Pity the carbon tax. Beloved by its parents, the economists, this humble environmental policy has faced an uphill battle for acceptance from a skeptical public.
In all their various federal and provincial guises, carbon pricing schemes have never been popular in Canada. At best, as in BC and Quebec where carbon pricing has been in place since 2008 and 2013, respectively, the system is accepted for what it is – an annoying but practical approach to reducing greenhouse gas emissions.
Elsewhere, voters have been more hostile. Some governments, such as Alberta and Ontario, brought in carbon pricing systems only to be swept from power at the next opportunity by “axe the tax” opposition parties.
At the federal level, Liberal leader Stéphane Dion’s 2008 election promise to introduce national carbon pricing was resoundingly rejected. Only in 2017, after an acrimonious and drawn-out process, did Justin Trudeau’s Liberals put the current federal system into place.
Economists like carbon pricing because it is a simple, low-cost option for reducing emissions. The theory goes that if fossil fuels cost a bit more, then people will burn a bit less. That’s good for the planet and doesn’t require expensive subsidies or spending programs.
Yet the carbon pricing system never managed to shake its detractors. Calls to abandon the system are now coming from both the right and left. The federal NDP and even the BC NDP are distancing themselves from the policy, which they have identified as a political liability.
The truth is that both the economists and the skeptics – to the extent that their criticisms are made in good faith – have a point.
Carbon pricing is indeed economically efficient, but it is also inherently politically toxic. Not only are the costs highly visible – as consumers, we stomach the carbon tax every time we fill up our car or pay the gas bill – but the benefits are hard to see.
To be clear, the benefits of the carbon tax are genuine. Because of carbon pricing systems, fewer fossil fuels are being burned across the country. It’s just that those reductions are the accumulation of thousands of individual choices made by households and businesses that are invisible to the rest of us.
Ironically, most households are also richer because of carbon taxes. In provinces covered by the federal system, the quarterly carbon pricing rebate more than offsets what most people pay upfront. But a rebate in your bank account does not register as strongly as a surcharge at the pump. It’s just not a popular equation, even if it works on paper.
In contrast, consider the shutdown of a coal plant. It is more costly to the economy than a broad-based carbon tax – and no one gets a rebate – but the vast majority don’t experience those costs directly. Meanwhile, the benefits of reduced pollution are obvious for all to see. That makes for popular environmental policy.
There’s an important lesson here for politicians and governments concerned about climate change. At the end of the day, what matters more than efficiency is effectiveness.
We need to prioritize policies with big, visible benefits, such as:
- investing in public transit systems and green manufacturing infrastructure, which creates good jobs
- enforcing an emissions cap on the oil and gas extraction industry to shift the costs of transition onto the biggest polluters
- implementing skilled trades training programs, which prepare workers for opportunities in a cleaner economy.
The poor carbon tax did its best, but too much pressure was piled on its shaky shoulders. There are more popular and resilient options on the table for driving down emissions, building up a clean economy and winning over a skeptical public.
That is where we need to focus now.
Hadrian Mertins-Kirkwood is a senior researcher with the Canadian Centre for Policy Alternatives.
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