Opinion: Carbon tax a cautious step forward

Article content

Public discussion about Alberta’s carbon tax tends to raise two important subjects for discussion: the urgent need for action on climate change and the severe shortage of tax revenue in our province.

On both, the provincial government’s actions have been cautious and highlight the need for much more work to be done. However, the carbon levy as it is currently designed is an essential step in the right direction after decades of inaction on climate change.

Every political leader in Alberta agrees, at least in word, that human-caused climate change requires government action.

While a carbon price is not a silver bullet for tackling climate change, a plan without one would have limited impact in achieving the goals required by climate science. The most common argument against the carbon tax in Alberta is an economic one. However, nearly every economist in the world favours putting a price on carbon.

We have precedents to draw from to ensure the policies we adopt are effective both for combatting climate change and for boosting the economy. In 1991, Sweden introduced a carbon tax, which sits at $200 per tonne today. Their economy has continued to grow at a pace similar to Alberta’s, and their greenhouse gas emissions have decreased by nine per cent over that time.

The very limited action the previous government took in Alberta, mainly very expensive carbon capture and storage projects, had little effect by comparison. Over the same period, Alberta’s emissions increased by 150 per cent. Clearly, the status quo was not working.

Alberta’s carbon tax, implemented this year, started at $20 per tonne and, following the federal government’s upcoming floor price, will grow to $50 per tonne by 2022. Alberta’s carbon pricing may need to be even more ambitious than planned to achieve the emissions reductions required by climate science. Such progress need not be at the expense of the economy.

The key is to reinvest the revenue in measures that both reduce greenhouse gas emissions and spur economic growth. Investments in energy efficiency create significant numbers of good jobs and reduce emissions at the same time. Making homes and workplaces more energy-efficient also reduces power and heating bills. Alberta’s climate plan puts a high priority on these measures through the creation of the Energy Efficiency Alberta agency and related programs.

The most significant piece of climate change policy our province still lacks is a way to track progress on reducing emissions. The government plan does not include specific targets or estimates of how much each measure will reduce greenhouse gas emissions. We need much more accountability for how well the plan is working.

Some say a carbon tax should be revenue neutral, meaning other taxes are cut to prevent an increase in overall government tax revenue. Not only would that prevent the above government actions from happening, but when Alberta is short roughly $10 billion in annual operational revenue, it makes little sense.

Alberta’s tax system is by far the worst in the country at raising revenue to collectively pay for public services Albertans want, need, and value. A recent poll commissioned by the Parkland Institute shows 66 per cent of Albertans support a carbon tax if the funds are used to invest in public services like health care and education.

Even if some carbon tax revenue is, at least in the short term, allocated to help address our province’s revenue shortage, a more extensive conversation is needed. The tax systems of other provinces would raise between $8.7 billion (British Columbia) and $22.4 billion (Newfoundland and Labrador) in additional revenue if adopted in Alberta. We need a broad public discussion to figure out a fair way to close that gap to protect and strengthen our public services.

Alberta’s carbon price is a cautious step in the right direction. It is necessary to make any real progress on preventing or even mitigating climate change, and those who oppose a carbon price need to state clearly what alternative measures they favour. The global transition away from emissions-intensive industries will not happen overnight, but it has already started, and any political leaders ignoring it are doing a disservice to Albertans and our future.

Joel French is executive director of Public Interest Alberta.