Kevin Berger – Leader Staff
Seeing that Alberta will now start paying the federal carbon levy in January, I figure I should take a look at a news story that arose late last week about its effectiveness.
As you may have heard, the Parliamentary Budget Officer (PBO) released a report indicating the federal government’s carbon levy would be insufficient to meet Canada’s emissions target under the Paris Agreement. Canada has agreed to reduce greenhouse gas emissions by 30 per cent below 2005 levels by 2030. Back then, Canada was producing an estimated 732 megatonnes of CO2; we have promised to lower it to 513 over the next decade.
Unfortunately, the carbon levy — coupled with the measures taken by Land Use, Land Use Change and Forestry sector — will only see our C02 emissions drop to 616 megatonnes by 2030, assuming the levy doesn’t go any higher than $50 per tonne of CO2.
A reduction of 116 megatonnes of CO2 is still kind of impressive on its own, but regardless, to meet our target under the Paris Agreement, the report states that an additional levy of $52 would be needed by 2030.
Naturally, opponents of the levy jumped all over this story. But here’s the thing: the report doesn’t actually say, “Carbon tax bad, get rid of carbon tax.” It just says, “A carbon levy of $50 per tonne of CO2 produced is not enough to meet our targets under the Paris Agreement.”
In fact, the report implicitly avoids any assessment of the policy merits of carbon pricing or the potential environmental/economic cost of climate change. (As fires rage across northern Alberta and drought maintaining its stranglehold in the south, things will only get worse.)
But if the carbon levy fails to meet our target under the Paris Agreement, then why have it?
I point to a key line that comes later in the report: “other policy measures (such as regulations) could achieve the same emissions target, but they would likely have a larger impact on the Canadian economy.”
This fits in with what I’ve heard repeatedly from economists in the U.S. and Canada — a carbon levy is the most cost-effective way to reduce CO2 emissions, as well as the least damaging to the economy. The PBO itself even released a report in April stating that the negative impact from the carbon levy — which they estimated to be a mere 0.5 decrease in GDP — can easily be mitigated by a reduction in corporate taxes
As I alluded to earlier, the carbon levy will still bring us more than halfway to meeting Canada’s emission reduction target. That doesn’t mean the carbon levy is worthless – it just means that it’s not the magic bullet that will solve all of our environmental woes. We need other climate change solutions on top of the levy, not as a replacement.
