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Experts are divided on what the levy has achieved and how it must evolve.
Thinking about the climate when we debate climate policy.
Premier Clark inherited bold climate policies and strong pressures on all sides. What will she do?
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Two years have gone by since that study was published and Canada still has no coherent plan to deal with its carbon emissions, a point stressed this May in a scathing report by federal Environment Commissioner Scott Vaughan.
Shadowing future risk
Absent a national climate strategy, many oil sands companies, including Nexen, Shell, Suncor and Cenovus, now factor a range of potential future carbon prices into their medium and long-term strategic planning.
The practice, known as "carbon shadow pricing," provides a degree of confidence that their operations, current and planned, will be able to survive more stringent limits on greenhouse gas emissions.
"We want certainty as business people because we're making big investments, and our shareholders would like certainly as well," Suncor's VP of sustainable development, Gordon Lambert, told the Tyee Solutions Society.
Lambert's Suncor models carbon prices as high as $45 per tonne, $15 higher than B.C.'s internationally-lauded carbon tax. According to a recent corporate update, Suncor is confident that a price in the upper range wouldn't "cause material disadvantage to the company." Cenovus thinks it could handle a carbon price of $65.
Even so, both companies, and their investors, would breathe more easily if they knew for sure the requirements that a Canadian climate policy would place on them.
And the leading oil sands producer has no qualms about how that should be done. "We think a price should be put on carbon," Suncor's Lambert said. "Ideally the model would be a national carbon tax."
The same message went repeatedly to Prime Minister Stephen Harper from the National Round Table on the Environment and the Economy (NRTEE). Not only would a carbon price be the most effective way to achieve Canada's greenhouse targets, the arms-length, multi-stakeholder panel advised, it would also be the most cost-efficient. Indeed, the NRTEE concluded, the current patchwork of provincial climate policies will cost Canada's economy 20 per cent more than a national pricing policy would by 2035.
The 2012 federal budget eliminated the NRTEE. Conservative ministers later revealed that its push for a "carbon tax" was a major factor in its demise.
"Why should taxpayers have to pay for more than 10 reports promoting a carbon tax, something that the people of Canada have repeatedly rejected?" Foreign Affairs Minister Baird told Parliament in May. "It should agree with Canadians. It should agree with the government. No discussion of a carbon tax that would kill and hurt Canadian families."
The federal government instead plans to regulate emissions from each of Canada's industrial sectors separately. It has promised to roll out oil and gas regulations by early 2013.
Reward the innovators
For an oil sands producer, there are several reasons to prefer a carbon tax. One is that it inherently rewards economic activity that is carbon efficient and punishes activities that aren't.
On the surface, that would seem to hurt Alberta's oil sands, widely identified as Canada's fastest-growing source of carbon emissions. What is not often acknowledged, though, is that from an economic perspective, many bitumen operations are actually quite efficient with their CO2.
"They may be a new, large and growing source of emissions," wrote University of Alberta business professor Andrew Leach on his blog, "but they are also among the highest value uses of carbon, at least among industrial activities, in the country."
Leach has calculated that one tonne of CO2 released during coal production is tied to about $20 to $30 in profits. Compare that to the oil sands, he estimates, where each tonne of emissions generates profits in the range of $400 to $500.
"If you think that an investment with that kind of value proposition is going to dry up in the face of a $30-$50 (or even much higher) per tonne carbon tax," Leach argues, "think again."
Carbon pricing would still be expensive for the oil sands. At that upper $50 range, it could cost a company such as Suncor more than $1 billion per year, Leach estimates.
But attacking emissions through government regulation instead could effectively nullify any chance for competitive advantages between or within industries. Typically such brute-force regulations impose blanket limits on all operators within a sector, then penalize companies for not meeting them.
"It's not clear to me how regulation drives innovation," Kirk Andries, executive director of Alberta's Climate Change and Emissions Management Corporation, told the Tyee Solutions Society. "Regulation is really good at bringing up the laggards to a minimum, but it doesn't promote leadership."
An economy-wide price on carbon, in contrast, leverages the power of the market. Companies and industries that develop the most cost-effective ways of reducing their emissions first, gain a competitive advantage.
For a major oil sands producer such as Cenovus, which claims to have some of the most carbon-efficient operations in the industry, that's an appealing proposition.
"If you're going to regulate carbon, it should be done through economic measures rather than regulation," Jon Mitchell, Cenovus's team lead for environmental strategy and policy, told the Tyee Solutions Society. "I think the most efficient way to do it is economy-wide and with a price."
Sources I reached could only speculate about why the Harper government prefers regulation, traditionally anathema to free-market conservatives, to an industry-supported tax. One called it "the $64,000 question."
But perhaps it's because a true "economy-wide" price on emissions would impact ordinary Canadians, not just industrial producers. Instituting a national carbon tax would raise transportation and heating fuel prices for everyone -- a politically dicey proposition that may explain the claim that such a tax would "kill and hurt Canadian families."
CEOs: Bring on a tax
Others, though, think more expensive energy is exactly what Canada needs.
