Good afternoon, ladies and gentleman, it's a pleasure for me to speak to you today to express my support, and to provide context for the greenhouse gas pollution pricing act, part 5 of Bill .
This legislation, the backbone for the federal government's approach to climate change, will complement the measures already taken by Canada's provinces. It will allow provinces without carbon pricing systems to benefit from the federal architecture to impose a carbon price, and will allow them to receive revenue collected from it. This combination of federal policy with provincial-level flexibility recognizes the diversity of provincial economies, yet allows for federal leadership on climate change, which is so important.
This bill guarantees that carbon prices will apply on nearly all emissions from energy used in Canada, from the cars on the 401 and the 417, to the largest industrial facilities in Canada. The bill provides for the federal price to be applied in provinces without sufficiently stringent carbon pricing policy.
Assuming no changes in provincial policy, implementation of this bill would likely exempt the provinces of B.C., Alberta, Ontario, Quebec, and most likely Manitoba. These provinces, home to 90% of Canada's population and responsible for 83% of Canada's emissions, would be potentially subject to this legislation were their domestic climate change policies to be significantly weakened.
Why have a carbon a price? Simply put, carbon price leverages the power of the market to enable emission reductions at the lowest possible cost. It does not rely on governments to determine who should emit, or what technology they should use to do so. It relies on individuals to make decisions where they are best suited to do so.
The carbon pricing plan proposed in this bill, just like current policies in B.C., Alberta, Ontario, and Quebec, puts the price on carbon emissions from most sources, not just large industrial facilities. The broader the price is on carbon, the lower the price will be to meet any given target, or the greater the emission reductions will be from any given carbon price.
Of course, as we know, carbon emissions in Canada are not just a big industry issue and certainly not just an oil and gas issue.
Do carbon prices work? That's probably a question you're hearing a lot on this committee, and the answer is simply, yes. We have plenty of evidence from B.C.'s carbon tax, which has been in place since 2008, that carbon prices do reduce emissions below where they would otherwise be. If you want to look up some work on this, work by Nic Rivers at the University of Ottawa, among others, has shown this conclusively.
This doesn't mean they're magic. They will not always lead to emissions being lower than they have historically been, especially when macroeconomic growth is rapid, something we've seen in Alberta for years, or when technological change is slow. However, let me assure you, and put on the record, that demand curves slope downwards despite frequent claims to the contrary.
When emissions have a price, we'll use fewer of them.
If you think of innovation and technological change as the solution to climate change, a carbon price is your best policy choice. When asked how governments can spur innovation and green tech, Syracuse University's David Popp provided five rules for government in a report published by the C.D. Howe Institute. The first of these is carbon price, carbon price, carbon price, because in his words, "Supporting technology development means not only investing in new technologies but also creating demand for clean technologies throughout the economy.” That happens organically with a carbon price. A carbon price is also a useful alternative to governments picking winners with regulations and subsidies.
Therefore, why not just have a big federal policy? Why not just have a one-size-fits-all federal plan in this regard? I think that would be a poor decision because our provincial economies are very different—I've done a lot of work in Alberta, Ontario, and Quebec—as our emissions profiles are very different, as are the means to reduce emissions. I have a couple of examples. If you look at some of our provinces, we still generate a lot of our electricity from fossil fuel sources, whereas in other provinces, electricity is already zero carbon. That in and of itself provides different opportunities.
If you look at my home province of Alberta, about a quarter of our GDP comes from sectors which are described as emissions intensive and trade exposed. It means they're vulnerable to possible emissions leakage, so Alberta designed a program to mitigate that. If you tried to pick the same policy to work for Ontario that worked in Alberta, you'd find that the policy didn't fit very well.
Finally, of course, is the use of revenues. You can see different choices made across the country to meet provincial goals.
Therefore, I think the federal government has chosen wisely here, not only providing the provinces with the means to select their own policies but also to determine the uses of revenue from these federally imposed carbon prices.
Here again, I think this is an area where provinces are going to have different priorities and different ideal uses of revenues. Trevor Tombe recently put forward a proposal for Ontario that would see, without altering the income distribution, a carbon tax used to expand the sales tax credit by 80% and to eliminate the health care premium.
Obviously in Alberta and B.C., we've chosen more progressive policies, which have made the bottom 40% to 50% of households better off with the carbon tax than they were without.
I think these choices are better made provincially than federally.
Just to wrap up, I do have a couple of concerns with this legislation. I am concerned a little bit with the discretion provided to the Governor in Council to apply measures to provinces.
Clause 189 indicates that the cabinet may take into account any factor it considers appropriate, including the stringency of carbon pricing mechanisms, to determine whether a province should be covered. Here I'd like to see a cleaner definition of “stringency”; and conveniently, a price on carbon gives you that. A test judged by that standard would prevent an outcome where cabinet sees fit to apply to one province a price on carbon far higher than it would allow to be applied in others.
I am also concerned a bit with clause 188, which determines the distribution of revenues from the carbon tax to specified provinces. I think what we want to make sure of here is that the implications are clear that the revenues collected in these bills will be distributed to the provinces independent of other transfer decisions of the federal government.
Overall, though, it's my pleasure to be here with you today to express my support for this bill.
Thank you for your attention and for setting time aside for me. I will be happy to answer your questions.
Thank you, Mr. Chairman. I've been on both sides of the table, and at this end too, so it's wonderful to be back.
Mr. Chairman, I am leader of the United Conservative Party in Alberta. We just had our founding annual general meeting, which wrapped up yesterday. Since 98% of our members voted in favour of a policy to repeal the carbon tax imposed by the incumbent NDP government in Alberta, I am here in opposition to part 5 of Bill and its proposed federal carbon tax.
The NDP government in Alberta imposed its carbon tax five months after the last election. Hilariously, they forgot to mention their carbon tax in that election. It was the largest hidden agenda in our province's political history, and the largest tax increase in our history. They raised it by 50% on January 1 of this year. They are now committed to raising it by a further 67%, and they're blaming Bill , the federal carbon tax.
I can report that there have been over a dozen public opinion polls taken on the carbon tax in Alberta in the past two years, showing consistently that two-thirds of Albertans oppose this tax. They oppose it not because they are indifferent to the environmental questions or the challenges of climate change and greenhouse gas emissions, but because they understand, with their good common sense, that punishing consumers for living normal lives in a cold northern climate and an advanced economy is not a responsible environmental policy. They understand that making it more expensive for seniors to heat their homes when it's 30 below outside, as it was just a couple of weeks ago in Alberta, or making people pay more in order to drive to work, is punishing people for simply living their lives and doesn't make sense.
The theorists who support carbon tax will generally admit that it is a so-called Pigouvian tax, by which they mean there should be a taxation on negative behaviours, like sin taxes on booze and cigarettes.
Most Albertans don't think that heating their homes and driving to work and running their small businesses are something that should be punished.
