It appears that the next federal election is going to be mostly about carbon taxes. As it should be.
Carbon pricing is the most effective, convenient and least expensive means of reducing the greenhouse gas emissions (GHGs) that cause global warming.
It also stimulates economic growth. In 2017, B.C., Quebec and Alberta, each with carbon-pricing systems in place for several years, were the fastest-growing economies in the country.
Canada is a pioneer in carbon pricing. In 2006 and 2007, Alberta and British Columbia, respectively, launched North America’s first carbon-pricing systems. The B.C. model is regarded as perhaps the best in the world. More on that later.
But in the coming federal election campaign, carbon pricing will be demonized in some quarters.
Saskatchewan Premier Scott Moe, another of the four so-called “holdout” premiers who opted against creating a carbon pricing program, describes the federal policy as “the ineffective, job-killing Trudeau carbon tax.”
Those are falsehoods. They are no different in kind from the “fake news” that yielded perverse outcomes in the 2016 Brexit referendum and the U.S. presidential election of that year.
Among the most effective ways of getting rid of something we don’t want is to put a price on it. That’s carbon pricing in a nutshell.
Fossil fuel subsidies top $5 trillion worldwide, fair pricing would have cut emissions 28%, study says
A recent study projects that global fossil fuel subsidies totaled a staggering $5.2 trillion worldwide in 2017, and shows efficient pricing would have cut more than a quarter of global carbon emissions in 2015.
The incredible figures come from the International Monetary Fund, which defines subsidies as “fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations).”
The IMF notes that it uses a broader definition of subsidies than some. Its projections reflect “differences between actual consumer fuel prices and how much consumers would pay if prices fully reflected supply costs plus the taxes needed to reflect environmental costs and revenue requirements.”
It calls these “post-tax subsidies.” The figure the IMF gives for “pre-tax subsidies” is $296 billion worldwide — a much smaller number, but still a huge amount in direct subsidies, and one that doesn’t account for those “differences.”
As part of the methodology, the study considered the number of ways economists have attempted to value the cost of CO2 emissions, and came up with a value of $40/ton for 2015 emissions, rising at 3% a year. The Environmental Defense Fund has said $40/ton is the “current central estimate” of the social cost of carbon, but notes that many experts believe this underestimates the true costs of carbon pollution — perhaps severely.
The IMF found subsidies totaled $4.7 trillion in 2015, which equalled 6.3% of global GDP, before the projected rise to $5.2 trillion in 2017 (6.5% of global GDP). China was by far the largest subsidizer in 2015 ($1.4 trillion), followed by the US ($649 billion), Russia ($551 billion), the combined European Union ($289 billion), and India ($209 billion).