Opinion
Chris Windeyer
Chris Windeyer

Dodging the Carbon Pricing Bullet

Charging for carbon dioxide emissions is the favoured economic method of battling climate change. How's that going to work up here?

The tentative return of spring brings with it another round of high-profile confabs on climate change. This week it’s the Quebec summit on climate change, which brought together provincial and territorial premiers and environment ministers.

All three territories are represented at this meeting, and issued a joint communique Monday, proclaiming that their governments are bringing a “Northern perspective” on climate change. This perspective, in essence, is that the territories are minute contributors to Canada’s overall output of carbon emissions (true) and that any action to reduce those emissions must “not significantly impact Northern costs of living, undermine food security or threaten emerging economies.”

Northern exceptionalism

Adjusting for the cold-oatmeal prose of the governmental press release, what you have is the plaintive cry of three tiny governments facing the thin edge of the climate change wedge, whose resource-dependent economies are royally screwed if the full suite of policy options is deployed to rein in emissions. A close read of that release seems to indicate a refusal to diverge from the current economic development recipe: more mines, more oil and gas development.

For the record, Shaun Dean, the premier’s press secretary, says the GNWT has no plans to bring in carbon pricing, and that it has nothing to do with the potential of scaring off industry, but is simply about avoiding a policy that would increase the cost of living in the territory. “We already have substantial incentive, because of the cost of fossil fuels in the NWT to begin with, to investigate alternatives and reduce our use,” Dean said.

Still, there has been some policy work done on this north of 60. In 2011, the GNWT commissioned a study on carbon pricing in the territory. The conclusion was that more study was needed, thanks in part to the fact that at the time, it looked like the Mackenzie Valley Pipeline might still go ahead, which threw some uncertainty into the numbers. And Ecology North has proposed a carbon tax pilot project that would raise between $2 million and $3 million per year, and put that money into helping low-income earners and remote communities switch to renewables and reduce fuel consumption. But that idea gained little traction.

To be fair, some Northern exceptionalism is warranted here. The North’s economy as a whole is disproportionately reliant on fossil fuels for everything from electricity to transportation, while our small population and enormous area mean everything we do is both more expensive and more energy intensive.

Mining is a pretty carbon-intensive business, although miners are generally more than happy to adopt renewable energy where possible and cut their diesel use, especially before the recent drop in oil prices. Oil and gas consumes a lot of oil and gas just to get more oil and gas. Aviation, trucking and diesel power plants are all, to varying degrees, important sectors of territorial economies. In the smaller communities, there is literally no way to travel any distance, or perform any sort of major work without gas or diesel. In places where incomes are low and costs are already astronomical, slapping a new levy on fuel simply adds to the pain, because there are no low-carbon alternatives for people to shift to.

Alternatives to carbon pricing

This is why the Northern premiers must look at the growing move toward carbon pricing (charging a per unit cost for carbon dioxide emission) with trepidation. Just this week alone, Ontario announced it was joining an existing cap-and-trade scheme that already features Quebec and California. Meanwhile, the president of that hive of eco-radicals and anti-capitalists, the World Bank, called on world governments to impose carbon taxes and do away with fossil fuel subsidies, the idea being to save poor countries from a one-sided subsidy battle with rich countries and to spur a new wave of renewable energy innovation. “You can have growth that will protect the planet and decouple carbon emissions from growth,” Jim Yong Kim told The Guardian. “We can get [that growth] now, but it would be much easier if we put a price on carbon.”

Economists generally favour carbon pricing over regulating emissions because it creates an economic incentive to reduce fossil fuel use without the need to create and enforce a complex web of rules for companies. The nature of the NWT’s economy is such that those price signals are a fact of life without any government action required.

It would seem the GNWT’s job now is to provide people some alternatives. That’s going to cost money and the government has indicated it is willing to spend. But government does nothing quickly, and the interregnum created by this fall’s territorial election will only add to the delay. And time’s a-wasting.