I recently visited the Sundre Seniors Centre. It's a wonderful organization that keeps seniors active in their community. They do that for only $18,000 a year. It's a completely volunteer organization. They're now spending 7% of their annual budget on a carbon tax they can't afford, which is about to go up by another 67%. They don't get a rebate and they don't get any prospective offsetting tax cut, so they're looking at possibly having to close down their seniors centre.
There are real human impacts that the advocates don't talk about. That is why I am pleased to report to you that if Albertans elect a United Conservative government in next year's provincial election, the first bill that we will introduce in the legislature will be the carbon tax repeal act. We will completely repeal the NDP carbon tax.
If the federal government then seeks to impose the powers proposed in this bill on Albertans through a federal carbon tax, we will see the federal government in court. Our official opposition is making an application to the Saskatchewan Court of Appeal to seek intervenor status to join the Saskatchewan government's constitutional challenge of Bill . Should we be in office, we will ensure that Alberta does everything it can to get Alberta before the courts on the same issue.
We believe this is an unconstitutional intrusion into the exclusive provincial power to tax for provincial purposes. It's also an unequal application of a federal power on different provinces, which are being treated differently.
I close by pointing out that the advocates of carbon taxes know that the $50 tax is just the beginning. Environment Canada has said that in order to hit the Paris targets, it has to go to $300 a tonne. This is the “frog in the pot” syndrome. All of the carbon tax advocates here are simply trying to get people used to paying more to heat their homes and to drive to work, so that they can continually raise this to give more revenue to politicians and more control to government. A future Conservative government in Alberta will do everything it can to fight that.
Thank you very much for the opportunity to speak today.
I represent Canada's Ecofiscal Commission. We are a panel of senior economists from across the country supported by a cross-partisan advisory board with representatives from industry, civil society, and perspectives across the political spectrum. The commission's mandate is to identify and support policies that make sense for both the environment and for the economy. In other words, it is to identify policies that achieve environmental objectives at the lowest economic cost. Our research and analysis clearly indicate that carbon pricing is such a policy.
Today, I look to unpack three key aspects of carbon pricing as they relate to Bill. First, carbon pricing is effective in reducing GHG emissions. It creates incentives for businesses and households to choose lower carbon activities and technologies, it creates demand for low-carbon technologies, and it drives low-carbon innovation. We know that prices affect choice all through the economy, but there is also, as Mr. Leach alluded to, ample and empirical evidence that carbon pricing works.
In B.C., according to academic research, GHG emissions would be 5% to 15% higher had B.C. not implemented its carbon tax. More specifically, for example, in the absence of the tax, vehicles would be 4% less efficient per capita, gasoline demand would be 7% to 17% higher.
Ecofiscal's own modelling analysis from 2016 found that a carbon price rising to $50 per tonne in 2021 and $100 per tonne by 2027 could reduce emissions by about 170 megatonnes in 2030 and 80 megatonnes in 2022.
Second, economists agree that carbon pricing is the lowest-cost approach to reducing GHG emissions. Our same analysis finds that the cost of carbon pricing, even when rising to $100 per tonne by 2027, would only slightly affect economic growth. How does revenue recycled affect these estimates? At worst, carbon pricing would reduce growth rates by about one-tenth of a percentage point, but if revenues were used to cut income taxes, as provinces have discretion to do under the pan-Canadian framework, the impacts on growth would be negligible. Economic growth would remain positive and strong.
Alongside these small costs, we must also consider benefits. Carbon pricing can reduce GHG emissions, helping Canada to achieve its 2030 target. Doing so will also contribute to global efforts to fight climate change, and avoiding the costly impacts of a changing climate. These reductions will also have benefits in terms of reducing local air pollution, and thus improving local air quality and health.
Canada has ambitious targets for emission reductions in 2030. Achieving these targets will have costs, but carbon pricing can achieve those emissions reductions at the lowest possible cost. Other policies, including subsidies or prescriptive regulations, will cost more. Regulations that require specific outcomes or technologies in specific sectors are less flexible, and thus have higher costs. Carbon pricing does not require a preconception as to where in the economy or the country the lowest-cost opportunities for emissions reductions might exist.
The flexibility of carbon pricing also creates powerful incentives for clean innovation. Subsidies for clean technologies require picking specific technologies. Furthermore, they're often paid to businesses or individuals that would have adopted the clean technology even in the absence of the subsidy or with a smaller subsidy, thus raising costs.
Finally, well-designed carbon pricing can reduce emissions while also protecting the competitiveness of Canadian businesses, even while some of our trading partners do not price carbon. In particular, Ecofiscal's analysis of output-based pricing suggested that this approach, as included in Bill, can provide transitional steps forward to vulnerable industries. It creates incentives for industry to reduce GHG emissions by improving emissions performance, not by reducing production or investment in Canada. This is the approach that Alberta pioneered under the specified gas emitters regulation in 2007, and subsequently improved under the carbon competitiveness incentive regulation.
Canadian businesses, especially those in emissions-intensive and trade-exposed sectors, have expressed clear support for output-based pricing as a way to cost-effectively encourage emissions reductions without undermining economic competitiveness.
To conclude, a climate plan based on carbon pricing is the lowest-cost approach to achieving Canada's GHG emissions targets. The legislation here ensures carbon pricing applies across Canada, addresses concerns around competitiveness, but also gives provinces flexibility in designing provincial carbon pricing and recycling revenue.
Thank you very much.
Thank you very much for inviting me to take part in your meeting today.
My name is Dale Marshall. I am national program manager for Environmental Defence, but I am here representing Climate Action Network Canada, as their vice-chair of the board.
I'd like to make three points in support of the greenhouse gas pollution pricing act. The first is that a polluter pays system is an important tool in the fight against climate change. Secondly, Canadians can afford to put ambitious and far-reaching climate policies into place, including a price on carbon. Third, Canadians can't afford to leave any tools in the tool box, when it comes to this massive risk and given the urgency of the issue.
First, a polluter pays system is an important tool in reducing emissions, giving incentives for businesses and individuals to move towards clean energy and to move towards greater energy efficiency. It's been used in many places for many years. That's why seven of the 10 largest economies in the world have some form of a price on carbon. China has often been used as the bogeyman of climate change. At the state level, they have had a cap-and-trade system for many years and now they're implementing a national cap-and-trade system.
Design matters, though. The concessions that this bill gives to industry, in terms of its output-based pricing system, could make it less effective. In the past, when carbon pricing systems have failed to be as effective as possible, it is because of larger than necessary concessions to industry. What worries me is that Canada is doing the same thing here. There is a small portion of the Canadian economy that does face competitiveness concerns when you put into place a price on carbon, yet this bill gives blanket concessions and blanket exemptions to the industrial sector and that could be its undoing, quite frankly.
Second, the Canadian economy can afford to have a price on carbon across Canada. Four provinces already have it. The fact that those four provinces are leading the country, in terms of economic growth, does not mean that carbon pricing provokes economic growth, but it certainly shows that you can have both a strong robust economy and a price on carbon.
