Last week, Mark Jaccard — a renowned climate policy analyst and professor at Simon Fraser University — published a short paper exploring federal approaches to reducing greenhouse gas emissions.
The report was quickly shared by other climate policy experts, including the University of Alberta’s Andrew Leach, Clean Energy Canada’s Dan Woynillowicz and York University’s Tzeporah Berman.
Unfortunately, many news outlets, including the Toronto Star and Metro, ran articles suggesting that Jaccard was petitioning against a carbon tax, with emissions reductions entirely accomplished via regulations.
That’s clearly not the case if one bothers to read the paper (a reality Jaccard spent much of the following days pointing out on Twitter).
Given the recent announcement by federal Environment Minister Catherine McKenna that the government is examining carbon pricing as a tool to meet 2030 targets, actually reading Jaccard’s report is very much worth the time.
The premise is simple.
A price on carbon (either via a tax or cap-and-trade system) is often politically unpopular even at low levels (one need look no further than Alberta), let alone in the neighbourhood of $200/tonne, which would actually be required to prompt an energy transition. (Hence the name of his paper: Is Win-Win Possible: Can Canada’s Government Achieve its Paris Commitment … And Get Re-Elected?
So why not pay attention to the vast possibilities of “flexible regulations,” combining policy options like industry-specific performance standards, mandatory market shares and partial-zero-emission vehicle obligations with a $40/tonne carbon price?
On Thursday, DeSmog Canada spoke with Jaccard about his report, the significance of political viability in building meaningful climate policy and how California is leading by example. The following transcript has been lightly condensed.
What compelled you to write the report?
This took six months. Really, this is a long-standing reaction to the election of a new government almost a year ago, a government that said “okay, we want to take action.”
We noticed … that there’s a real barrage of messaging going to the government that we must price emissions.
So I had a lot of people saying to me: “This isn’t correct. It’s actually factually incorrect to say we must price emissions. It’s a choice.” And so people said to me: “Shouldn’t somebody point that out?” And I said: “Well, I can point it out but it takes six months.”
And here we are. People say to me: “Ah, we see, you tried to time it just after Catherine McKenna said we’re going to price emissions.” And it’s like: “You don’t understand.”
It’s released now simply because I’m going away to Oxford tomorrow and I told my students two months ago: “Come on, we’ve got to try to get this out before I go away, it would be nice to get out before there is a provincial-federal meeting and so.”
So basically, the motive — and I’m going to be really careful because I’ve been misquoted here in the last two days quite a bit — was simply a response to the factually incorrect message that we must price emissions. That doesn’t mean I’m against it or for it. I’m against untruths.
And as an academic, how could we help with that? Produce a report in which emissions pricing doesn’t play the dominant role. We kept it in there because we were trying to do something that was practical and kind of in line with what’s been happening so far. You do have a federal government that says “we want a minimum emissions price across the country” so one of our scenarios has them relying almost completely on an emissions price.
And the other says: “Let’s assume that you do this minimum that you talked about but you find it politically difficult to go beyond that minimum. Does this mean that you can’t achieve Paris?”
And that’s the motive for the study.
— DeSmog Canada (@DeSmogCanada) September 26, 2016
Do you think it’s fair to say that political viability has been historically underestimated by researchers and economists?
Yes. That’s my take. I did a study for the Mulroney government in 1988/1989 as a new professor saying: “Oh yeah, you want to reduce emissions. That’s neat. And Margaret Thatcher says that and Ronald Reagan. Here’s emissions pricing: have a really small price on emissions, let it rise over time.”
And the government even paid for me to go to Paris to a meeting at the International Energy Agency with economists from other countries. And we all came back to our countries and said, “yeah, price emissions.”
Thirty years have gone by since then.
So there have been little cases where people have priced emissions. But I think at some point, somebody needs to point out those have been really low prices compared to what you need to cause an energy transition. And that’s why our report is laden with terms about energy transition.
You can increase the price of gasoline by 10 cents a litre; the carbon tax in B.C. doesn’t even do that. But we know that price of gasoline has gone up and down 50 cents. You really think adding 10 cents is going to get people to buy electric and biofuel cars? Almost all modelling shows that it won’t do that.
Where I get misquoted is people will say: “Oh, Jaccard thinks the policy should be ‘a’ or ‘b.’ ” I’m actually not saying what the policy should be. I’m saying if you are severely constrained politically, is all hope lost? And then I just said: “If you look around, how is California reducing emissions? How did the Swedes reduce emissions?”
And that’s the purpose of the report: to inform decision-making.
A popular critique of flexible regulations is that on a national scale it could be more difficult to administer or track as opposed to the potential transparency of a carbon tax. Do you buy that, or do you think it’s more about the actual design of the regulations?