"The most effective means of promoting energy conservation is to allow energy prices to rise," read one non-governmental organization's report from December 2011. "Governments must resist the temptation to shield Canadians from higher energy prices."
That forceful statement didn't come from any environmental group. Nor was it written by any of the parties opposing the government in Parliament. Rather, the views were those of the Canadian Council of Chief Executives, a group representing more than 150 of Canada's largest corporations.
"The present trend is unsustainable," these CEOs concluded. "It is time for Canadians to get serious about energy conservation, for the health of our economy as well as the environment."
Tomorrow: When it comes to putting a price on carbon, B.C. and Alberta have much to teach each other. For the whole series to date, go here. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
Canada's Oil Insiders Want a Carbon Tax: Page 2 of 2
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pwlg
48 weeks ago
More Hogwash
A price on carbon won't cost tar sands companies anything. Their costs will be passed on to the consumer. The consumer will pay tar sands companies carbon tax as well as a carbon tax at the pumps etc.
The only other way for the consumer in this country to avoid paying the tar sands companies carbon tax is if the tar sand companies export their product (which is exactly what they want to do).
Trouble is, their profits do not necessary stay in Canada.
lindi6676
48 weeks ago
I agree total hogwash
this has nothing to do about energy conservation or improving the economy ,again its putting the expense on the consumer to make record profits for the rich corporations. If the people fall for this change of heart from these greedy corporations then we will get what we deserve. Wake up people this is about the corporate agenda Money & Control!!!!
jimmmmy
48 weeks ago
Carbon tax
Just another opportunity for the the capitalists to grind a few more bucks out of the taxpayer . If you look under the covers here you'll see many strange bedfellows.. All with their hands up the "governments" skirt.
bob1964
48 weeks ago
So by the previous comments
So by the previous comments I've come to the conclusion that if David Suzuki wants a carbon tax it's a good thing but if industry wants the same carbon tax it's got to be a bad thing ????
jimmmmy
48 weeks ago
Bob1964
Suzuki is a Canadian treasure but he does not do politics very well and is greatly disliked by banksters and profiteers , they would like nothing better than to get him in bed with them. I can here the screaming now!
Luck
48 weeks ago
STOCK MONEY FOR RICH 101.......................
STOCK MONEY FOR RICH 101,
THIS LIL GAME WAS SHOWN ON CNN,
MAKE MORE MONEY BY INTRODUCING A BILL,
AND THIS DRIVES STOCK UP,
THEN BUY TO YOUR HEARTS CONTENT,
CAUSE YOU HAVE THE MONEY, TIME AND INSIDE INFO,
WITH INSIDER INFORMATION,
YOU KNOW IT AINT GONNA PASS,
CASH OUT WHILE STOCK IS HIGH WITH SOME MONETARY GAINS,
AND WALA YOU HAVE MADE SOME QUICK MONEY,
JUST BEFORE THE STOCK GOES BACK TO ORIGINAL PRICE,
STOCK MONEY FOR RICH 101
Craig King
48 weeks ago
Energy
If you don't have a big, stable energy supply you can't make stuff. You can't make defense stuff. If you can't make defense stuff you can't win a war. If you can't win a war somebody will come and take what is yours.
Wind and Solar are pathetic little bumps of energy. Gas, Coal and Nuclear are what it takes with a bit of hydro thrown in where it works.
Lack of energy is weakness. This is a predatory world.
wanderingraven
48 weeks ago
Not so fast
A decent carbon tax is by far the fairest way to cut down on fossil fuel use, and will provide governments with a money to reduce other regressive taxes like GST/HST.
Bob Wiley
48 weeks ago
carbon tax is a regressive tax
A carbon tax is a regressive tax because rich and poor all pay the same amount which hurts a poor person just trying to heat their home far more than a rich person heating their pool for instance. Taxes, all taxes must be graduated and based on income and assets to be fair.
Amor de Cosmos
48 weeks ago
We should take the money but a cap system critical
If industry supports a carbon tax system, we should do it, and use the revenues exclusively to help create a sustainable economy.
That being said, a carbon tax would be of no benefit if it is not used for this goal, and would actually be counter-productive (and anti-sustainable) if we come to rely on the revenues for general spending.
There are a lot of nay-sayers about a cap and trade system. You'll notice that most of the criticism relates to the "trade" part of "cap and trade". People are concerned about manipulation of markets.
In fact, I believe the absolutely critical part of a cap and trade system is the "cap" part. This, in a nutshell, is the sustainability part. Everything else is details to be worked out.
As above, revenues from a carbon tax should be welcomed if they are used to usher in a sustainable economy. Revenues from a carbon tax should not be used or relied on for general spending not focussed on creating the sustainable economy. Such a reliance would actually be anti-sustainable.
Either way, we should not exclusively rely on a carbon tax system unless we are certain that it will lead to a sustainable economy within an appropriate timeframe. Otherwise, we need a "cap" system as well, of some sort.