Scandinavian countries were the first to put these kinds of carbon pricing systems into place and generally, they have led the industrialized world, in terms of economic growth. The modelling shows that the difference you can have between doing absolutely nothing on climate change and having ambitious, robust climate policies is incredibly small and incredibly manageable. Environmental Defence and some of our partners published recent research from leading Canadian economists, which showed that the difference between reaching our Paris commitments by 2030 and doing nothing on climate change would be the difference between 38% growth in our GDP and 39% growth in our GDP between now and 2030.
Third, Canadians need to use every single policy tool that we have in order to fight climate change. Canada's 2030 target has been deemed to be highly insufficient to avoid dangerous levels of climate change and yet we're not on track to reach it. Therefore, proposed policies in the pan-Canadian framework on clean growth and climate change are incredibly important and they should be implemented with the greatest urgency and rigour. That includes carbon pricing across Canada. Leaving it off the table just leaves us further from doing the bare minimum to fight the biggest threat that we face.
Over the last decade, maybe even a generation, the history of Canada has been that we have increasingly understood the perils of climate change, yet we've done nothing about it. I certainly hope that the next decade isn't written by those who will favour polluters over the public good.
Thank you very much.
Thank you very much for the invitation.
Ladies and gentlemen of the committee, Mr. Chair, it is a pleasure for me to be here to represent Équiterre. My comments will mostly be on section 5, that is, on the price for pollution caused by greenhouse gases.
Équiterre is a not-for-profit organization with charitable status. We have 22,000 members and 110,000 supporters. We have offices in Quebec City, Montreal and Ottawa. We have been involved in environmental and climate issues for 25 years.
To tackle smoking in Canada, our government increased the price of tobacco. To tackle the acid rain that was destroying our forests, President George Bush senior put a price on sulphur dioxide using a cap and trade system. If we want to reduce emissions of greenhouse gases, GHGs, there has to be a tax on carbon. Moreover, this is an international commitment that Canada made in Paris and it is a policy essential for the achievement of our goal. It is a simple, inexpensive approach that has been shown to be effective on a number of occasions.
According to the recent report by Environment and Climate Change Canada on the estimated impacts of the carbon pricing system, it could decrease GHG emissions by 80 to 90 million tonnes in 2022, if Canada and all the provinces and territories adopt a pricing system. That is huge. It is the most significant tool at our disposal. In addition, still according to that report, the impact on the growth of the GDP in Canada would be negligible, as my colleague has already said.
Given that we are still forecasting a shortfall of 64 megatonnes of GHGs compared to our 2030 target, we need these estimated results from the price on carbon. Setting a price on carbon is the norm now. According to the World Bank, more than 67 countries, including China and several other trading partners of Canada's, have already set a price on carbon. It is high time that Canada took the same economic route.
Some are concerned about the potential economic disadvantage that Canadian industry might suffer, but the federal system provides for precise measures to mitigate the risks for the industries exposed to that type of competition. The new clean innovation fund or the low carbon economy challenge, for example, will stimulate a reduction in greenhouse gas emissions in a number of economic sectors, thereby ensuring that our industries remain competitive.
Quebec's greenhouse gas cap-and-trade system covers almost 85% of the economy and has recently expanded again as the Quebec market joined with those in California and Ontario last January 1. For Quebec, the carbon market is the most appropriate economic tool to guarantee reduced greenhouse gas emissions because of its reducing caps and also because of the income it generates. To date, the carbon market has generated revenues of $2 billion, which are channelled in their entirety to implementing Quebec's climate change action plan.
In passing, it must be said that, in Quebec right now, there is a political consensus on the carbon market. No major party in Quebec is opposed to it. It is here to stay.
The revenue from the carbon market auctions goes into the green fund. This fund pays for investments in the economy of tomorrow. Let me give you an example: the fund supports Lion, the Quebec SME that makes school buses that are 100% electric and has more recently started exporting them to California. One day, all school buses in the world will be electric and Quebec will have carved out a part of that lucrative market, thanks to the green fund.
We should note, however, that putting a price on carbon, though it is essential, is not sufficient in itself to attain our goal of reducing greenhouse gas emissions. As a result, provincial and territorial governments must implement complementary policies. Let me give you just one example: regulating GHGs in passenger vehicles, meaning regulating the energy efficiency of those vehicles. Without that, manufacturers are going to continue to spend billions of dollars in advertising so that they can sell us huge vehicles, and especially light trucks. That holds consumers hostage to fluctuations in the price of gas, as we have recently seen.
So it is essential to regulate the energy efficiency of vehicles and light trucks. This is a measure that complements the carbon pricing. The debate about carbon is not a new one. We have been talking about it for a very long time, at least since the 1990s. Consensus has been established in a number of ways. In 2008, the federal Conservative Party at the time adopted a climate change plan entitled “Turning the Corner”, which proposed setting a price on carbon.
Of course, my colleagues have already spoken about the provinces that have since set a price on carbon themselves. So we have some convincing examples.
I also want to emphasize that Canada's target for 2030 was set by the previous government.
I will close by saying that we feel that it is important for a carbon price to be part of a comprehensive climate change plan for Canada. For that reason, we support the bill before you.
Mr. Chair, members of the finance committee, my name is Graham Saul. I am the executive director of Nature Canada.
First, I'd like to acknowledge that budget 2018 represents a historic federal investment in nature conservation. Nature Canada is truly excited about the promise of expending the $1.3 billion prudently over five years to reverse the decline in biodiversity in Canada and to establish managing protected areas and recovering species at risk. Thank you to everyone who played a role in supporting those provisions.
On the subject of the greenhouse gas pollution pricing act, I think it's worth remembering that it was 26 years ago, in May of 1992, that Canada signed the United Nations Framework Convention on Climate Change. It has been more than 25 years since Canada first promised to reduce its greenhouse gas pollution, and we've barely begun to follow through on that promise.
And it was about 14 years ago that former Liberal prime minister Paul Martin first announced plans to put a price on greenhouse gas pollution by creating a market for emission reductions in all sectors of the economy, and it never happened. Then, in May of 2008, almost exactly 10 years ago today, Conservative federal environment minister John Baird called carbon trading “a key part” of the government's new Turning the Corner plan to reduce greenhouse gas emissions.
Later on that year, also in 2008, the Conservative government of Stephen Harper won a minority mandate with a campaign that clearly pledged to develop and implement a cap-and-trade system for greenhouse gases and air pollution, and it never happened. Then, in 2015, Canadians supported a Liberal election platform that made a clear commitment to put a price on greenhouse gas pollution, and here we are today.
What are just a few of the things that have been happening in the meantime? The city of Calgary had two 100-year floods in only eight years, the most recent of which, in 2013, resulted in $6 billion in financial losses and property damage. In 2016, two years ago this May, almost 90,000 people were evacuated from wildfires across Fort McMurray, and thousands of homes were reduced to ashes. According to the Insurance Bureau of Canada, the Fort McMurray wildfire became the costliest insured natural disaster in Canadian history, with an estimated $3.77 billion in claims filed by mid-November, 2016.
