Debunking EcoFiscal’s “10 Myths about carbon pricing”

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Earlier this week, EcoFiscal Commission released a report entitled “10 Myths about Carbon Pricing”. In this report, the Commission cites numerous “myths” they believe are hindering the uptake and acceptance of a carbon pricing scheme in Canada. They say they found evidence that many common arguments against carbon taxes just don’t hold up. However upon further examination and research, their debunking may have created more questions than answers.

Here are some of the myths they tried to debunk:

1) Putting a price on pollution is a new untested idea.

They claim that pollution pricing and carbon pricing are proven ideas that have worked for decades, however, there is evidence that suggests the opposite. For example, even though emissions may be reduced in the area the pricing scheme is in place (Most recently all of Canada), due to the concept of carbon leakage, Canada’s competitive advantage in emissions reductions in our oil and gas sector could be offset by increased production and consumption in other countries.

2) Only very high Carbon prices are effective.

While they note that there has been reductions in GHGs in British Columbia, and a decrease in per capita gasoline and natural gas due to its carbon pricing scheme.  However, in a study by the Conference Board of Canada titled; Cost of a Cleaner Future(Read More) they note that not only is the carbon pricing not enough to substantially reduce emissions, there are also other factors that limit the effectiveness of carbon pricing across Canada.

3 and 4)  Carbon Pricing Will Cost Canadian Families/Carbon Pricing Hurts Jobs

Eco Fiscal suggests that while 80% of families will receives rebates larger than the cost, as well as such things as zero job losses, just jobs moving into different sectors. However, in a study by Germain Belzile and Mark Milke from the Montreal Economic Institute (Read More), they note that despite the cap and trade system of Ontario and Quebec, the capital losses from the carbon market do little to reduce emissions. Meanwhile, those billions of dollars fleeing Canada. That’s billions out of the Canadian economy which could hurt employment and families.

5) Big Polluters are getting a break

While no, big polluters are not getting a break per say as they do pay the same price per household. However, In this study Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates(Read More), they found that though the policies all support competition “none is necessarily effective at reducing global emissions” and arguably this calls carbon pricing into question as it might not address the global issue of emissions and climate change.

6) Carbon Tax is a Cash Grab

Even though that yes there are rebates available as well as the money gets distributed to back to the provinces, however this study by the Fraser Institute suggests that “Every jurisdiction in Canada with a carbon pricing program has violated the fundamental economics of such programs in ways that will greatly inflate their costs and impair their effectiveness”( Green, Kenneth P. (2017). Canada’s Climate Action Plans: Are They Cost Effective? Fraser Institute). The increased costs of programs such as carbon pricing may actually be passed down to consumers.

7 and 8) People change their behaviour in response to Carbon Pricing/There is no point to carbon pricing if the governments rebate the revenues.

EcoFiscal argues that people will change their behaviour over time with newer and cleaner options and that the rebates will incentivize the use of these other options. This might not be the case as Kenneth Green makes the point in Canada’s Climate Action Plans: Are They Cost Effective?(Read Morethat the “rebound effect” could actually reverse incentivization by creating conditions to continue producing emissions rather than reducing, which cancels out the taxes intended effect.

9) We can use other, better policies to shrink our emissions

While there is much debate around climate change policy and their effectiveness, EcoFiscal maintains that carbon pricing is the most efficient policy for reducing emissions. However as noted in the Cost of a Cleaner Future(Coad, Len, Robyn Gibbard, Alicia Macdonald, and Matthew Stewart. The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions. Ottawa: The Conference Board of Canada, 2017), the price differential between current policy and effective rates do not match up with the climate change reduction plan. The price would have to be substantially higher according to the report to make a dent in Canadian emissions.

10) There is no need to reduce Canada’s carbon emissions

Arguably, while Canada is in the top 10 emitters, its emissions are only around 1.6% of total global GHGs. Canada is a global leader in reducing emissions and continues to advance our technology to do it. Canada does need to participate in climate change mitigation, however its new carbon pricing scheme may not have a large effect on Canadian emissions and in tangent, total global emissions. If climate change is global issue, Canada needs to lead the way on global solutions, not pricing schemes that won’t reduce emissions.

To learn more about Carbon Pricing and Carbon Leakage and read these articles check out:

https://qmf.afd.myftpupload.com/carbon-leakage-and-carbon-pricing/

on The Canadian Energy Network

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