A recent UN report calling for a global carbon pricing regime has not changed the provincial government’s assessment that P.E.I. can achieve its climate change targets without a carbon tax.
Environment Minister Richard Brown said he has been reviewing a recent report of the Inter-Governmental Panel on Climate Change (IPCC) released earlier this month.
The report found that a 1 C rise in global temperature has already occurred and that effects are already being felt through more extreme weather, rising sea levels and diminishing Arctic sea ice.
But Brown said the IPCC report has not changed the provincial government’s current plan, which does not include a carbon tax.
A carbon tax is designed to make carbon-polluting purchases by consumers and businesses more costly.
“Does our plan still hold up? I think it does,” said Brown.
In September, the province’s climate plan was submitted to the federal government.
The plan aims to reduce the Island’s greenhouse gas emissions by 30 per cent below 2005 emission levels by 2030. It does not include a carbon tax, nor cap-and-trade, the two options for the province under the federal government’s Pan-Canadian Framework on Clean Growth and Climate Change.
The IPCC report, prepared by close to 100 scientists, found that most countries are not on track to limit a temperature rise to 1.5 degrees, and calls for a “rapid and far-reaching” transition away from carbon-heavy fuels.
The report also recommended a global carbon pricing regime, even recommending carbon pricing between $135 and $5,500 per ton of carbon dioxide pollution by 2030. By comparison, Canada’s target under the Pan-Canadian Framework, set to be implemented starting in January of 2019, calls for a carbon price to begin at $20 per tonne, maxing out at $50 per tonne in 2022. Under $20 per tonne, the average cost to Island households would be $315 for the first year before reaching $788 by 2022.
Under the Pan-Canadian Framework, the province would decide how carbon tax revenues would be used – whether they would be given back in tax breaks or be used to fund green programs.
The federal government is currently reviewing P.E.I.’s climate plan.
The issue of a carbon tax has become contentious amongst P.E.I.’s political parties. The provincial PC Party has pledged to fight the imposition of a carbon tax on P.E.I., possibly going so far as joining a constitutional legal challenge with the governments of Saskatchewan or Ontario. The party has yet to release its own plan to meet the province’s emissions reduction targets.
The Green Party has introduced a plan to implement a “revenue neutral” carbon tax which would be offset by a quarterly dividend cheque mailed to households earning less than $110,000 per year in income. Under this plan, the agriculture and fisheries industry would see exemptions to the tax.
Brown said the province would not pursue a legal challenge if the federal government imposes a carbon tax in January.
But two policy experts contacted by The Guardian said a carbon tax regime has been demonstrated to be the most cost-effective method of reducing emissions.
Dale Beugin, executive director of the Ecofiscal commission, said provinces have essentially two means of reducing emissions: regulation including carbon taxes or subsidies.
"There's a pretty limited set of alternatives,” Beugin said. “Subsidies can be kind of expensive both because they require governments to pick specific technologies to subsidize and because you end up paying people to do what they would have done anyway."
Greenhouse gas emissions by province (Megatonnes of C02).
Year P.E.I. NL NS NB Quebec
1990 1.9 9.3 19.6 16.1 86.6
2005 2.0 9.9 23.2 20.1 86.5
2016 1.8 10.8 15.6 15.3 77.3
Source: Environment Canada
Beugin said the provinces of Quebec and Ontario used carbon tax revenues to subsidize electric vehicle sales, which may have rewarded consumers who would have bought these vehicles anyway.
“P.E.I.'s plan to proceed without a price on carbon will result in more expensive policy relative to carbon pricing, less effective policy relative to carbon pricing, or both,” he said.
Isabelle Turcotte of the Pembina Institute said the national conversation around carbon pricing has largely been driven by groups seeking political gain.
She said carbon pricing was widely viewed as the most cost-effective way of reducing greenhouse gas emissions.
“I wouldn't [be able], right of the bat, to point to a jurisdiction that has seen great success in reducing emissions without carbon pricing,” Turcotte said.
Others on the conservative side of the political spectrum argue that the imposition of a carbon tax is an ineffective way of reducing emissions.
Shannon Stubbs, the resource critic for the federal Conservative Party, said there is limited evidence linking specific reduction in greenhouse gas emissions to carbon pricing.
She also said it could be more expensive. She pointed to an internal Environment Canada memo, obtained by the Conservatives under access to information, that suggested carbon would need to be priced at $100 per tonne by 2020, twice that of the current plan of $50 per tonne by 2023, to achieve a national 30 per cent reduction in emissions.
Stubbs said a better approach to reducing emissions would be to lower the tax burden on energy companies.
"The biggest investors in Canada in clean tech and alternative and renewable energy technologies are oil sands companies, pipeline companies, utility companies and conventional oil and gas companies," Stubbs said.