Don't let the right carbon policy get lost in the screams

JEFFREY SIMPSON
Globe and Mail
June 20, 2008

CALGARY — Consider these words: "For us, there is no debate about climate change. It's real. It needs to be addressed in a serious way and there is no time to lose. The longer action is delayed, the harder it will get."

Words from a greenie environmentalist? A speech by David Suzuki? Something from Stéphane Dion?

No, the words are those of Shell, one of the Seven Sisters of world oil. What to do? the company asks. Many things, to be sure, but one is to "put a price on emitting greenhouse gases."

There you have it: a price. We can fool around, as we have, with voluntary programs, exhortations to do the "right thing," public-awareness campaigns. We can subsidize here, there and everywhere. And we will get next to nowhere in combatting greenhouse gas emissions.

You can sort out politicians (and business people) who are serious about significant GHG reductions by asking a simple question: Who wants to put a price on carbon, and who doesn't?

Then, you can sort out the really serious one from the semi-serious by asking: Who wants the price to be universal, instead of directed only at selected targets, such as "big polluters" in industry?

The really serious ones will be those who espouse a carbon tax to drive up the price of polluting behaviour over time, recycling the additional revenue into lower personal and business taxes. The semi-serious politicians, or the not-at-all-serious ones, will dismiss this idea out of hand, grossly misrepresent it and finance television advertisements against it.

Yesterday, Mr. Dion, the Liberal Leader, showed himself to be a really serious politician about climate change, almost.

He got the formula for a serious attack on greenhouse gas emissions right - mostly - at what will undoubtedly be considerable risk to himself and his party.

The Harper government, lacking a really serious policy and apparently content for Canadian federalism to display complete incoherence, with provinces going off in all different directions, started spreading falsehoods about the Liberal proposal even before it was announced. Nothing suggests these falsehoods will stop. And the media, if the past is any guide, will concentrate on the political cockfight rather than examining the policy's substance, thereby inhibiting public understanding.

The essence of the Liberal plan is simple. It's an approach endorsed by leading economists (see the latest book by Yale's William Nordhaus), deemed theoretically acceptable by the Canadian Council of Chief Executives, preferred (quietly) by many CEOs (including those in the oil patch), already introduced by the British Columbia government, used in some European countries, but nonetheless very politically risky.

Risky, because it takes 30 seconds to explain in a sound-bite world of 10 seconds. So the second part of the explanation - that revenues from the carbon tax will be recycled back into the economy - gets lost in the critics' screams about the first part: They're Raising Your Taxes! Tax Grab! Insane (Mr. Harper's word)!

It doesn't matter that the plan asks the Auditor-General to report on the neutrality of the tax shift. It doesn't matter if, as in B.C., the finance minister's salary must decline if the tax shift is not neutral. In the crude world of attack politics, the risk falls on those who propose really serious policies.

The Dion plan acknowledges this reality, in that it fails to apply the carbon tax to gasoline. This fuel is ubiquitous and politically volatile. But no really serious attempt to use price to change behaviour over time can be complete without applying the tax to the fuel used to power most vehicles.

Instead, the Liberals are taking the existing 10-cents-a-litre federal excise tax on gasoline and calling it a carbon tax, then extending that tax to all other fuels. The greatest impact will be felt on home heating fuels, which is a bit backward in a cold climate such as ours, in contrast to changes from higher prices to vehicles and driving patterns. With gas prices having recently soared, the Liberals got scared, for understandable if regrettable reasons.

But the Liberals got the essence of a serious policy right: Tax the behaviour that pollutes, then use that revenue to reduce personal and corporate taxes. Bravo to the brave.