Government says no to carbon tax

Pat McGrath/CanWest News Service Federal Environment Minister John Baird

OTTAWA — The Harper government rejected an advisory panel’s recommendation to implement a carbon tax on Monday while its rivals opened the door to the idea in response to advice that the levy could lead the way to deep cuts in greenhouse gas emissions from Canada.

The National Round Table on the Environment and the Economy, a panel of Canadian experts from environmental groups and the business world, concluded that Canada could achieve a 65% reduction in greenhouse gas emissions by 2050 by acting as soon as possible with measures that would put a price on activities that result in the release of heat-trapping gases in the atmosphere.

The panel suggested the government could set this price either by slapping a carbon tax on emissions or by setting a cap on the level of industrial emissions and forcing companies that exceed their limit to buy credits from greener companies in a cap-and-trade system similar to the stock market.

It also concluded the costs of setting a price on carbon would result in a minimal impact on the economy, which it assumes will grow by an average annual rate of 2%, resulting in a loss equivalent to about two years of growth between now and 2050.

"Market-based policies that put a price on carbon to send an economywide signal on emissions are the most effective way to achieve deep, long-term greenhouse gas emissions reductions of the scale being considered," said the round table’s chairperson, Glen Murray.

"Delay in adopting and implementing such a market-based policy approach carries with it unnecessarily higher environmental and economic risks in the form of greater cumulative greenhouse gas emissions into the atmosphere, higher emissions prices with a larger economic cost in the future to achieve the same targets, and the very real risk of not achieving our targets at all."

Although the Harper government asked the round table for its advice in 2006, Environment Minister John Baird quickly dismissed the carbon tax proposal as a "Liberal idea," explaining that he had already addressed the concerns raised in the report by introducing a new federal green plan that sets a price on carbon emissions.

"What we’re not going to do is be like Stephane Dion and the Liberals [who] constantly change their position, their policy," Baird told reporters. "Every time a report comes out, you can’t change your mind."

The federal Liberals rejected the panel’s proposal to immediately introduce a new carbon tax, explaining that they supported the concept of a cap and trade system to ensure businesses — not consumers — would shoulder the burden of reducing emissions.

But at a news conference, Liberal MPs John Godfrey and David McGuinty said they would consider a carbon tax if the round table did more research on the consequences.

"Right now, we’re on the cap and trade system because we have a greater level of confidence in that because it has been validated internationally — it happens in Europe," said Godfrey. "But I think it is incumbent on us to pay attention to this debate, and to pay attention to the future work, and never to exclude anything, absolutely, until you see what the actual design is, and what its impact would be on the economy and on Canadians … We’re Liberals. We actually think about things. We don’t take ideological views that don’t evolve."

Meantime, Green Leader Elizabeth May said she was encouraged by the panel’s recommendations, stressing her party was the only one clearly advocating a carbon tax as part of a fiscal plan that would result in a reduction in payroll and income taxes.

But McGuinty, the Liberal environment critic, said he wasn’t sure whether a carbon tax was the solution.

"When environmentalists choose the carbon tax as the panacea, I don’t think we’re convinced yet," said McGuinty. "Frankly I think the round table has done the work on the emissions trading side. I think they should now seriously examine a carbon tax and come back and tell Canadians what they find."

NDP environment critic Nathan Cullen said the report demonstrated the government’s actual green plan is flawed.

"It’s more evidence of the wrong direction the Conservatives are going in," said Cullen. "No one in the country supports their position other than oil powers in Calgary."

Baird has rejected all criticism of his government’s plan from independent research groups, economists and environmentalists, insisting he would stick with a plan to limit the growth of pollution from large industries instead of forcing them to make absolute reductions in their greenhouse gas emissions.

Baird’s plan would require large polluting facilities to reduce greenhouse gas emissions per unit of production by 18% starting in 2010. It also would require them to increase this so-called "intensity" target by 2% in every subsequent year.

Critics have argued that under that plan, some industries, such as the oilsands sector in Alberta which is responsible for much of the growth in Canada’s emissions, would be allowed to triple or quadruple their emissions in absolute terms over the next decade, since they are projected to see production grow by up to five times. But Baird insisted it would achieve its goal of reducing Canada’s emissions by 20 per cent below current levels by 2020.

The government has not finalized regulations for industry, but it has pledged to deliver them in 2008 to start up a new domestic cap and trade system, along with a technology fund.

Alberta said it would oppose any economy-wide carbon emissions tax.

"We have been and continue to be opposed to any kind of implementation of a cross the board tax," Environment Minister Rob Renner said Monday.

Instead, Renner touted Alberta’s plan, which he said shares some traits with recommendations released Monday by the National Round Table on the Environment and the Economy.

Alberta’s plan, which was the first in Canada, will force industrial polluters to cut the intensity of their greenhouse gas emissions by 12%. Companies that cannot meet the targets will have to buy carbon offsets or pay $15 per tonne of carbon dioxide into a climate change and emissions management fund.

What Renner said he doesn’t want is money leaving the province and not coming back.

"There’s some validity to [the report], provided we don’t reach some kind of situation where funds are flowing into some kind of general revenue fund and Albertans find themselves having dollars flowing out of Alberta and not contributing to deal with the real issue, which is how do we reduce the production of CO2."

At last month’s United Nations climate change summit, Canada, the United States and Japan were criticized for blocking the international community from recognizing warnings from leading scientists that the world must make dramatic reductions in levels of greenhouse gases in the atmosphere to prevent dangerous changes to the climate.

But the three countries were forced to agree to a road map towards a new climate change treaty within two years that could strengthen the legally binding targets for developed countries in the international Kyoto Protocol, while imposing new measurable obligations on developing countries.

With files from Edmonton Journal

The panel recommended the government’s climate change plan respond to the following five conditions:

— Acting in concert with the rest of the world to address trade and competition issues;

— Establishing a long-term policy framework "to ensure predictability for new investments";

— Adding regulatory policies to complement the economywide emission price signal "to foster investment, technology deployment and change consumer behaviour";

— Ensuring technology deployment throughout all sectors of the economy;

— Integrating the approach of addressing climate change and air pollution to reduce costs and to improve public health.


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