Sask Resident
48 weeks ago
What they really mean
The writer carefully twists what the executive say to push a personal agenda. As on executive said "If Canada really wants to reduce CO2," then put a carbon tax on everything. He didn't say that reducing CO2 was a good policy but the writer implied it. As for former Liberal leader Stéphane Dion's disastrous 2008 Green Shaft, he never wanted a carbon tax on everything but a wealth transfer from western petroleum fields to Ontario and Quebec, something like a super equalization program.
It doesn't take a genius to realize that a carbon tax would, "kill and hurt Canadian families." A tax on everything would drive up prices on everything especially food which is an important cost to families.
Amor de Cosmos
48 weeks ago
The real alienated West
Sask Resident:
I would strongly disagree with you. The majority of flatlanders appear to have been brain-washed about what is, and what is not, in their long-term interest.
Alberta has done an utterly disasterous job of managing the oil business and has created an economy where both population-growth and essential-services spending has depended upon the temporary exploitation of non-renewable resources. This is insane.
After only a very minor downturn in the market, Alberta was put in a deficit position. There are MASSIVE unaccounted future risks and costs associated with this approach.
Another way of expressing this is to say that Albertan residents and those who rely on such revenues are essentially living on hand-outs paid for by selling capital assets. No Canadians work less for what they receive from government than Albertans.
It is like the farmer who does not grow anything or produce any goods with his labour, but who instead survives only by selling a piece of the farm bit by bit. It might seem like a good plan at first, but it is not.
Your suggestion that taxing fossil fuel energy use would kill and hurt families is not sound. Not dealing with our economic reliance on unsustainable revenue-sources is much more likely to kill and hurt families in the long run.
In my view, NOBODY has sold out Western Canadians (land and people) more than the prairie conservative movement. The real alienated West is that under-represented majority which disagrees with this approach.
istvan
48 weeks ago
Tar sands
This is a tax that we pay ,and the oil companys profit from.And how about the new industy of carbon traders?More people that do not produce anything,good for the GDP I supose.
Suspicious by nature
48 weeks ago
What the hell is going on
Who`s fooling who, I`m not talking about the tar sand oil whores, I`m talking about what the Tyee is up to..
Has Harper and the CRA been looking into your charitable status, have you been threatened or bought off by big oil..
First we have a suggestion of ramping up tar sand use but eliminating that dreadful coal.
The lesser of two evils, wrong, the coal barons won`t give up any turf and big oil won`t share.
Then we talk about morals and tar sands..
Now a mythical carbon tax to slow carbon burning, false again.
Consumers will pay, carbon will be burned and nothing will slow.
Perhaps you don`t remember the BC Liberals, economists, and industry leaders reminding us that consumers pay all taxes, not industry.
Hugo Chavez has 2 Trillion barrels of tar sand(Orinoco) and he`s ramping up, Russia is developing huge new oil plays, the USA has new found oil reserves in the Trillion barrel range(new extraction technology)
WTF is going on Tyee, who got to you.
Oil companies care about profit, carbon taxed tar oil(paid for by consumers) still has to be piped and tankered.
BC is shipping record coal, the USA is advertising mythical clean coal, fracking has gone wild everywhere and investors and shareholders want $big dollars.
Suspicious by nature
48 weeks ago
Dead Fish
Canadian mining companies raping Panama and many other areas, no morals, no ethics, bribes and bully tactics.
Big Oil doesn`t want anyone weaned of oil until there is none.
Just imagine a $1 Trillion dollar investment in the hydrogen power cell or green alternatives.
Carbon tax bullshit when this tar oil is being refined elsewhere, what about the carbon footprint of this goo after it leaves Canada.
I could go on Mr. beers.
I see right through this bullshit, who got to you eh?
carfreecity
48 weeks ago
automobiles
we need the companies that sell products made from oil to chip in too and with uto industry it should be retroactive
our living environment has been built to support the uses and abuses of automobiles
these companies must pay for social costs
Gonzaga
48 weeks ago
And yet
Perhaps if the oil companies were to stop backing the Conservatives and promoting a "reduced regulatory burden" they might make more progress. They might stop funding organizations that try to stymie attempts to cut down on GHG emissions as well as those that spread anti-science propaganda. They could buy ads in major papers, which might simultaneously motivate said newspapers to take an interest in the issue and not endorse parties with no GHG plan or policy.
Some commentators appear to have unearthed the historical side issue that Stéphane Dion's Liberals proposed a carbon tax as part of their 2008 platform. I however was in Canada during that campaign and can tell you that this fact must be understood in context. The burning issues of the 2008 campaign were in fact the following: was Stéphane Dion "not a leader"? Was Stéphane Dion an egghead? Would you want to have a beer with Stéphane Dion? Could Stéphane Dion control his caucus? When this became tiresome, voters were invited to consider whether the Liberals had really changed since the sponsorship scandal--or were they still sleazy and corrupt? In Quebec, the focus was somewhat different as voters were invited to reflect on whether or not Stéphane Dion despised Quebec.
To put things in perspective, I'll remind you that the Nude Garden Party of Canada did not propose a carbon tax, and it won far fewer seats than the Liberals.
Jim Baird
48 weeks ago
John Baird
One Baird to another your government's efforts at suppressing clean energy innovation is killing and hurting this Canadian's family.