To the great surprise of exactly no one, money influences behaviour.
As of January 1st 2019, a carbon tax was enacted nationwide to do just that. In the 1920s, this was known as a Pigovian tax. A man named Arthur Cecil Pigou, a Cambridge economist, first conceived the idea of applying a price to something he termed “negative externalities.” These were most often negative by-products of certain actions which are not accounted for in the price of those actions. For instance, when you purchase cigarettes you don’t need to also purchase treatment for lung cancer, or when you buy a car, you don’t need to also purchase the roads. And no, current taxation levels are not sufficient to pay for those things. A Pigovian tax is meant to account for these externalities and better represent their true cost.
Canada is one of a growing list of countries to institute some form of carbon pricing, a tactic which has been widely acknowledged to be the most effective way to rapidly attain international cooperation and alter behaviour. As part of a national climate plan, the Federal Liberal government implemented a price on pollution.
The plan was brokered with most provinces nearly 2 years ago, and included a carbon tax as part of a bigger effort to tackle climate change. All provinces needed to establish their own programs, have them assessed by Ottawa and approved, or else they’d have a Federal pricing scheme imposed on them.
This Federal default would start at a minimum of $10 per tonne in 2019, rising by $10 each year to $50 a tonne by 2022. Whether a provincial initiative or the Federal default, the carbon tax would remain revenue neutral, meaning all money generated in a certain province, through this program, would be given and spent in that province. Newfoundland and Labrador produced its own carbon pricing plan, which was approved by the Federal government, and that will provide the framework for us moving forward. But what will that mean?
A Look at Our Province’s Carbon Pricing Plan
Let’s start with what will not change, the exemptions. There will be no additional tax on home heating fuels, off-grid diesel electricity generation, aviation fuel, inter-provincial marine transportation or municipalities. Agriculture, fishery, forestry, offshore and mineral exploration, and methane gases, from venting and fugitive emissions in the oil and gas sector, also all exempt.
So what actions are we taking?
We are enacting performance standards for large industrial facilities, and large scale electricity generation that emit more than 25,000 tonnes of greenhouse gases per year. These standards should cover approximately 44% of total greenhouse gas emissions in the province. These industrial facilities include petroleum facilities in the offshore, refining, primary mining, iron ore pelletizing, metal smelting, pulp and paper, and large scale electricity generation.
Each regulated onshore facility will be assigned an annual greenhouse gas reduction target equal to 6% below its 2016-17 historical average emissions-to-output ratio for 2019 (as calculated by the provincial government). The reduction targets rise to 8% in 2020, 10% in 2021, and 12% in 2022. Numbers upon numbers, but what do they have to do with the individual? What will this carbon tax mean for you and me? For us, the carbon tax will be a gas tax.
4 cents of our current gas tax will be removed and 4.42 cents of carbon tax will be added, a net increase of 0.42 cents per litre of gasoline. Several prominent politicians, including Liberal MP Yvonne Jones, have said “gas will only increase by a cent or a cent and a half per litre,” meaning that we will probably see an extra cent of gas tax stuck on top of the 0.42 cent carbon tax increase, and be blamed on the carbon tax.
My question to you is, will a cent and a half more per litre of gasoline really change anyone’s behaviour? If this carbon tax is really meant to curb emissions, can we really say we are doing our part? Climate change could very well be the greatest challenge any generation has ever faced. When Muskrat Falls comes online, assuming the bloody thing actually works, Newfoundland and Labrador will be using 98% renewable emissions-free electricity. Does that mean we are doing our part?