High prices have not always proved the best way of promoting energy efficiency. Significant progress has been made using other tools, writes Philip Cross.
By Philip Cross, May 29, 2018
When first proposed, a carbon tax had the potential to be an effective way of achieving the long-term goal of reducing greenhouse gas emissions.
However, its introduction and the ongoing campaign conducted by advocates have become so politicized and corrupted by ideology that it is no longer politically tenable, while rising oil prices reduce its economic necessity.
To achieve the goal of curtailing fossil fuel use enough to meet the Paris Climate Agreement, our current technology requires carbon taxes so high that they are a political non-starter. Proponents of a carbon tax seem to increasingly agree with this.
Instead of a major overhaul to the efficiency of the tax system, supporters now meekly argue that a carbon tax is just one of a wide range of solutions (the federal environment minister recently was reduced to pledging to plant more trees to make its climate change plan palatable to the public).
Small carbon taxes are not a serious proposal to curb emissions, but the equivalent of buying a papal indulgence to alleviate our collective conscience with a largely symbolic gesture to climate change action.
Waning interest in a carbon tax is not necessarily a bad thing for the environment. Even without a meaningful carbon tax, fuel prices across North America are at, or near, record highs this summer. Proponents never clarified how the tax would interact with changes in oil prices: low prices made a carbon tax seem acceptable, but high oil prices make it feel punitive to the average person already struggling with higher fuel costs.
Waning interest in a carbon tax is not necessarily a bad thing for the environment. Even without a meaningful carbon tax, fuel prices across North America are at, or near, record highs this summer.
High prices have not always proved the best way of promoting energy efficiency. Significant progress has been made using other tools.
Mandatory mileage standards for vehicles have resulted in dramatic increases in fuel efficiency, allowing North Americans to drive larger vehicles without guzzling more gas. Electricity generation has been largely de-carbonized in Canada through government fiat, while in the U.S. a shift away from coal was driven by a drop in natural gas prices, not higher taxes.
Most fatally for the carbon tax, it has become politicized. In its early days, people on both the left and right of the political spectrum supported a carbon tax. Conservative leaders such as Patrick Brown and Jim Prentice advocated versions of the tax. Now their heirs in Ontario and Alberta have joined a growing number of conservative parties opposing it, including at the federal level.
Why are conservatives increasingly united in opposing a carbon tax? Partly because their long-standing suspicions that the carbon tax would become another government tax grab were confirmed.
Almost all provincial governments used carbon tax revenues to increase government spending rather than cutting income taxes.
Carbon tax proponents needed to vociferously condemn governments not lowering other taxes as an existential threat to the whole carbon tax agenda. By mutely watching the exercise degenerate into a tax grab, academic advocates implicitly said that what was important to conservatives — that the exercise be part of a more efficient but not expanded tax system — was not important to them. In so doing, carbon tax advocates made it easy to label the whole exercise a Trojan horse to expand government.
Poisoning the bipartisan well of support for a carbon tax reduces its effectiveness. The public increasingly treats such taxes as transitory, to be reduced or removed when conservative governments are elected. So people respond to a carbon tax by making transitory adjustments instead of fundamental investments (such as buying more fuel efficient cars) that permanently alter behaviour and lower emissions.
Left wing governments have stoked the cynicism of conservatives with an alarming willingness to ignore facts and simply indulge vindictive environmental whims. When the Obama administration failed to get a cap-and-trade scheme to control emissions through Congress, it petulantly played to the environmental lobby’s obsessive hatred of Canada’s oilsands by blocking the Keystone XL pipeline despite evidence it would lower emissions.
A similar process is at work in the opposition to the twinning of the Trans Mountain Pipeline. These moves make it seem that the triumph of a particular ideology, not the effectiveness that could only come from bipartisan support, is what drives the push for lower emissions.
Philip Cross is a Munk senior fellow at the Macdonald-Laurier Institute.