Conservatives are blowing hot air on carbon pricing
The territorial election campaign may be over but the Yukon Party’s efforts to keep the issue of a federal carbon tax at the forefront of the political conversation are not.
The party spent last week hammering the new territorial government to push for an exemption from the tax.
The Yukon Party’s newly minted chief of staff, Ted Laking, also recently published an op-ed in the Toronto Sun taking aim at carbon pricing. Arguing that there are other, better ways to tackle the issue of climate change, Laking pointed to emissions standards for new vehicles, incentives towards retrofits, investments in renewable energy, and carbon capture and sequestration as better solutions.
It is fair to note there are a number of policy tools available to combat climate change, but I think it is important to point out that no matter which approach we take there will be a cost up front. And that cost is going to be funded by — you guessed it — you and I, whether through higher prices or taxes.
Take reducing tailpipe emissions for example. If you mandate automakers must reduce tail pipe emissions for new vehicles — as the previous Conservative federal government did — the simple truth is that there will be a cost. Implementing whatever technology is necessary to accomplish that goal costs automakers money and economics dictate that they will pass that cost on to consumers in the form of higher prices on new vehicles. The cost may be buried in the sticker price of the vehicle unlike an in-your-face carbon price but you pay it nonetheless.
The same goes for green standards for new homes. It is often lamented here in Whitehorse that new green municipal building standards have contributed to rising house prices.
Carbon capture and sequestration (CCS) costs money too, and at the moment it’s still unclear whether CCS will ever be a cost-effective way of reducing greenhouse gases in the atmosphere. Leakage of all that sequestered carbon is a serious issue. It is also currently one of the most expensive alternatives out there, although the hope is that with technological advances the price will go down. But the Boundary Dam CCS project (which, contrary to what the name suggests, is actually a coal power plant) doubles the price of electricity generated by the plant and required an investment of nearly a billion dollars by the federal and Saskatchewan governments.
The reality is whichever way we tackle this issue will cost money. Those costs will be passed on to you and I. If reducing carbon emissions were cheap and easy this wouldn’t be one of the most contentious issues of our time. We would just do it.
Ironically, while some portray a carbon tax as being an increase of the amount of our money that governments take it could actually turn into an opportunity to be the opposite. Currently we are primarily taxed based on our income, and the only way to reduce our tax burden is to reduce the amount we earn — a fact that conservative economists have lamented for years, reasoning that it is, in effect, a tax on hard work and initiative.
A carbon tax actually provides us with opportunities to reduce our tax burden and help the environment. You can pay less tax by turning down your thermostat and putting on a sweater. Or by choosing a more fuel efficient option when shopping for new vehicles. That retrofit or solar installation you were contemplating? It will pay for itself more quickly once a carbon tax is factored into the equation.
Laking is right about one thing: the carbon tax proposed by the federal Liberals and accepted by their territorial counterparts here in the Yukon is probably too small to make a big enough difference. And after increasing to $50 per tonne by 2022 it will likely have to go even higher.
But it would seem to make more sense to ease into it so that adjustments can be made slowly over time once it is in place and details have been sorted out. And the small size of the tax also puts to lie some of the hyperbole that has gone on in recent months about the purported impact of this tax. Once fully implemented it is expected that the tax will lead to a whopping 10-cent increase in gas prices. We have seen fluctuations in fuel prices of that magnitude and greater in recent years (months even) without the hardship many are predicting. And unlike when gas prices rise because of market forces, the excess as a result of the new carbon tax will stay in the Yukon and be distributed to taxpayers rather than padding the pockets of oil companies.
You will have to forgive my scepticism about numbers released by conservative lobby groups purporting to show that the cost to the average household will be in the thousands of dollars per year. They can’t have it both ways. They can’t insist that the tax will impose such a massive cost on consumers while arguing that people won’t seek out low-carbon alternatives. If the impact was that big we would be doing everything we could to reduce our emissions.
The nub of the issue seems to be an assumption that the Yukon Liberals were insincere in their pledge to return every dollar collected in carbon tax revenues to Yukoners. And it is going to be difficult to persuade anyone of what will happen in the future. There is good reason to be cynical about any government living up to any promise it makes during an election campaign.
But thankfully we have an official Opposition that can hold them to account if the new government doesn’t live up to their promise of revenue neutrality. This, I think, is where the Yukon Party should direct its attention and abandon this notion that the Yukon will be exempted from the tax.
Kyle Carruthers is a born-and-raised Yukoner who lives and practises law in Whitehorse.