On this day last year, I watched as the military was called in to help deal with the fact that my hometown of Ottawa-Gatineau was flooding. The flooding caused more than $220 million in insurable damages. A couple of months later, I spent a few weeks in British Columbia as the worst recorded fire season in the history of the province unfolded. More than 1,300 fires burned more than 1.2 million hectares, displacing 65,000 people from their homes and costing B.C. over $500 million. The wildfire season included the longest state of emergency in the history of British Columbia, lasting a total of 10 weeks.
Now, all we have to do is look east to the tragic situation unfolding in New Brunswick. As Premier Brian Gallant put it:
We are seeing weather events like we have never seen before. This is most likely going to end up being the largest, most impactful flood that we have ever recorded here in New Brunswick....
I've been asked to comment on what I think about part 5 of Bill , which enacts the greenhouse gas pollution pricing act and makes the fuel charge regulations. I think this is a policy that we should have adopted at least 10 years ago. I think we need to use all the tools in the tool box, including carbon pricing, to finally move this country in the right direction. We need to stop fiddling while places like New Brunswick drown. We need to stop fiddling while places like British Columbia burn.
Canadians have consistently voted for leaders who have promised to take action to fight climate change, and now we need to stop playing politics with what is quickly becoming a life-and-death issue for communities and species across Canada and around the world. We need to position Canada to be a leader in the economy of the 21st century, and putting a price on greenhouse gas pollution is part of that process.
We need to position Canada to be a leader in the economy of the 21st century, and putting a price on greenhouse gas pollution is part of that process.
More importantly, we need to finally send a signal to our children and grandchildren that we are prepared to invest in solutions instead of turning our back on the problems and letting them deal with the resulting damage.
We've witnessed something extraordinary at this committee. We saw difficult questions put to a witness who is a parliamentarian, and the parliamentarian actually answered them. He was asked a series of yes-or-no questions that he answered. He provided an answer to every one of Ms. O'Connell's questions.
I contrast that with what happened here, for example, last Thursday, when the was at the table and was asked repeatedly by Mr. Poilievre about supplying evidence that had been redacted resulting from an access to information request. He was asked repeatedly to end the cover-up, and was asked repeatedly, “What will the cost to ordinary families be for this federally imposed carbon tax?” We did not get any answers, not even an attempt at an answer, so I applaud Mr. Kenney for answering questions at committee. We don't see that very often here.
My question to Mr. Kenney is this. You've spent the last two years campaigning, and it's extraordinary what you've accomplished in uniting the Conservative movement, winning the leadership of that new party, and then winning a by-election. During all of your interactions with regular Albertans, can you relay to this committee some of the feedback that you heard from ordinary Albertans about what they think of the policies of this federal government specifically with regard to the carbon tax?
Almost half the questions here could have easily been answered if the government would stop covering up the true cost of the carbon tax to low-income Canadians. Affordability is the number one thing I always hear about, and affordability or any form of taxation is a great question, but especially the carbon tax because it punishes those at the lowest income scale. It's a tax on everything. I know Mr. Kenney and others on the Conservative side all across the country have used this terminology: It's a tax on the essentials of living, and that's what it is.
The government keeps talking about people needing to make better choices. I have an arena in Erin Woods in my riding and when the carbon tax was introduced provincially it punished the families who used the arena through higher fees, higher costs, when it came to just going out and having a day of hockey for the kids. That's the issue, and if they would stop covering it up we'd be able to have a fulsome debate on it and be able to understand the true impact it will have on every Canadian: the affordability of everyday activities, heating your home, but also just going out for a game of hockey.
The euphemism that's often used is there's a tax on everything, making better choices, but they're trying to change the behaviour of people. They don't like what people want to do, go play hockey, heat your home to a temperature that you like. That's what I hear in my riding.
Mr. Kenney, again my questions are going to go to you. Forcing the actions of people, forcing people to do what the government wants them to do, obviously you disagree with it, and obviously you've heard lots of stories from Albertans all across the province. Can you share those with the committee?
I think there is a fundamental philosophical difference here. That's a fair point. What do we really know? We know that those countries around the world that are doing the most around this issue—countries like Germany and Norway—are doing perfectly well economically. So the sky doesn't fall. In fact, there's evidence that you can perform very successfully economically if you take this problem seriously.
We also know that provinces in Canada, like Quebec and British Columbia, that are trying to move forward are doing perfectly well economically and are taking steps to protect the least advantaged people in their provinces in ways that many other provinces aren't.
We also know, though, that we have a serious problem on our hands. If you actually believe in the science—and I think this is where the fundamental philosophical difference comes in—then you have to draw the conclusion that it would be reckless and irresponsible to continue on the trajectory we are on today, that it would fundamentally undermine the well-being of our children, and that it would cause potentially unprecedented harm to our economy and to future generations—not to mention the fact that the poorest people in the world, those least responsible for the problem, are the ones who will suffer first and worst if we fail to take action.
The fundamental philosophical difference we have is this: do you actually care about the problem? Do you actually care about what the science of climate change is telling us or the implications of doing nothing? If you do, then the secret is very clear. When we look at jurisdictions that are actually making progress on this issue, what do they have in common? They are trying. The jurisdictions around the world that care about this problem and are doing something about it and are actually making progress on reducing greenhouse gas emissions and ushering in the clean energy economy of the 21st century, what they ultimately have in common is that they are trying.
So if everyone around this table does truly care about this problem, if we do not suffer a philosophical divide on that question, then every party around the table has a responsibility to come forward with a plan that reflects the fact that they truly want to try to address it. In the absence of that plan, it's very difficult to come to the conclusion that we do in fact share a concern about this problem.
Welcome, everyone. It's been a very informative and spirited conversation this afternoon.
I have a couple of things. I keep hearing about the economy. I know that, for the residents of my riding, the economy is the most important thing, ensuring people have a good future and a bright future for their children.
As someone who's followed the economy for over 20 years of his life—and Mr. Leach, I've read a lot of your material, along with the materials of my alma mater professor, Mark Jaccard over at Simon Fraser University—I think about where our Canadian economy is, with 85% of the provinces now operating under a pricing of carbon or some sort of mechanism. We're doing quite well, and this was affirmed last week. A.T. Kearney came out, and Canada is the number two place in the world for preference of foreign direct investments.
Mr. Kenney and I visited the beautiful province of Alberta. I am originally from the west coast. We visited the Alberta industrial heartland. Seeing the number of investment decisions that have been made in the polypropylene and propylene businesses that IPL has announced and so forth and the number of opportunities there, we know there is just phenomenal activity going on in that area of Alberta.
I covered the oil and gas sector. I'm not asking questions; I'll get there in a second.
To Mr. Leach, the question I have is this. If you look at the empirical evidence, and you look at where industry is going.... Look at Daimler in Germany, where they're switching their entire fleet of dregs or trucks, the ones you see on the Alberta highways and on the Ontario highways, to electric. They understand.... Mr. Kenney alluded to ragging the puck. I like the analogy of knowing where the puck is going and making sure you're there. That's the analogy I use.
To Mr. Leach, innovation, yes, but we need a mechanism for pricing carbon to get at the root of the issue.
