Ontario Premier Kathleen Wynne‘s scarf is picked up by the wind during a climate-change policy announcement at Evergreen Brickworks in Toronto on Wednesday.Mark Blinch/The Canadian Press
Let's start with the good news. The national debate over global warming has largely moved on from arguing over whether anything should be done to reduce carbon emissions, to debating how best to do it. This is progress.
More good news: Ottawa and provincial governments covering the bulk of the Canadian population – British Columbia, Alberta, Quebec, Ontario – all agree with the idea of putting a price on carbon, as a way of discouraging the burning of fossil fuels. Making it more expensive to use carbon is the easiest and most efficient way to begin to lower greenhouse-gas emissions.
And now, on to the less positive news.
Last Tuesday, Ontario released its "Five Year Climate Change Action Plan." The Liberal government of Premier Kathleen Wynne could have simply brought in a carbon price and stopped there. The principle of taxing carbon has all-party support, from the Leap Manifesto wing of the NDP to Progressive Conservative Leader Patrick Brown.
And the province is introducing a cap-and-trade plan, essentially a more complicated version of a carbon tax, which will be linked up with cap-and-trade schemes already in operation in California and Quebec. There are questions about how well Ontario's scheme is going to work, and there should be. But cap-and-trade, if properly designed, is capable of lowering greenhouse-gas emissions without bankrupting voters, driving out industry or wasting one of society's most precious non-renewable resources: the taxpayers' money.
All of which means Ms. Wynne and Environment Minister Glen Murray could have made carbon pricing the centrepiece of their greenhouse-gas strategy. They could have laid out a roadmap for gradually lowering the province's greenhouse-gas emissions by gradually raising the carbon price. And they could have left it up to millions of people and businesses to figure out, through billions of little and big choices, how to most efficiently reduce their individual fossil-fuel costs and consumption. Ontario could have focused on harnessing the power of the market to get the job done.
Unfortunately, the Liberals are not just going to price carbon and stop there. Instead, they've dreamed up what threatens to become a megaproject of micromanagement.
Page after page of the climate change strategy is about how Queen's Park is going to subsidize, cajole and bribe people and businesses into adopting or ditching this type of fuel, or that kind of vehicle. The ends are ambitious and commendable, with the province aiming for an 80-per-cent reduction in greenhouse-gas emissions by 2050, compared with 1990 levels. But the means to that end should be raising eyebrows, and sparking debate.
Here's just one example. Instead of simply ratcheting up the tax on fossil fuels such as gasoline, thereby encouraging people to consider alternatives such as driving less, using public transit more often or buying a more fuel-efficient vehicle, the province intends to throw money at Ontarians and bribe them into buying electric cars.
There's a subsidy of up to $14,000 per purchaser of an electric ride. There will be free electricity – free – for owners who charge up overnight. The province also wants purchasers of zero-emission vehicles to pay zero HST. On, say, a $50,000 car – electrics aren't cheap – that's a $6,500 subsidy.
There will even be money for lower-income Ontarians who trade in an old beater, so they can replace it with an electric ride. At the moment, electric cars are seriously expensive, which is why not a lot of poor people are buying them. And yes, we get that bringing together anti-poverty and green in the same paragraph makes for giddiness around the cabinet table. But out here in the real world, it sounds completely bonkers. It's like developing a poverty-reduction strategy that, instead of simply putting more money in the pockets of poor people, aims to bribe them into shopping exclusively at Whole Foods.
If a government is willing to throw enough of your tax dollars at a problem, it can accomplish almost anything. But at what cost? The goal of any sane greenhouse-gas strategy should be achieving maximum emission reduction at minimum cost. A lot of what the Liberals are proposing is likely to fail the arithmetic test.
The sort of micromeddling the Liberals are advocating doesn't tend to work. Putting a price on carbon, in contrast, whether through a carbon tax or cap-and-trade, is simple. You don't need a doctorate in economics to get it. If the price of chicken goes up, you'll think about eating more turkey. And if the price of oil rises, you'll think about driving less, or buying a more fuel-efficient car, or taking public transit, or moving closer to work, or a host of other possibilities.
Prices are the signals at the heart of the free market. They're the reason markets are extremely efficient at allocating resources. A price sends a singular message, but each person will respond to it differently, based on their reading of their unique circumstances.
What it means is that individual choice and the collective goal of lowering greenhouse-gas emissions don't have to be in conflict. Carbon taxes, done right, are a kind of crowd-sourcing. The question of how to lower GHGs is put to an entire nation. But instead of demanding a single, one-size-fits-all answer – aha, electric cars for everyone! – the higher price of carbon encourages millions of slightly different, individual answers.
On climate change, government leadership is indispensable. Only government has the ability to use the tax structure to make it that greenhouse-gas emissions are no longer "free," and the real cost of them is baked into the price of things. But the more government gets away from using price signals and other simple and efficient mechanisms to lower carbon emissions, the more it risks creating not the promised green future, but a boondoggle standing in its way.