…environmental economics and the implications of environmental policy

A harmonized carbon price? Please make it so Jim.

with 15 comments

When Jim Flaherty, the Federal Minister of Finance makes very public comments about climate policy, it is important. (see here). All too recently all things climate policy seemed to be the exclusive purview of Environment Canada. While Environment Canada is the logical lead on the file, the lack of visibility of others Ministers in the government on the file has been troubling. Climate policy is truly cross-cutting with important thinking required on industrial policy, international relations, energy and lots lots more. Look to Bali and Canada’s “results” for a good example of when a single department and Minister covers the entire file.

So it is interesting to see the Federal Finance Minister wade into the climate policy realm in a public way. The Minister’s key point is about federal-provincial cooperation:

“Generally speaking, the consensus I would say is that it is desirable in Canada not to have multiple regulators in various areas of the economy,”

This is a good signal since the proliferation of a hodge-podge of carbon policies has to have industry and others doing business in multiple jurisdictions worried and could perhaps lead to higher overall costs (as the minister states in the article).

So while the Department of Finance has likely been beavering away assessing the possible macroeconomic impacts associated with carbon pricing, it is good to see the Finance Minister shake the tree bit. Lets just hope more consultation does not lead to inaction.

Written by Dave Sawyer

January 15th, 2008 at 5:50 am

15 Responses to 'A harmonized carbon price? Please make it so Jim.'

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  1. I don’t know if this struck you as well, but there is a fair bit of rich irony in Flaherty’s admonition to the provinces that they should not regulate/tax carbon.

    Certainly that’s the type of response that Flaherty can deliver with a straight face when he’s talking about the need for a national securities regulator, an instance where the federal government is showing admirable leadership with a proposal for a set of sensible national standards.

    But the Minister’s step-aside-and-let-us-handle-this approach is laughable in the face of the anemic GHG emission intensity plan that his government released last year, and that Ottawa is relying upon to take Canada to a target of 20% below 2006 by 2020.

    For starters, the plan’s 2020 reduction target does not measure up the target many provinces have set for themselves in an effort to beat the ever-climbing curve of rising temperatures. Ottawa’s 2020 target comes up short against the targets of BC (33% below 2006), Ontario (15% below 1990) New Brunswick (10% below 1990) and Quebec (6% below 1990 by 2012).

    Moreover, the provinces also know what everyone else knows about the federal plan – that it will fail to meet the targets that Ottawa has set. This was the finding in four separate studies by the NRTEE, the C.D. Howe Institute, the Pembina Institute and Deutsche Bank.

    What are the provinces to do? . . . sit on their hands while Ottawa fiddles?

    No one seriously disputes that an effective national standard is often preferable to a patchwork quilt of provincial regulations, particularly when inter-provincial impacts are involved. But what alternative do the provinces have in this instance, when Ottawa has so demonstrably opted not to take the bull by the horns on the pressing issue of climate change?

    Lead Ottawa, and they shall follow . . .


    21 Jan 08 at 5:55 pm

  2. Good comment Pierre. Once does have to wonder why he would wade in, given all you say above. It seems that whenever there is talk of national harmonization, there is a settling on the lowest standard. Look to the Canada Wide Standards on PM and Ozone as a very good example. Essentially these were politically negotiated air quality standards that many jurisdictions were already meeting when they were rolled out. They had (or have) very little to do with forward looking action or science based standards to protect human health. So, it seems reasonable that some provinces are forging ahead. I guess the question is what to do with the laggards?

    Dave Sawyer

    22 Jan 08 at 5:39 am

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