On Oct. 18, 2022, the NetZero Advisory Board and Canadian Climate Institute hosted “2030 in Focus: Getting the Next Decade Right on Net-Zero.”
Friends of Science Society posted an explainer video that challenged many of the assumptions of the presenters called “Too Far. Too Fast. NetZero 2030 In Focus.” (Power point is posted at the end of this page.)
At the event, the notion was floated that carbon-pricing uncertainty could be solved by enshrining Canada’s intended $170/t carbon tax in a permanent contracts-for-differences law of some kind, which could never be repealed by any subsequent government. The theory is that this form of guaranteed payment would ‘open the floodgates of investment.‘ It was suggested that this might be announced by Canada at COP27.
Friends of Science Society asked Robert Lyman about his thoughts on that. Lyman was a federal public servant for 27 years and a diplomat for 10 years. (Robert Lyman’s bio)
ROBERT LYMAN replied:
I have never seen an example of hubris that exceeds this proposal, no doubt inspired by the companies and groups that now expect to benefit competitively from the proposed freezing of carbon tax rates in future at the rates already announced, but not implemented by the Trudeau government.
Where does one start to explain what is wrong with this idea? First, perhaps, with feasibility. In Canada, the legislation approved by the present Parliament, including that governing taxation and expenditures, cannot bind the actions of a future Parliament. In other words, the policies and taxes imposed by the Trudeau government can be amended or rescinded by any future Parliament. So, the proposal to freeze future taxes or incentives at present levels eight years from now would only have political substance if the present government is still in power then. Even in that circumstance, the commitment to retain current rates would have no legal significance, only a political one.
Second, there is the fact that the present Canadian carbon tax rate is one of the highest in the world. Only 46 national governments have implemented carbon dioxide tax regimes, and most of them have rates of $30 per tonne or less. That means that 150 countries have no such tax regimes and Canada’s present and projected carbon tax rates place Canadian businesses at a high and rising competitive disadvantage compared to firms in other countries. The United States, Mexico and China, our three largest trading partners, either have no carbon taxes or have one set at rates of $6 per tonne or less. Locking in the future $170 per tonne rate would guarantee higher levels of loss in investment, trade and employment. This is notable in the context of a recent OECD study of the productivity trends among the 38 OECD countries. Canada ranked last, meaning that for the next 60 years, Canada’s projected growth in income will be the lowest in the OECD. Do we need to lock in one of the main sources of our higher costs?
Third, the Canadian system of taxation and expenditure include hundreds, if not thousands, of special provisions that grant advantages to one group or another, ranging from child tax credits, to incentives for sports organizations and charities, to investment incentives for some industries. No other group, to my knowledge, has ever had the arrogance to ask that it be granted guarantees that its fiscal privileges will be assured for the future. Such demands for exceptionalism reek of privilege and vested interest. In their pursuit of economic rent at the expense of other citizen taxpayers, have the climate zealots and the industries they support have no shame?
Fourth, carbon dioxide taxes are only one of over 300 current policy and program measures that federal and provincial governments have implemented to promote the reduction of GHG emissions. Together they mark an unprecedented set of interventions for a small number of industries. I counted 24 different generic subsidies to renewable energy industries alone. If they were to be “guaranteed” the indefinite continuation of their carbon price advantages, would they expect the continuation of, even guarantee of, all the other favours?
This proposal makes no sense.