by Nancy Olewiler

Over the last decade, many Canadians have been saying either that climate change was not really occurring or that Canadians would never support effective climate policies – or both. The Liberals’ disappointing result in last October’s general election seemed to confirm the naysayers’ view of Canadian realpolitik. But all this changed last November 4 with the election of Barack Obama as President of the United States. The naysayers in Canada started to sing in harmony with the new U.S. song sheet.

How should the newly confirmed Liberal leader, Michael Ignatieff, carve out a role for his party on the environment? First and foremost, he needs to be a leader – that is, to articulate lofty but achievable aspirations and goals for the country, communicate these goals convincingly and not try to please everyone all the time. The Green Shift fell off the rails for many reasons: wrong spokesperson, wrong time, poor design, but also because the policy was distorted by trying to give a sop to too many interest groups. Mr. Ignatieff has shown he has the fortitude to stand by his beliefs; I urge him to take strong stands in four areas of environmental policy.

Think environment and economy: The low(er) carbon economy

The classic argument against taking action on environmental problems is the economy card: it will be too costly to business and households. That line of thinking is now both outmoded and risky for Canada. Not only is the world economy transitioning to using fewer carbon-intensive fuels, but more importantly for Canada, the Obama Administration has signalled strongly that it will – among other policies – aggressively promote renewable energy supply, invest in new technologies to improve energy efficiency and support state and local efforts to improve building codes. Not far behind these lofty goals will be ensuring a “level playing field” with imported products – read trade restrictions for countries that do not follow the U.S. lead with comparable policies. Canada stands to be a beneficiary of the new economy if it gets its carbon act together.

In the new lower carbon economy, there will be more emphasis on renewable energy supply and renewable resources in general; more energy-efficient movement of goods and people; more efficient industrial processes with a lower carbon footprint. Canada is well endowed with natural resources that position it to be a world leader in this economy: lots of renewable energy potential, water resources, agricultural lands and forests that are key ingredients for an economy based on less waste and more energy-efficient delivery of goods and transportation. In these times of economic stress, think investments that enhance our ability to produce with less energy.

I am not a fan of picking economic “winners”; the history of such strategies is not encouraging. I urge Mr. Ignatieff to develop strategies to price carbon – that is the most direct way to provide incentives for business to look for lower carbon processes and for consumers to buy lower carbon goods and services. Energy efficiency standards and consistent and effective eco-labelling are policies to complement pricing. Infrastructure investments need to be more than “shovel ready”; they should integrate the best energy efficiency and other environmental standards. Canada needs to be ready to seize opportunities as the low carbon economy evolves, not be put in the penalty box as carbon laggards.

Pricing carbon

Pricing carbon is complex and Canadians are sleepwalking around this issue, having been confused by the political rhetoric and outright falsehoods perpetrated in election campaigns. Leaders need to understand the rationale for pricing carbon and be honest with the public.

All economists and now most business leaders argue that environmental policy goals will be met more effectively and at lower total cost to the economy if the environmental damage from activities that emit carbon are priced. Greenhouse gases are being released into the environment without charge – using the absorptive capacity of the environment instead of paying for the waste disposal. Our policy regime to date has consisted of regulations and moral suasion (think the “One tonne challenge”). It has failed: it has not budged Canadians off their carbon-intensive diet. Canadian greenhouse gas emissions rose by 33 per cent from 1990 to 2004 – faster than the United States and faster than the world average.1 Pricing needs to complement regulatory policy.

The two competitors for carbon pricing are a carbon tax or a “cap-and-trade” market for buying and selling emission permits. Some believe cap-and-trade is a superior policy, but it is not. It is a quagmire of complexity, far from the purity and perfection of textbook explanations. Cap-and-trade markets will make financial derivatives and asset-backed commercial paper look simple. The United States will likely introduce a heavily pork-barrelled version of a cap-and-trade system. It will want Canada to participate in the market for the simple reason that we will be big buyers of permits; our participation will lower the overall U.S. cost of compliance. We shouldn’t think we can change the U.S. Congress steamroller when it gets going, but we cannot be designing policy on cocktail napkins.

I urge Mr. Ignatieff to put together a “climate action team” to investigate how Canada can meet greenhouse gas reduction goals (including a reexamination of our targets). This means a thorough investigation of an economy-wide cap-and-trade system that might be integrated with whatever the United States develops, but also an economy-wide revenue-neutral carbon tax. I suggest returning the tax revenues to each province in proportion to its payments. This will let the provinces address competitiveness and equity issues, and hopefully preclude an acrimonious political debate about which provinces are benefiting and which are losing.

Adaptation to climate change

No matter how quickly we reduce our carbon emissions, the impacts of a changing climate are already here. Canada’s north is undergoing a transformation not seen before by human inhabitants. The pine beetle explosion is decimating western Canadian forests. We have either too much water (flooding in Manitoba and New Brunswick) or too little (droughts in parts of the prairies). Storm surges threaten infrastructure along our coastlines – even before the damage wrought by rises in sea level forecast for coming decades. A federal strategy that combines mitigation (reduction in carbon emissions) with adaptation is needed. The Harper government has signalled interest in adaptation policy, but has not implemented a comprehensive strategy. Mr. Ignatieff’s climate action team needs to look for double “wins” – policies that contribute to mitigation along with adaptation.

Preserve and protect Canadian ecosystem goods and services

Our water, natural areas, air quality and northern communities are all threatened by emissions of air and water contaminants and toxic wastes. We are losing natural areas to unchecked, carbon-intensive development, as agricultural lands and forests give way to suburbs and strip malls. Our federal environmental policies are generally in the form of guidelines, not binding regulations, with little use of price incentives. The 2007 federal budget committed $250 million to protect our natural heritage: this is not close to enough. In tough economic times, it may seem folly to suggest devoting more funding to environmental protection, but these are legacy issues fundamental to Canadian prosperity and sense of stewardship. Canada currently protects a little more than 8 per cent (approximately 85 million hectares) of its total land area through federal and provincial legislation, nonprofit conservation land trusts or eco-gifts (a federal program). Eco-gifts have generated less than 5 per cent of this total. The World Conservation Union recommends that 10 per cent of each ecosystem within a country be strictly protected, with an additional 5 per cent reserved as a buffer zone. Mr. Ignatieff’s team needs to completely reassess strategies to protect and enhance our natural environment.

To conclude: our environmental policies are woefully inadequate, and without a robust environment, we cannot sustain a strong economy.

 

Note

1    On comparative rates of emissions increases since 1990, see the article by my colleague John Richards, “A New Order of Things: The Case for Pricing Carbon,” in the Winter/Spring 2009 issue of Inroads (pp. 39–45).

 

Mr. Ignatieff needs to be a leader – that is, to articulate lofty but achievable aspirations and goals for the country, communicate these goals convincingly and not try to please everyone all the time.

The Green Shift fell off the rails for many reasons: wrong spokesperson, wrong time, poor design, but also because the policy was distorted by trying to give a sop to too many interest groups.

I urge Mr. Ignatieff to develop strategies to price carbon – that is the most direct way to provide incentives for business to look for lower carbon processes and for consumers to buy lower carbon goods and services.

Infrastructure investments need to be more than “shovel ready”; they should integrate the best energy efficiency and other environmental standards.

Our policy regime to date has consisted of regulations and moral suasion (think the “One tonne challenge”). It has failed: it has not budged Canadians off their carbon-intensive diet.