The biggest problem with Canada’s climate change policy is that our plans are not sufficient to meet our targets. Furthermore, our plans aren’t even being implemented.
The government says it wants to cut Canadian emissions to 17% below 2006 levels by 2020, and to 60-70% below by 2050. If they really wanted to do that, they could achieve that outcome simply by doing the following:
- Choose a series of annual emissions targets, starting this year and running out to 2050 and beyond.
- In each of those years, auction a quantity of permits for the production and import of fossil fuels. Also require permits for activities that generate other greenhouse gases, such as methane. Anybody who wanted to produce fossil fuels, import them, or emit greenhouse gases in other ways would require a quantity of permits equal to their emissions. The price of the permits would be determined by auctioning.
- Take the auction revenues and send an equal share to every Canadian each quarter by direct bank account deposit or cheque.
This approach would be simple and fair. It would not cost much to administer, since the permits would be auctioned at as high a level as possible. It would conform to the polluter pays principle, since they would do just that. It would send price signals to consumers, as the firms that bought permits passed along the cost. And the whole system would be revenue neutral, since all the revenues would be returned to Canadians. Critically, it would ensure that Canada hit its greenhouse gas emission reduction targets, each and every year.
This kind of approach is known as cap and dividend.
So, why doesn’t the government just go ahead and do this? The major reason is that people who have emitted greenhouse gases in the past feel that gives them the right to do so in the future. If this plan was put in place, all the industries that have been using the atmosphere as a free dumping ground for CO2, methane, and other greenhouse gases would suddenly need to pay for their waste disposal. This could seriously affect the growth prospects of some industries.
That said, since the cap would begin at current levels and gradually shrink down toward the target, no businesses would get obliterated immediately. They would simply need to adapt, in a fair way, to the kinds of business models required to meet the government’s stated climate change targets. The fact that the government is not pursuing an approach that would cause them to do so is the clearest indication that Canada’s government is not serious about dealing with the issue of climate change.