Counting the Cost of Our Carbon

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Black piggy bankCanadians are warming up to the idea of a carbon tax. The reason is simple: the well-being of our economy relies on the well-being of our environment. And when it comes to the environment, Canada has run a hefty tab.

Canada is presently the second largest per capita emitter in the world for greenhouse gas (GHG) emissions. With no plans of slowing oil sands production anytime soon, GHG emissions are projected to grow.

These emissions come with significant environmental and social expenses, a newly released report by the University of Calgary's School of Public Policy points out – expenses we haven’t factored into the pricing of energy or the commodities that depend on its use. From food to cable, the costs of our goods and services fail to account for the environmental and social damages incurred in the production, distribution and consumption of energy to deliver that product or service. The result is that the cost of environmental damages exceeds what we actually pay for energy.1

The report advocates for a “full-cost pricing” system that adjusts prices of goods and services to include not only their direct costs but also their “impact on the country’s natural capital.”

Central to full-cost pricing is carbon pricing: attaching a price to the burning of fossil fuels. It’s arguably the most important element in any environmental policy Canada pursues. The reason: efforts to create an environmentally-friendly society are going to be minimally effective without a carbon-conscious market. Carbon pricing creates this market by creating a distinction between carbon-heavy products goods and carbon-light products, prompting more environmentally-conscious consumer purchasing practices.

The Case for a Carbon Tax

There’s more than one way to put a price on carbon. The main alternative is a cap-and-trade scheme – essentially a limit on the amount of greenhouse gases which can be emitted by industries each year. However, a carbon tax is preferred by most economists, Canadian industries, and environmental groups. Key reasons include its simplicity, as it builds on an already existing tax system, its efficiency, and its ability to provide greater price certainty. A carbon tax is also less easy to cheat than a cap-and-trade scheme.

And it makes sense – even to some you might not expect. Manning Foundation CEO and Reform Party founder, Preston Manning, agrees that “It’s just fairly basic concept that, with any production of energy, you’ve got to figure out what are the environmental impacts and then the cost of avoiding or mitigating them and then integrating that into the price of the product.”

Making it Fair

A carbon tax needs to be implemented with care. Key considerations:

  • A carbon tax is highly regressive. Although high income earners consume more energy than low income earners, low income earners spend a higher percentage of their budgets on energy products. To offset this, a large proportion of revenues raised by the tax should be directed to a progressive green tax credit.2
  • As the Canadian Centre for Policy Alternatives (CCPA) notes in their recently released Alternative Federal Budget, imports from countries that don’t have similar measures to price carbon should also be taxed according to the emissions associated with their production, processing and transport, exempting imports from highly impoverished nations.
  • CCPA also suggests that exports to countries without similar climate change measures be exempted from the carbon tax, ensuring that Canada’s exporters are not placed at a competitive disadvantage.
  • A national carbon tax should be integrated with existing provincial carbon taxes like those in British Columbia and Quebec, and a federal tax would apply where provincial carbon taxes are not in effect or are at a lower rate.

For additional considerations in the fair implementation of a carbon tax, see CCPA’s 2012 Alternative Federal Budget.

Public Justice and the Carbon Tax

The case for environmental care and the threats posed by global warming are now familiar headlines and most Canadians seem able to dismiss them with little damage to the conscience. The government has only reinforced this alienation from environmental concern by associating environmental groups with all manner of peculiar company, from radical socialists to Al Qaeda sympathizers.

But there are those who recognize that our planet is not immutable. Underneath all the pavement is a complex, living ecosystem that is affected by and responds to our actions.

If the imminent risks of inaction against global warming aren’t enough to cause concern, it remains that respect and care for the environment are a simply a matter of being responsible and loving neighbours. As Wendell Berry elucidates, “If we are willing to pollute the air – to harm the elegant creature known as the atmosphere – by that token we are willing to harm all creatures that breathe, ourselves and our children among them.”3

Canada’s emissions are harming our neighbours – both in our nation and across the globe. And they are setting future generations at a disadvantage. To love our neighbours, present and future, we need to count the cost of our carbon and care much more intentionally and skillfully for our planet.

A nation-wide carbon tax would be a step forward for the economy, the environment, and public justice – all of which are inextricably entwined. It’s not the only green initiative needed in Canada, but it’s certainly one of the most strategic.

  1. 1. For example, the report cites a Canadian Medical Association estimate that in 2008, lost productivity due to premature mortality as a result of air pollution amounted to $688 million. Of course, the tragedy of premature loss of life for a family and community is in and of itself, immeasurable.
  2. 2. Chandra Pasma. “CPJ Backgrounder on Taxation,” Citizens for Public Justice, 2011. Available from /sites/default/files/docs/CPJ_backgrounder_on_taxation.pdf.
  3. 3. Wendell Berry. The Gift of Good Land: Further Essays Cultural and Agricultural. North Point Press, 1981.
Melodi Alopaeus is CPJ’s former policy intern.

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