Canada’s wisest policy: stealing policies from other countries

Canada has a rich tradition of thievery – and it’s a good thing we do. Much of our success comes from adopting sound policies that have already proven successful elsewhere.

Image result for cartoon reinventing the wheel

We implemented employment insurance in 1935, a full 15 years after it was introduced in Britain. We achieved universal health care in the early 1970s, a decade after many European countries. We adopted the GST 25 years ago, following a global trend toward “value-added taxes” that was already mature by the time we came on the scene.

The same is true of carbon pricing. It may be a contentious policy in Canada today, but there is nothing Canadian about carbon pricing; we introduced it here precisely because it works so well in other countries.

It should not be surprising that some Canadian provinces adopted carbon pricing 15 years after the first systems appeared overseas. Not only is putting a price on pollution – any kind of pollution – the most efficient way to clean up the environment, it’s an old, proven idea that prioritizes the power of markets over the power of government.

Compelling evidence comes from two of the planet’s oldest pollution-pricing systems.

Sweden has the world’s highest carbon tax, and introduced it in 1991. It took some tinkering, but the Swedes ultimately got it right. Economists estimate that just five years in, the carbon tax had reduced Sweden’s emissions by 15 per cent relative to business as usual. Since 1995, Sweden’s total emissions are down by 25 per cent, emissions per unit of GDP are down by 65 per cent, and its economy has expanded 12 per cent faster than the EU average. So much for the idea that carbon taxes kill economic growth.

How exactly did Sweden’s carbon tax work to reduce emissions? One significant shift came from how its buildings are heated. Sweden uses district heating, where central units provide heat to entire blocks and neighbourhoods. Carbon taxes made biomass cost competitive with fossil fuels, and its use in heating quadrupled in just five years.

Another successful example of pollution pricing comes from the United States. Prices don’t just work for greenhouse gases; a price on any type of pollution can work, as long as it’s well-designed. Remember acid rain? It didn’t disappear on its own. The United States set up the world’s first cap-and-trade system in the 1990s and eliminated the problem in less than a generation.

Once 3,200 American power plants had to pay for their sulfur-dioxide emissions, they quickly came up with creative ways to reduce their emissions and avoid those costs. They rerouted rail cars to gain access to different types of coal and then experimented with them to produce fewer emissions. They also invested heavily in “scrubbers” that pull sulphur dioxide directly from the exhaust stream.

The U.S. policy was a success by any measure. After 10 years, sulfur-dioxide emissions had declined by 36 per cent, even though coal production had risen by 25 per cent. The program more than paid for itself and saved billions of dollars compared to less flexible and more intrusive regulatory approaches.

Now back to Canada. As we enter the federal election season, Canadians should ask themselves: how best should we reduce GHG emissions to fight climate change? MORE

Uncertainty for clients due to carbon pricing

Putting a price on carbon means business will have to take seriously their carbon emissions

‘Businesses would be wise to quantify and verify greenhouse gas emissions’

Uncertainty for clients due to carbon pricing

Jennifer King says emitters will continue to be subject to greenhouse gas emission reporting requirements, whether that is through a provincial or federal pricing system.

On April 1, the federal carbon price backstop came into effect, which meant that a $20/tonne charge for greenhouse gas emissions is being applied in Ontario.

Meanwhile, the Ontario government continues to wage a legal battle at the provincial Court of Appeal against the federal government, calling the carbon price legislation unconstitutional.

Lawyers say that, while their Ontario-based clients are advised to comply with the federal rules, there remains uncertainty as to what they should expect going forward.

Jennifer King, a partner at Gowling WLG in Toronto and a member of the firm’s environmental law group, represented the Canadian Public Health Association in both the Saskatchewan and Ontario courts of appeal during their respective reference cases on the federal carbon price.

The Saskatchewan government had asked the Saskatchewan Court of Appeal whether the federal price was constitutional, followed by a similar reference from the Ontario government at the Ontario Court of Appeal.

In early May, the Saskatchewan Court of Appeal ruled in Reference re Greenhouse Gas Pollution Pricing Act 2019, 2019 SKCA 40, that the federal price was constitutional in a 3-2 decision.

The court also agreed that the federal price was a regulatory charge and not a tax.

“It is likely that the decisions of the Ontario and Saskatchewan Courts of Appeal will be appealed to the Supreme Court of Canada,” says King.

“There are other provinces now who have indicated that they may challenge the [Greenhouse Gas Pollution Pricing Act] in some way or the other. The Manitoba government filed its own court challenge of the act in Federal Court.”

King says it’s important to remember that businesses in Ontario did have a cap-and-trade system, which was ended in July 2018.

The cap-and-trade system used emissions credits trading to impose a price on carbon in the province.

The uncertainty around the carbon pricing system in Ontario is not new, she says.

Tyson Dyck, a partner at Torys LLP in Toronto, says his clients in the energy, infrastructure and mining sectors are asking about both the short-term and long-term carbon pricing issues.

His clients tend to be industries that are subject to emissions regulations, he says. They have questions about the immediate compliance obligations required by the federal Greenhouse Gas Pollution Pricing Act, but the more difficult questions are about the long-term outlook of carbon pricing. MORE



Ontarians are voicing dissent by the thousands. Take Action!

While the provincial government continues to roll back progress made on environmental protection, Ontarians have made it clear that the vast majority want decisive climate action.

Before the government passed the legislation to eliminate the cap-and-trade system, a consultation process received 11,000 comments with more than 99 per cent in support of putting a price on harmful emissions and maintaining the cap-and-trade system that supports investment and clean energy job creation. Thank you to those who submitted comments. It’s unacceptable for the government to scrap a program that has such overwhelming public support.

You have another chance to tell the government that its new weakened environment and climate plan fails to protect Ontarians from climate risk and sets us on a dangerous path of missed economic, energy and job-creation opportunities. TAKE ACTION!

NB: This consultation closes at 11:59 p.m. on January 28, 2019