I want to make one comment. As I sit here and listen to this debate, I think we've had a really good discussion. Canada is going to be left out of being part of the solution if we don't address the climate change issue, but I would say to all those folks who demonstrate against our pipelines and the ability to get our resources to market, that's not a solution either.
For provinces such as Alberta and others to come on side, I think they have to see that the people in the environmental community are on side in allowing us to deal with climate change. We also have to get our product to market. I just wonder sometimes in this country.... We're a country with natural resources like no other, yet we can't find a way of getting our product to market, and we can do it in a way of lowering greenhouse gases.
Jason, I know the difficulty, as you do, of federal-provincial issues, but this country has more opportunity than any other in the world in terms of our natural resources, the size of our country, and everything else. We have to find a solution that balances climate change against the ability to get our resources to the market, and do the right thing for our kids and our grandchildren. That's where I'm coming from.
Thank you all for the discussion. I think it was a lively discussion. I want to end by saying that we have to find a way of bringing the sides together here and getting to a solution.
With that, we'll suspend for two minutes and bring up the second panel.
Thank you very much. Mr. Chairman, honourable committee members, I would like to thank you all for inviting the Green Budget Coalition to speak to you today.
The Green Budget Coalition has been active since 1999. It is really unique in bringing together the expertise of 20 of Canada's leading environmental organizations, including many groups you would know well, such as Ducks Unlimited, the Nature Conservancy of Canada, CPAWS, and Nature Canada, which collectively represents over 600,000 urban and rural Canadians from coast to coast.
The Green Budget Coalition's mission is to present an analysis of the most pressing issues regarding environmental sustainability in Canada, and to make a consolidated annual set of recommendations to the federal government regarding strategic fiscal and budgetary opportunities. We work on a wide range of issues including climate change, energy, nature conservation, first nations health, and freshwater and waste-water issues.
Today, I would like to address two points. I'd like to discuss carbon pricing, of course, and then also talk about some important progress in budget 2018. I'm really echoing messages that were in our recommendations for budget 2018, which we sent to you all last year and discussed with senior representatives of all of your respective parties.
First, I would like to express the Green Budget Coalition's strong appreciation for budget 2018's investment of $1.3 billion over five years to create and manage protected areas and protect species at risk. This unprecedented federal investment has a potential to be a game-changer for nature conservation in Canada and could help move Canada from laggard to leader in terrestrial and marine conservation.
We're also appreciative of other funding measures in budget 2018, particularly the $1 billion for environmental laws, new funding for first nations drinking water and waste-water systems, protecting whale species, implementing and enforcing the federal carbon pricing system, and for science and research.
How this historic $1.3-billion investment is allocated will be critical to determining whether Canada delivers on our commitment to protect at least 17% of our landscape and 10% of our oceans by 2020, to substantially exceed this target in the long term, and to recover species at risk. Consistent with our past recommendations, the coalition encourages the government to allocate most of this funding to partnerships by supporting the involvement of provincial, territorial, and indigenous governments, as well as other partners, including for provincial parks and indigenous protected areas, and to primarily allocate the rest to support federally led expansion and more effective management of federal protected area networks.
The coalition and our members are very interested in continuing the constructive dialogue we have had with you and your colleagues and government officials to ensure that we maximize the impact of this important federal investment.
Second, on carbon pricing, I would like to reiterate the Green Budget Coalition's strong and long-standing support for implementing an effective price on greenhouse gas emissions. Climate change poses a major risk to Canadians, to the nature that Canadians hold dear, and to the nature that successive governments over the years have made major investments into protecting. A price on carbon is an important element to any climate change plan, applying the polluter pays principle, and giving incentives for businesses and individuals to reduce greenhouse gas emissions, move towards cleaner energy sources, and contribute to phasing out fossil fuels. We support combining a carbon price with measures that protect financially vulnerable Canadians and with measures to address competitiveness concerns that are targeted, transparent, and temporary.
Along with other strong government measures, research shows that a carbon price that continues to ramp up every year to 2030 is needed for Canada to reach its 2030 greenhouse gas emissions target. The sooner that we take substantive and effective action on climate change, the more effective it will be and the less it will cost Canadians. Supporting the implementation of an effective price on carbon now is an important step forward that, years from now, you will all be able to look back on with pride.
To conclude, I would like to thank you all for inviting the Green Budget Coalition to appear before you today. I look forward to your questions.
Thanks for having me back.
Polls show that a majority of Canadians don't understand or have never heard of a carbon tax. This demonstrates the gulf between them and the largely academic-bureaucratic elite who advocate this tax. For nearly three years, pro-carbon tax governments and bodies such as the Ecofiscal Commission have controlled the commanding heights of this debate with funding and media support that the fossil fuel lobby can only dream of, but they have failed to parlay these huge advantages into public understanding and support.
The main economic selling point for a carbon tax is that it leads to a better tax system. However, this is strictly based on several conditions, including being revenue neutral; every dollar raised by the carbon tax must be offset by lower income or payroll taxes. These promises were quickly forgotten, revealing it as just another tax grab that antagonized people concerned about the economy. Meanwhile, the promised reduction of carbon emissions is already falling short because the levies were not enough to materially change behaviour, disillusioning environmentalists—except some of them. The carbon tax did not bridge the gap between these two opposing groups, speaking for the environment and the economy, to create the social licence to build a pipeline. Finally, the election of a U.S. administration uninterested in its own carbon tax meant higher energy costs in Canada automatically put our industries at a competitive disadvantage without any prospect of lower continental emissions, making the whole exercise both costly and pointless.
For a trading nation such as Canada, raising the cost of domestic production but not taxing imports based on their carbon intensity penalizes our producers. This may curtail Canada's carbon emissions but does nothing for global warming if production simply moves to countries with lower emissions standards. Meanwhile, Canadian exporters are at a competitive disadvantage with the U.S.
As a practical matter, proponents of the tax have not disclosed what level of tax will be required to achieve Canada's climate change commitments. The case for a carbon tax has been disingenuous; advocates rarely discuss publicly how high a carbon tax is needed to attain the lower emissions targets, if that really is the goal. Is the current $50-a-tonne carbon tax the long-term ceiling for a carbon tax? If so, then they admit that most of the reduction in emissions is going to come from technology or regulation, since a $50-a-tonne tax has little impact on behaviour given its inelastic demand. Or is there a plan to raise the tax towards $200 a tonne, the level more transparent economists say is needed to change societal behaviour enough to move significantly towards emission reduction targets? However, saying so risks public support, so this is rarely mentioned. The Canadian public usually has a good sense when they are not being addressed in a forthright manner.
The politicians who most enthusiastically support a carbon tax are identified with left-wing governments such as in Ontario and Alberta. This has politicized carbon taxes, reducing their potential appeal to the broader base of the population concerned about climate change but hostile to a carbon tax. Instead of cultivating broad-based support, proponents of the carbon tax smugly stayed inside the safety of an echo chamber with their left-wing supporters and declared victory while demonizing opponents as dim-witted fossils from another era.