If it’s the transportation sector, of course that’s a false statement because we’re already regulating the transportation sector! Even Stephen Harper ramped up emissions regulations — because he copied Obama — and in fact it’s better to do that nationally rather than provincially.
The auto industry will say “don’t do it, don’t do it.” But if push came to shove and you were actually doing it in one province, they would say: “Oh no, no, it should be federal. It should be the same across the country. Don’t try to make us hit different targets in Ontario and Saskatchewan.
If it’s electricity, then I would partly agree with that statement. It’s harder for the federal government to go after electricity. We’re very careful on that end of the report. Again, Stephen Harper put in a coal plant reg. Now, it was a soft, weak reg but it did require coal plants to close down or do carbon capture and storage. So what we’re talking about is just ramping that up.
In fact, you don’t even have to ramp it up in Ontario because they already did everything. You don’t have to ramp it up in any of the hydro-dominant provinces. You don’t have to ramp it up in Alberta, because they already said they’re going to not use carbon pricing but just regulation to shut down the coal plants.
It’s quite funny. People will talk about: “Oh look, Alberta has a carbon tax.” But they knew the carbon tax wasn’t big enough to close down the coal plants. It would have to be about $80 or $90/tonne. So they’re saying “close the coal plants.”
So if the federal government tightened the Harper national coal plant electricity reg, it’s really only Saskatchewan that would raise bloody hell. Even Nova Scotia and New Brunswick have already sort of put in policies like Alberta. So then maybe we say in there “give a little bit of money to Saskatchewan.”
But when it comes to industry across the country: again, federal government is better to do it. And industry would tell you that at the end of the day. Stephen Harper had this whole process going on. Of course, he wasn’t really pushing it because he didn’t really want to do anything. He wanted to look like he was doing something.
But the regs they were designing: I had a look at them nationally for a performance standard for emissions. It’s really not much different from the effect of a carbon tax. You can do that federally as well.
You mentioned California. Are there other jurisdictions that you or other climate policy academics look to as inspirations or role models, harnessing regulations for this purpose?
I’m shocked that an entity like the Ecofiscal Commission, and I write about it in the report, say “we have to have fiscal solutions.”
And I’m like “why did they never write about the renewable portfolio standard, which several European countries and something like 30 U.S. states have?”
It has a lot of the benefits of emissions pricing in terms of flexibility. And oh my goodness: half of the U.S. states are using this to get greenhouse gas emissions down in the electricity sector. Why is no one talking about that? Why isn’t the Ecofiscal Commission talking about that?
Likewise, California’s vehicle regs, its low-carbon fuel standard: there’s several of these. If you looked at California today, maybe people will say “oh, they’ve got an emissions price and cap-and-trade that now Ontario and Quebec have joined.”
But actually, the top modellers in the U.S. tell me that about 90 per cent of the reductions in the last eight or nine years, and the forecast for the next eight or nine years, in California are occurring because of the flexible regs, not because of that very low floor price in their cap-and-trade, which works out to about $15 U.S., or half the B.C. carbon tax.
Why do you think it is that the Ecofiscal Commission but also various newspapers do seem to focus on an either/or scenario, either carbon tax or regulations?
Yeah, and to add to your comment: either a carbon tax or command and control regulations that are really economically inefficient.
Well, I have one little paragraph in the report — because I try to anticipate, because I know them so well, all the arguments that will be made — and point out that it looks like there are two types of people who really want to ignore other evidence and stay on this emissions pricing.
One kind is conservatives who really just don’t want big government and they’re afraid that any kind of regs have transaction costs and administrative costs and so on. And some of that’s true. But it’s not as bad as Ontario taking the emissions price revenue that it’s got and deciding to create $2.3 billion of programs over a three-year period. It’s hilarious. So don’t tell me that emissions pricing is automatically more economically efficient.
The argument is that we should do this with minimal government. And they think emissions pricing is easier because you can put a carbon tax on and use that to cut corporate taxes. In other words, do what Gordon Campbell did. When Campbell was bringing in that emissions price — the carbon tax in B.C. — I was the one who said: “Good. Give the money back. You don’t need to create big government.” He did that.
That’s kind of a model for the C.D. Howe Institute, the Ecofiscal Commission and the new head of the Conservative Party in Ontario, Patrick Brown. People like him, who are saying “we conservatives are not just Stephen Harper types, sort of denying climate change or doing nothing about it, but we don’t want to create big government in doing it.”
That’s one group of people who don’t seem to even want to look at flex regs.
The other ones are, as I said, economists and the Ecofiscal Commission kind of seems to have all of that together who just don’t want to think too much about political acceptability and say: “Our job is to just tell you the lowest cost option, and you do what you have to to get political buy-in. But this is the way you should do it.”
Any final thoughts?
I beg people to read the first nine pages.
Photo of Marc Jaccard giving a speech at Enbridge Northern Gateway protest in Vancouver, by Chris Yakimov via Flickr.