricing could make up between 20 and 48 per cent of Canada’s emissions reductions by 2030 — surpassing any other single policy. It also found it has already been successful, prompting Alberta and the Maritimes to quickly phase out coal power.
The research also shows that Canada’s industrial carbon pricing systems don’t significantly affect households and can even create benefits for some.
Under the system, industrial polluters only pay when emissions exceed a specified limit and can sell credits if emissions are below it. It also protects us from tariffs that jurisdictions including the European Union and United Kingdom impose on countries that don’t price carbon.
The budget’s promise to set a post-2030 carbon price path and strengthen the backstop is welcome, but Ottawa must enforce it when provinces play games with industrial pricing. Canada needs a level playing field, not a race to the bottom where polluters pressure provinces to weaken the rules until the price signal disappears.
The post-2030 plan is designed to help Canada reach net-zero emissions by 2050. Given the anti-climate tactics of governments in provinces including Alberta and Saskatchewan, improving the benchmark and ensuring all provinces and territories meet or exceed the federal industrial carbon pricing standard is critical. The federal government can’t let provinces derail necessary climate solutions.
Political opportunism and disinformation convinced Prime Minister Mark Carney to throw out the consumer carbon tax, even though it was successful and economically beneficial to most households. We can’t let fossil fuel interests and governments that side with them weaken or eliminate any more effective climate policies.
This is an emergency. The government’s budget has many flaws, but its strengths include the industrial carbon price. It may be just one way to reduce emissions, but it’s the biggest lever government has.
David Suzuki is a scientist, broadcaster, author and co-founder of the David Suzuki Foundation. Written with David Suzuki Foundation Senior Writer and Editor Ian Hanington.
Learn more at davidsuzuki.org.
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