Without public support across the political spectrum that would ensure its long-term viability, the tax risks disappearing after its opponents are elected. The GST shows how easy it is to get elected by promising to reduce or eliminate an unpopular tax, even if it is universally beloved by academics and bureaucrats. The failure of carbon tax advocates to gain the support across the political spectrum that legitimizes a tax and insulates it from election results reduces the very efficiency of the tax, which is supposed to be its major advantage. The rush to impose a carbon tax before properly building public support for it lowers its efficacity because even when implemented, people don't believe it will endure and therefore do not invest in the lifestyle changes that would enhance energy efficiency and not just trim energy consumption.
The carbon tax is also unpopular partly because short-sighted, tax-hungry politicians refused to offset it with cuts to other taxes. More importantly, it imposes immediate costs on the vast majority of Canadians who still drive to work and heat their homes with fossil fuels while the benefits lie decades in the future. Finally, the federal and Alberta governments must shoulder the blame for failing to deliver on their promise that a carbon tax would buy social licence for pipeline construction, with the Kinder Morgan proposal the latest example.
There are two fundamental flaws in the academic assumptions underpinning the carbon tax. First, it assumes that changing long-standing behaviours is best accomplished by tinkering with the price system. This ignores that the true miracle of capitalism is not the efficient allocation of resources through the price system, although that is certainly one of its attributes, but its unmatched capacity for relentless innovation and technological change.
Game-changing new technologies are needed to combat climate change, not government fiddling with relative prices. The fact that our knowledge of how economics works in this area is limited to modelling the price system and not innovation is a reason to be skeptical about economics and to strive to better understand innovation, rather than focusing on the limited and less important areas economics purports to understand.
Second, having claimed that a carbon tax is the most efficient way of reducing greenhouse gas emissions, and hence climate change, carbon tax advocates assume that slowing climate change itself, via a carbon tax or any other mechanism, is the most efficient way of improving the human condition. Bjorn Lomborg, the self-styled skeptical environmentalist, convened a panel of experts to ask how limited resources could be allocated for the maximum benefit. Fighting climate change ranked 17th out of 30 initiatives, behind feeding preschool children, more immunization, fighting malaria, increased crop yields, and implementing early warning systems for natural disasters like tsunamis and earthquakes. Climate change ranks low because it imposes large economic costs while delivering uncertain benefits decades in the future.
We have many pressing needs that our current state of technology deals with more effectively than climate change.
I'd like to thank the committee for the invitation to appear today. I'm Isabelle Turcotte, senior analyst at the Pembina Institute. We're a national non-partisan think tank that advocates for effective and strong policies to support Canada's clean energy transition, and we've been doing for over 30 years.
My comments will be limited to part 5 of the bill today. Canada has an unfortunate history of not respecting its promises on climate. We pulled out of Kyoto and we're on track to missing our Copenhagen target. We made another promise in Paris and collaboratively, over a year coming back from Paris, we developed a new plan to keep this promise. This plan was qualified by Canada's commissioner of the environment and sustainable development as, “likely one of the best plans we’ve seen to date”.
This is great news for Canadians who, according to a recent poll, want to see credible action on climate change. Indeed this poll showed half of Canadians would only consider voting for a party committed to fighting climate change. Ninety-one per cent of Canadians believe we have a moral responsibility to do so for future generations.
Let's be clear about what our options are. There are three policy options to reduce carbon pollution. These are, number one, putting a price on carbon that results in market-based emissions reductions due to a price signal. Number two is to regulate specific actions that result in emissions reductions, for example, the new federal methane regulations. Number three is financial support and subsidies for innovation or deployment of emissions reductions technology. For example, there's the low carbon economy fund, which will help provinces leverage investments in clean growth. Canada's climate plan combines all three options.
According to the economist and Nobel prize laureate Joseph Stiglitz, a well-designed carbon price is an essential part of any strategy to reduce emissions in an efficient way.
Here are four reasons to price carbon pollution.
Number one, it is the lowest-cost pathway. As was discussed by my colleague from the Ecofiscal Commission, carbon pricing not only involves lower costs than other policy approaches, but the GDP cost is low in absolute terms. Number two, it lets industry chose its own path. Number three, it offers stability and predictability. Carbon price gives that consistent signal to promote the investments we need today to create that competitive low-carbon economy of tomorrow. Number four, it ensures transparency and fairness. Carbon pricing reflects the polluter pays principle and contributes to distributing costs and benefits equitably, avoiding disproportionate burdens on vulnerable groups through revenue recycling. As was discussed earlier, only 10% to 12% of carbon pricing revenues are needed to address equity concerns for the bottom 40% of households.
A price on carbon is becoming the norm around the world, and from an economic competitiveness standpoint Canada cannot be left behind. Luckily, in 2017 pricing carbon pollution became mainstream economic policy in Canada. Pricing systems are now in place in the four largest provinces. The same poll I mentioned earlier found that 78% of Canadians support putting a price on carbon.
Here's what we know about the impact of carbon pricing in these provinces. In 2017, Quebec, Ontario, Alberta, and B.C. were the four best-performing provinces in terms of GDP. The data soundly refutes the misconception that a carbon price hurts economic competitiveness and growth. In B.C., the carbon tax generated a net benefit for taxpayers and reduced taxes on employment, investment, and economic growth. B.C.'s carbon tax did not disproportionately affect low-income households. In fact, the opposite is true, it was progressive.
The federal government is now moving forward to ensure that carbon pricing is applied across Canada and we support this. According to the federal government, a pan-Canadian price on carbon would cut carbon pollution by 80 to 90 million tonnes by 2022. Our own analysis at Pembina, using our energy policy simulator, which is Canada's first free open source tool, shows that even larger reductions are possible. To put this 80 to 90 million tonnes into perspective, Canada needs to reduce its emissions by about 215 million tonnes by 2030. This cannot be achieved without carbon pricing.
As we sit in this room, Canadian diplomats are finishing another day of negotiations at the Bonn Intersessional, representing Canada, collaborating in good faith to implement the Paris Agreement. Pricing carbon is one of the most direct ways the Canadian government can support its own diplomats in doing the very difficult but important work of convincing the rest of the world that we are capable of following through on our climate commitments.
Thank you, Mr. Chair and members, and thanks for inviting me.
I'm here today wearing two hats. I'm the chair of the Smart Prosperity Institute at the University of Ottawa, which is one of the major economic environment think tanks and research institutes in the world. We've got over 100 of the world's leading researchers on innovation and clean growth. We were just awarded the largest research grant by SSHRC to spend six years working with them to try to figure out how you drive clean innovation and growth across the economy.
For my second hat, we also have a leadership council that has 30 CEOs from across Canada's economy, mining, forestry, oil and gas, banks, and others who share this ambition.
I want to speak to two main points today. The first point is why carbon pricing is important for Canada's economy, and second, why it's the most cost-effective way to reduce emissions. If I have a minute, I may add one more about a tax incentive.
Let me turn to my first point.
Carbon pricing is a good idea not just for the environment but for Canada's economy. Don't take my word for it. Here are the words in a letter written to the and premiers by a group of prominent CEOs across Canada recently:
Building a high performance, low carbon economy is a major economic opportunity and a vital environmental responsibility for Canada....
