What's wrong with the carbon tax in Canada

A few people think that a carbon tax is a horrible idea. It's just another tax for the government to get more spending money for their programs. The conservative politicians in this country would surely want you to believe this. "There are better ways to reduce carbon emissions than a carbon tax", they say. Except that this isn't true.

For starters, before carbon taxes came to be, powers left to their own devices did not do much to reduce emissions. Why? Because there was no incentive to do so. If there is no ramification for emitting, then I'll likely emit as much as I want.

Then, it turns out that a carbon tax is the most effective way to encourage emission reductions. But don't take my word for it. The economists who came up with the idea (William Nordhaus and Paul Romer) won a Nobel Prize for it. Many CEOs of oil companies have stated publicly that they support the idea of a carbon tax, because there's really no fairer way to encourage emission reduction.

But I did title this article 'what's wrong with the carbon tax'. And what is wrong is the government's inability to sell it. The pundits would have you believe that a carbon tax is the biggest financial assault on the consumer since GST. What they don't tell you is that the tax is designed to be revenue neutral. Consumers are predicted to get more money back from a climate action incentive (in SK, MB, ON and NB) than they paid in carbon tax.

Industry knows it can do better, but because up until now they didn't have to, they mostly didn't. The carbon tax forces them to consider the following. Which costs me more, emitting as per usual and paying the tax? Or cleaning up my act and paying much less tax? Nobody is forced to do anything (unlike when legislation is passed), but if you pollute, you pay. Sooner or later, it makes sense to pollute less. When the CEOs of Cenovus, Shell and Suncor say this is a good idea, it's harder to argue the point. Unfortunately, this rarely makes the front page (or the conservative election platform).

Another thing that’s somewhat bad about the carbon tax is how all the provinces aren’t playing along with it. Ontario, Saskatchewan, Manitoba, and New Brunswick are not playing along. Yet they will end up paying a carbon tax directly or indirectly in a manner that should net them more money, but directly to the consumer. Not every province is adopting a carbon tax per se, but rather a cap and trade system, as is the case in Quebec. How the two options work gets complicated, which of course doesn’t help sell the idea.

On the consumer side, we have much less choice in how we emit. If you heat your home with gas or oil, how are you supposed to burn less and still have a comfortable home? The only way is to either buy a greener home or retrofit your existing one. Both of those scenarios cost the kind of money that ordinary people don't usually have. The same thing goes for our vehicles. I could buy a $70,000 Tesla, but who has $70,000 for a new car? I don't.

So what would need to be done in order to make this work? For starters, be more transparent. Ask 20 random Canadians how a carbon tax works and you’ll likely get 10 different answers. Ask those same 20 people what the money collected is being used for and I doubt you’d find any that could answer correctly. Once people have a better understanding of how it works, they might be better informed to decide whether it’s a good idea or not and how to make it better. I for one would like to see the money collected go to much more visible and practical benefit to the consumer. In other jurisdictions, people get rebates and credits for doing green things. Look at California, Oregon and Washington states and see how their governments reward people for being greener. In Canada, I’d like to see things like the following:

·If you buy a purely electric car, you should either get a big rebate, a percentage paid of your car loan, or the part of your electric bill that provided the car’s power paid for by the carbon tax.

·If you buy a net zero energy or passive house, you should get the cost differential reimbursed by the carbon tax. If you retrofit your own home and make it net zero or passive house, you should get your money back, or at least a substantial part of it. In both cases you’re building homes that are not only better insulated and better constructed, they use less energy when it’s hot, and use so little energy to heat the home, many don’t even need a furnace - even in Canada. They also tend to last longer. That’s a game changer.

·High efficiency hot water heaters, furnaces, heat pumps, etc. should not only be the only kind you can buy, they should be subsidized to encourage upgrades in existing homes.

·Upgrading a home to include solar water and/or electricity generation should be easy to achieve with the help of 3rd party providers who will buy and install the hardware, hook you up both ways to the grid to sell excess energy, and then cut you a cheque every month for a portion of the surplus energy you sell back to the grid. They get their cut and this is used to pay off the hardware over 20 years. This way there’s no financial outlay for the homeowner. This has already been proven to work in Ontario and elsewhere.

·Developers should be encouraged to build entire developments sharing sustainable energy and heating sources. It has already been proven that it costs much less to build massive solar structures, geothermal heat extraction, long-term underground solar heat storage, etc. for dozens of homes at once than it would to do it one home at a time.

·Farms should be encouraged to become energy (and water) self-sufficient. I’ve written about this before. A combination of thermal and electric solar, wind and geothermal generation, coupled with closed system hydroponic farming would allow us to grow longer, with less water and produce fruits and vegetables normally unheard of in Canada.

·A national network of electric vehicle chargers needs to be built to encourage electric vehicle adoption.