The ABCs of Canada's climate future

How would you define a carbon tax?

A carbon tax is a charge levied by governments on industry for each tonne of carbon dioxide it emits. The tax might be levied at the oil refinery or where the gasses are emitted such as out of the tailpipe of a car or an industrial furnace. The price has to be high enough to have an impact and should rise over time. Sweden charges a carbon tax of $150 per tonne. Germany, Finland and England all have carbon taxes. Boulder, Colorado levies a $7 a tonne tax on electricity production. Quebec charges $2 to $3 a tonne on carbon emissions.

Does the consumer ever pay the carbon tax?

Everything winds up on the consumer’s plate eventually. Some industries will pass on the extra cost of the tax to their customers. However, if an industry actually reduces it greenhouse gas emissions by cutting back its fuel consumption, it can actually save money, and pass on this savings to its customers. Consumers could also benefit from the energy efficiency innovations the carbon tax will likely spawn. For instance, if carbon taxes on car emissions lead to the production of more efficient, hybrid cars, consumers would pay far less for fuel over the year!

What is the difference between a carbon tax and an emissions 'cap and trade' plan?

In a cap and trade system governments fix maximum emission levels – in other words, set a cap - for different industries. When industries go over their set emissions level, they can buy credits at market price from other companies that have not yet reached their cap. This way, companies have financial incentives to reduce emissions. A similar system worked well to reduce acid rain 20 years ago.

It is generally accepted that a combination of a cap and trade system and a tax on carbon is the market-based way to shift the economy to a low carbon diet. Greenpeace feels that both are necessary. The tax on its own, without hard caps on emissions and ensuing trade mechanisms, guarantees nothing. Deep and verifiable emission decreases are key.

Are there any other ways to reduce greenhouse gas emissions at the national level?

You could have a cap with no trade, but that would leave no options for companies that lag behind. In other words, they would not be allowed to buy emissions credits from companies that are below their cap. This could kill some businesses that are too slow to adapt to the new limitations on carbon.

You can also cap and trade carbon emissions based on levels of intensity - a made in Canada idea. Intensity targets do not set absolute caps on greenhouse gas emissions. They encourage corporations to reduce the amount of greenhouse gas emissions per barrel of oil or litre of gas used. That means that a company that is growing quickly could increase its overall greenhouse gas emissions while reducing the amount produced by each barrel of fuel used. In other words, a company might produce less greenhouse gases per barrel of fuel it uses while actually increasing the overall amount of greenhouse gases it produces.

The tar sands are a great example of this as expansion far overrides any modest intensity decrease. Since 1990, the intensity of greenhouse gas emissions has fallen by 17 per cent in Canada, yet our greenhouse gas emissions are up by 25 per cent.

In other words, intensity targets are a bad idea.

What are the measures now under consideration by the federal government?

In fact, nothing of any real merit. The federal government is working on capping emission intensity, and allowing companies to trade intensity vouchers. The process is not in practice as it has not even been adopted by cabinet. The Canadian advisory body on greenhouse gases and air pollution, The National Round Table on the Environment and the Economy released a report in January 2008 showing that even the modest, far from Kyoto objectives of the Harper government cannot be met by simply reducing intensity. The Round Table proposed a combination of a carbon tax and a cap and trade system, but Environment Minister John Baird rejected the idea straight out.

Would the federal government's proposed measures meet Canada's obligations under the Kyoto Protocol?

No. The Kyoto Protocol calls for a six per cent reduction below 1990 greenhouse gas emissions levels by between 2008 and 2012. Canada is now 25 per cent above 1990 levels. The Harper targets are 20 per cent below 2006 levels by 2020 and 60 to 70 per cent below 2006 levels by 2050. Using 2006 as a benchmark year instead of 1990 makes all the difference. It’s like starting the 100 yard sprint at the 50 yard mark (2006) while everybody else starts at 0 (1990). In 2020, Canada will be five per cent above 1990 levels. That’s 11 per cent above our 2012 Kyoto target. If the whole world followed our example, we would toast the planet for sure.

What do other countries do?

The rest of the world, with the exception of the U.S., is trying to achieve Kyoto targets. Much of the European Union is well on the way to succeeding. The 2,500 scientists on the Intergovernmental Panel on Climate Change feel that by 2020 greenhouse gas emissions must be reduced by 25 to 40 per cent in developed countries. It is the only way to keep global warming under the fatal two degree rise. The IPCC says that after two degrees, we could literally lose control of the situation. Most of the world agreed to this in Bali, with the exception of the U.S., Japan and Canada. Remember, Canada intends to be five per cent above 1990 levels in 2020, so fixing a 25 to 40 per cent reduction would leave Canada 30 to 45 per cent behind the rest of the planet.

What does Greenpeace recommend to the federal government to reduce greenhouse gas emissions?

We recommend that Canada respect its Kyoto commitment of a six per cent decrease from 1990 levels, (Kyoto does foresee mechanisms to allow late comers to catch up after 2012) and then move to a deep 30 per cent decrease from 1990 levels by 2020. Only then can Canada rejoin the international community in negotiating a post-Kyoto agreement by 2009, as agreed to in Bali. To get there, we need a huge change in federal climate policy.

What can I do?

Join Greenpeace’s ongoing efforts to get Canada on side. Write or telephone the prime minister demanding he make every effort to meet our Kyoto targets and fulfill our international obligations:

• Call Prime Minister Harper at 613-992-0984
• Write PM Harper or House of Commons, Ottawa, Ontario K1A 0A6
• Call, write or visit: www.parl.gc.ca to find your MP