The world’s most advanced economic players are hard at work forging cleaner, more innovative economies, fuelled by a desire to compete in a changing global marketplace – one with huge potential to spur growth in all parts of Canada’s economy [including resource and manufacturing sectors]....
...Putting a price on carbon, to reflect the real environmental costs, is the most cost-effective way to reduce emissions, stimulate innovation and drive energy efficiency....
...the revenues can be used to advance climate and/or economic goals....
[Carbon pricing is an essential part of the] mix of...policies (incentives, infrastructure and investment) [needed]...to drive clean innovation – which is the key to generating climate solutions and securing Canadian competitiveness and jobs in a low-carbon world.
That is from environmental radicals like John Manley; the heads of mining, forestry, aluminum associations; Dominic Barton; and CEOs representing over $300 billion in revenue and a million jobs across Canada.
In my materials, you'll see quotes from each of them setting out why they think carbon pricing is critical to clean innovation and competitiveness for Canada. It's the same reason why more than 150 companies have signed on to the carbon pricing leadership coalition, including all five of Canada's big banks and three major oil companies, why seven of the 10 largest economies in the world now price carbon, including China, which just brought in the world's largest carbon pricing market, and 10 U.S. states, representing 30% of the GDP.
Carbon pricing isn't a left-wing or a right-wing idea. The three first carbon pricing systems in Canada were all brought in by centre-right governments. In B.C., Alberta, and Quebec it's been championed around the world by conservative leaders from Arnold Schwarzenegger to Preston Manning to Angela Merkel. It's just a good idea.
One of the major benefits is driving clean innovation, which is becoming a critical factor for global competitiveness in the years ahead. You can already see it beginning with the massive technology advances we've seen in clean energy and electric vehicles driving down costs and driving up markets. This trend is going to scale it across the economy in turning resource sectors, agriculture, and manufacturing, to create global economic opportunities estimated at more than $23 trillion by the World Bank, including resource and manufacturing sectors by 2030.
We just completed the most in-depth study ever done in Canada on how to drive clean innovation. This is the insomnia cure. This is the short version which was released by a group of 28 CEOs last month at GLOBE. The short version states that unleashing clean innovation by the private sector requires a mix of smart policies, incentives, infrastructure, and investments, but most important of all is carbon pricing, because it sends a signal that ripples across the economy.
The second point I wanted to make is that carbon pricing is the most cost-effective way to reduce emissions. You've heard several people speak to that today, so I won't say much on it other than that almost every credible economist supports that idea, and there's not much they agree on, I would add. There's tons of evidence and experience to support it.
Just look at B.C., in our own backyard. It brought in a carbon tax in 2008 that ramped up over five years like this one. In the time since that came in, if you compare B.C. to the rest of Canada, it has reduced GHG emissions by 7% more than the rest of the country, and its GDP has outperformed the rest of Canada by double in that period.
The evidence doesn't support a claim that the carbon price was the reason for the better economic performance, but it certainly didn't hurt the economy. It's the same story in Europe. If you look, over eight years, since its ETS came in—this is an OECD study that just came out comparing firms covered by Europe's price to those not covered—the ones covered by it have reduced emissions by more than 11%, and outperformed the other firms on revenue, growth, employment, investment, and innovation.
It's also not a perfect system, by the way. Quebec and Ontario have done better.
Part of the reason for that is that the revenues from pricing can be reinvested in the economy. They can be reinvested in tax cuts, as British Columbia has done—taxpayers have come out ahead by more than a billion dollars because of the reinvestment—or it can be reinvested in incentives for energy efficiency, clean vehicles, or firms to invest in clean technology, as Ontario and Alberta have done. It's one of the reasons why the four strongest economic performers in the country last year were the same four provinces that priced carbon.
The last point, just to make it briefly, because this is the finance committee, is that the CEOs on our leadership group are very concerned about competitiveness, and I'm sure all of you are, too, particularly in the wake of the U.S. tax cuts. When we released this “Clean Innovation” report last month, one of the recommendations made was—in addition to going ahead with carbon pricing, which is critical for innovation—to pair it with targeted tax incentives, one of which is an accelerated capital cost allowance for all clean technology. In the U.S., they've given an accelerated capital cost allowance for all technology, even dirty technology. Matching that just for clean technology would send a signal that would reduce emissions, increase investment in Canada in leading-edge technology, and be good for reducing costs for firms and competitiveness. I recommend that to you.
To wrap up, this country has a history of far-sighted policy leadership to prepare Canada for major economic changes. We did it 30 years ago when we realized that the world was moving towards freer trade. Even though we were a nation built on economic protectionism for a century, the Conservative government at the time got ahead of the global change by bringing in a free trade agreement. It also signed the UN Framework Convention on Climate Change, by the way. It was the same government that did both.
We're at that same kind of moment now. The world is moving towards a low-carbon economy as a fundamental economic shift. We need that same kind of far-sighted policy leadership from our governments today. People will look back on it in the same non-partisan way that we look back at the free trade agreement as a wise decision for Canada's economy.
Thank you to our panellists for coming today.
I think that we've heard in the last two panels that there's an overwhelming consensus—except for one panellist, who we shall not name—that the facts support a price on carbon. Now we can disagree on what type of price that will entail, the process of that price, whether it should be revenue-neutral, but the facts do support that pricing carbon will lead to a reduction in GHG emissions.
We also know, factually, across the world, when you look at any economist or any environmentalist, that the earth is getting warmer. Over the next century, it's supposed to go to an increase of 3 to 5.3 degrees Celsius, which is the biggest increase that we will ever have had in the history of planet Earth. That's a challenge. Like Stewart said, Canada has to be forward thinking. It has to meet this challenge head on.
You mentioned that, across the globe, economies that have done carbon pricing have had stronger economies and good economic growth. Can you please talk to that a little bit more, even outside of the Canadian context, so we can see what other jurisdictions in the world have done, a carbon price, and their corresponding GDP growth?
Thank you to our witnesses.
I hope MP Grewal can count on the support of his own father in his own riding.
Politics aside, I think, Mr. Elgie, you had pointed out that in the United States they have created the equivalent of a CCA, capital cost allowance, where within one year it can be used toward any kind of equipment including, as you said, a coal-fired facility. I think that illustrates the example that if we were to do something similar here, only for clean technology, many people would say that many of those clean technologies are much more intermittent than a coal-fired generation facility. I'm not arguing for coal, but I am saying that it's a competitive challenge because coal can be done quite cheaply in comparison to intermittent energy sources.
I think this raises the bigger question of competitiveness, and I do also think we need to discuss carbon leakage.
Mr. Chair, I'd like to ask a question of each of the witnesses. Mr. Elgie talked a little bit in his presentation, and so did Mr. Cross.... What is your definition of carbon leakage, and in regard to Bill ? I just would like to hear what you have to say about those two things—your definition of carbon leakage.
As the father of five-year-old twins, I'm an expert in leakage of all kinds. I'll talk about the carbon kind.
