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                                  A Climate Plan Framework Is Not Enough

 

By Terri Chu

As an engineering consultant, every project I ever worked on had “carbon tax” as a line item.  It was usually set to zero, but no self- respecting analyst would ever complete a project without at least putting various carbon tax scenarios into the spreadsheet to see the effect on the economic returns. 

There were projects to reduce greenhouse gas emissions I wanted to see happen so badly I would have done just about anything.  Sadly, returns were so low no one could justify building them.  I would write up the reports in as positive a light as I possibly could, pointing out that in the near future, when carbon taxes hit some magical dollar figure, the payback period would be low enough to meet the client’s investment criteria. 

Senior management would scoff, smile at my naivety, and quietly delete the line before the report went out the door. 

That's because a carbon tax was one of those things that everyone knew had to be done, everyone was prepared for it, but nobody believed anyone had the political gall to get it done.

The First Ministers meeting just proved yet again how right those old jaded men really were.  After hours upon hours of closed-door meetings, we had a smiling Prime Minister who announced a “framework” but no carbon price. 

At the very least this PM has promised to unilaterally impose one.

Everyone intrinsically acknowledges that carbon has a cost - we just haven’t been able to price it yet. Don’t believe me? Ask the residents of Oakville and Mississauga how much they liked the idea of having a gas plant in their back yards.  If carbon doesn’t have adverse effects on the environment with social costs, why did they spend so much time, money and energy in fighting it?

There isn’t a single actor in the energy sector who hasn’t been preparing for a carbon tax.  The idea has been floating for decades and implemented in Europe since the 1990s.  Even ExxonMobile, said to be the boogeyman of dirty oil itself, has stated its support for a carbon tax.

Everyone just wants governments to get it over with so they can do the financial planning necessary and move on.

Industries will adjust and find efficiencies when price structures change. It’s the nature of the “invisible hand” of the market that right wing economists like to cling to so much. 

For Saskatchewan Premier Brad Wall to refuse the idea of a carbon tax is not only sticking his head in the mud about the bleak future our children face (nice that he doesn’t have to deal with, or pay for it) and underestimating the ingenuity of Canadians across the country. Assuming the death of Canadian industries a priori is like assuming nobody has the brains or the gumption to innovate. 

Nobody is claiming that some industries won’t be hurt, but on the other hand, many other industries will thrive.

Green energy players cannot compete in an environment where governments refuse to remove social subsidies for pollution. Carbon taxation is one of the ways to remove the structural advantages that fossil fuels already have. Manufacturing jobs could be created by green energy producers. Companies looking to reduce emissions will finally have a reasonable enough payback to make those capital investments. 

Outside of an election year and thus not having to pander to entrenched interests, is there really much justification to drag our heels on this issue any longer? 

Many European companies flat out refuse to purchase from suppliers without sustainability plans.  A carbon tax will only sweeten the sales pitch.

ExxonMobile isn’t waiting around.  It has already started internally pricing carbon. 

If ExxonMobile can see far enough into the future to start begging politicians to begin taxing carbon, perhaps it’s time Canada got out of its lumberjack mentality and started acting like global players.

As noted, every energy project I have ever worked on has at least looked at the impact on carbon pricing, if not explicitly included it their analysis. 

The question is simply the price.

A palatable baby step would be $20 per tonne. Biofuel producers will start thanking the Prime Minister at $60.  I’m not sure there is a price we can set to keep our polar bears alive.

The time is now.  We’ve been waiting long enough.  A climate plan framework isn’t enough. 

 

 

 

 

 

 

 

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Posted date : March 08, 2016
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