What you don't want is what my colleagues alluded to, which is that firms simply move across the border and continue to emit the same emissions they would have emitted in your country, and keep all the revenues and jobs there. That's the lose-lose option.
What you do want, though, is to keep your firms here and give them an incentive to be among the leaders in low-carbon production, because then they're going to get ready to compete where the world is going.
You want to have both, which is why you want to ease the economic transition. That would be the same as we did with an economic transition on the free trade agreement here for a few years, as you moved from a closed economy to an open one. There will be an economic transition here. Things like output-based pricing, things like accelerated capital cost allowance, and things like revenue recycling help firms as they make the transition to being low-carbon competitive without having to move elsewhere to do that.
It shouldn't be a long-term solution. In the long term, free markets are going to determine this, but this country has supported firms during economic transitions for a hundred years, and we should do the same here.
I want to appreciate what Ms. Turcotte said specifically within Canada, because Bill , in essence, is taking away the ability of a province. Let's give the example of Saskatchewan, which has built itself on being competitive with its neighbours. You also have northern territories, like Mr. McLeod's, where the cost of living and the cost of doing business are so much higher, so to be imposing a centralized framework upon them basically may seal up Canada inter-jurisdictionally between provinces and territories. Now actually—with the United States being at a different rate—I think we need to have more discussion now.
Here is what the B.C. NDP provincial government describes as carbon leakage in its 2018 budget:
...industries that compete with industry in countries that may have low or no carbon price. If...industry loses market share to more polluting competitors, known as carbon leakage, it affects our economy and does not reduce global greenhouse gas emissions.
This, of course, is in B.C. with a carbon tax already. I should say that my end quote here is on gas emissions, so this is coming from British Columbia, with a carbon tax already.
We've already seen a lower price that was first installed by former premier Campbell and his government, where the cement industry was hard hit and has continued to receive subsidies and has struggled to maintain its market share.
I believe that the B.C. NDP are also quite worried about one of their favourite industries, which is pulp and paper, and you know we all have our favourite industries. I think the rising cost in the carbon tax, as set out in Bill —as of April 1, we saw gas prices go up in British Columbia because they are moving $5 per year—will only get worse.
What obligation do we have as parliamentarians to ensure that, for those industries where many families are impacted, and those small and medium-sized businesses will be impacted, we are able to stem this issue of carbon leakage? I would open that to anyone.
In terms of a price on pollution, we often hear that, in a number of areas, polluters should clearly pay for the pollution they create.
In the 21st century, does it make sense, in your opinion, that people should have to pay if they pollute, or if they send their waste somewhere, to landfills, for example? It can be done through taxes, municipal, provincial, or any other kind.
In your opinion, is that notion logical, given that, in most other areas, it is already taken for granted, and that we are currently just catching up in terms of a carbon strategy?
Ms. Turcotte, do you have any comments on that, or on any of the other questions I raised?
I think the first point is that this is a real cost, and part of Adam Smith's invisible hand is that free markets work when they charge real costs. The reason we have too much pollution in the world is that private markets don't naturally capture those costs and it falls upon government to actually be responsible for imposing that collective cost, so that markets work more efficiently, not just for environmental reasons but for economic efficiency.
One of the things I've found is that none of the people who oppose carbon pricing can come up with a more cost-effective way of reducing greenhouse gas emissions. They say that they don't like the cost of a carbon tax, but I've never heard a single one of them come up with a more cost-effective way to reduce emissions. I'm left wondering if they really believe genuinely in reducing greenhouse gas emissions or not. That would be an interesting debate to have.
I think in terms of this issue of how much the public gets it, there's probably some truth to it. I would say there are lots of things in terms of running an economy that not everyone understands. When the governor of the Bank of Canada changes the Bank of Canada rate, I'm not sure everybody, including me, understands all the reasons for doing that, but that's part of the reason why we have government to show leadership.
I think the average person does understand that the world is changing, when they look around them and they see more and more high-mileage vehicles and electric cars on the road, they see when they flip their electricity switch on that it's coming from clean sources, and they see more and more energy-efficient buildings. They see that the world is moving toward a cleaner, more innovative, low-carbon economy and that things are still working fine, that we can make that change, and they understand that we need to accelerate that change. Part of the reason we elect governments is to help them figure out how to do that.
Would it be great if every person understood all the economics of a carbon price? Sure, but part of the reason we have governments is to help make those leadership decisions.
I guess I'd start by questioning the issue of whether or not carbon pricing must be revenue neutral.
I think governments make choices about how to spend tax monies all the time; that's part of the fundamental reason we elect governments. I'm a co-founder of the Ecofiscal Commission, so I believe in everything it's done. I think there are a lot of strong economic arguments for taking carbon tax revenues and reinvesting them in tax cuts. Probably if I were elected, I'd put a lot of the revenues toward that.
When government reinvests in the economy, whether it be in clean infrastructure, public transit that lowers the cost for people to get around, home energy incentives that lower people's fuel and heating costs for their homes, incentives for companies to invest in clean technology and increase their profitability, those are all investments in the economy, too. Those are all investments that can actually reap economic rewards. In fact, your government is making a massive investment in infrastructure on that very same argument, that building the physical and technology platform for the future is a really smart investment in the economy.
I think there is a strong argument for tax cuts. If you look at the modelling we've done at Ecofiscal, for example, reinvesting the revenue in technology incentives, both for businesses and homeowners, you see it generates almost the same positive economic outcomes as reinvesting it in income tax cuts.
I appreciate all the presenters here today.
Climate change is something that is very real in my riding. I represent the Northwest Territories. We certainly see the impacts. Yesterday the river broke on the Mackenzie, and the ice moved. I had a lot of people contact me and voice concern about how thin the ice is. The ice is about a foot and a half thick. When I was growing up as a young child, the ice was five to seven feet thick. It was a spectacular event to see the Mackenzie River break up. There was lots of thundering noise and ice pushing up the bank. You don't get that anymore. I flew over the Beaufort Sea this winter, in January, and in parts it hadn't frozen. It was still open. We've never seen that before. People in the communities are saying they're not able to go hunting. They used to be able to go 40 miles onto the ocean. Now they can barely go five.
So we're really starting to see a lot of impact. A lot of people are asking, “What can we do?” Pricing on pollution is one area we can certainly focus on, but there needs to be more. If we're going to have an impact, we certainly have to do a lot of the things at the same time.
I think somebody mentioned today that if we're going to have change, we need good planning. Many of the indigenous governments that I represent—we have seven large indigenous governments in my riding—talk about land use planning. Every one of them wants to do land use planning where we have a plan to develop the economic opportunities and where we also have, in the same plan, conservation areas.
My question is for the Green Budget Coalition, because I know you work with organizations that work with protected areas, but you also do a lot of planning on how we can protect what we have. Can you maybe talk a little bit about the importance of a good plan, especially a land use plan where we can do conservation planning, economic planning, protect our historic sites, take into consideration what the indigenous governments are telling us in areas that are sacred to them, and have everybody have buy-in rather than always butting heads on the issues?