From Science Matters

By Ron Clutz

Trudeau Turns the Carbon Tax Screws on Canadians April 1

Ross Mckitrick explains the smoke and mirrors in Trudeau’s justifications for his racheting carbon tax in a National Post article Wanted: A leader who is honest about climate policy.  Excerpts in italics with my bolds and added images.

Pierre Poilievre is leading anti-carbon tax rallies around the country, ginning up support for an old-fashioned tax revolt. In response, Justin Trudeau went to Calgary and trumpeted — believe it or not! — his love of free markets. After explaining the economic logic of using a carbon tax to reduce greenhouse gases, the prime minister slammed regulatory approaches, which, he said, “all involve the heavy hand of government. I prefer a cleaner solution, a market-based solution and that is, if you’re behaving in a way that causes pollution, you should pay.” He added that the Conservatives would instead rely on the “heavy hand of government through regulation and subsidies to pick winners and losers in the economy as opposed to trusting the market.”  Amen to all that!

But someone should tell Trudeau that his own government’s
Emission Reduction Plan mainly consists of heavy-handed
regulations, subsidies, mandates and winner-picking grants.

Within its 240 pages one does find a carbon tax. But also 139 additional policies, including:

♦  Clean Fuels Regulations,
♦  An electric vehicle mandate that will ban gasoline cars by 2035,
♦  Aggressive fuel economy standards that will hike such cars’ cost in the meantime,
♦  Costly new emission targets specifically for oil & gas, agriculture, heavy industry and waste management,
♦  Onerous new energy efficiency requirements both for new buildings and renovations of existing buildings, New electricity grid requirements, and page upon page of
♦  Subsidy funds for “clean technology” firms and other would-be winners in the sunlit uplands of the new green economy.

Does Trudeau oppose any of that? Hardly. But the economic logic of a carbon tax only applies when it is used on its own. He doesn’t get to boast about the elegance of market mechanisms on behalf of a policy package that starts with a price signal then destroys it with a massive regulatory apparatus. Trudeau also tried to warm his Alberta audience to the carbon tax by invoking the menace of mild weather and forest fires. In fairness it was an unusual February in Calgary. The month began with a week of above-zero temperatures, hitting five degrees Celsius at one point, then there was a brief cold snap before Valentine’s Day, then the daytime highs soared to the low teens for nine days and the month ended with soupy above-zero conditions. Weird.

Oops, that was 1981. This year was weirder: February highs were above zero for 25 out of 28 days, eight of which were even above 10 degrees C.

Oops again, that was 1991. Granted, February 2024 also had
its mild patches, but not like the old days.

Of course, back then warm weather was just weather. Now it’s a climate emergency and Canadians demand action. Except they don’t want to pay for it, which is the main problem for politicians when trying to come up with a climate policy that’s both effective and affordable. In fact, you can only have one of those two. Take your pick: effective or affordable, affordable or effective.

In practice, of course we typically end up zero for two,
with policies that are both ineffective and unaffordable.

You can claim your policy will yield deep decarbonization while boosting the economy, which almost all politicians in every western country have spent decades doing. But it’s not true. With current technology, affordable policies yield only small temporary emission reductions. Population and economic growth swamp their effects over time, which is why mainstream economists have long argued that while we can eliminate some lowvalue emissions, for the most part we will just have to live with climate change. Trying to stop it would cost far more than it’s worth.

Meanwhile the policy pantomime continues. Poilievre’s anti-carbon tax rallies are popular, but what happens after we axe the tax? If he plans to replace it with regulatory measures aimed at achieving the same emission cuts, he really should tell his rallygoers that what he has in mind will hit them even harder than the tax they’re so keen to scrap.

Or does he have the courage to do the sensible thing
and follow the mainstream economics advice?

If he wants to be honest with Canadians, he must explain that the affordable options will not get us to the Paris target, let alone to net-zero, and even if they did, what Canada does will have no effect on the global climate because we’re such small players. Maybe new technologies will appear over the next decade that change the economics, but until that day we’re better off fixing our growth problems, getting the cost of living down and continuing to be resilient to all the weather variations Canadians have always faced.

Addendum

Notice that Trudeau asserts that his carbon tax is needed so that “polluters pay.”  Millions of Canadian taxpayers’ dollars have been spent on prime time TV ads reminding viewers that we have to do something to stop “carbon pollution”, by which they mean CO2 emissions.  No matter that CO2, far from being an unnatural contaminant, is plant food without which (less than 150 ppm) plants and animals die.  No mention of thousands of scientists proclaiming that “There is No Climate Emergency,” and that global warming and rising CO2 since the Little Ice Age have led to unprecedented human flourishing.

So essential CO2 is labeled as a pollutant in order to insist that emissions from burning hydrocarbons must be reduced to avert a crisis: heat waves, forest fires, floods, droughts, etc. etc.  The premise is “We have to do something to stop emitting CO2.”  Politicians of all stripes dare not question it.  And a video interview below demonstrates how that premise prevents any reasonable discussion of energy policy.

The Parliamentary Budget Officer released a report looking into how much the carbon tax is actually costing Canadian households. In the CBC interview, Parliamentary Budget Officer Yves Giroux breaks down the report. And, Dale Beugin, executive vice-president of the Canadian Climate Institute discusses the analysis his organization has conducted on the government’s emissions reduction plan. Note the PBO role is non-partisan, while the CCI agenda is open and obviously Gung Ho against CO2.

The discussion with the PBO ends at 11 minutes into the video, the remainder being CCI talking about ways to shape industrial policies to force additional emissions down to meet Paris targets.  A few excerpts from the first part show how difficult it is to escape the premise that we have to do something about CO2.

CBC:  I’m sure have been watching what’s been happening in the House of Commons the conclusions in your report they’re being cited by the conservatives in particular as proof that Canadians are worse off because of carbon pricing and that means this policy needs to go. Is that a fair representation of your findings?

PBO: Well it’s a representation of our findings once you also include the economic impacts of introducing a carbon tax. So there’s the fiscal impact on households paying the tax versus the amount of the rebate that households are receiving. But once you also include the economic impacts due to the introduction of a carbon tax, for example the reduction in activity or the slower growth in economic activity in some sectors then that’s the full impact.

CBC:  The fiscal analysis is the financial analysis that the government points to. They say most families will still get  more in rebates than they pay, sort  of Straight Cash Out, Straight Cash in.  Is that a fair representation?

PBO: The conclusion we arrived at if you take into consideration the carbon tax that households pay on their fossil fuels that they’re buying: gasoline, natural gas, diesel and so on, they pay that directly as well as the embedded energy component of whatever goods and services they buy and they subtract from that the the rebate then about 80% of households are better off.

CBC: It gets complicated and this is where it gets controversial because you took a look at the broader effect that carbon pricing, any kind of tax has on an economy, it can have an economic impact to the negative and this is the line from report that conservatives point to once you factor in the rebate but also the economic impacts the majority of the households will see a negative impact as a result of the carbon tax. The rebuttal to that conclusion is that it doesn’t tell the whole story it doesn’t look at other options and other impacts. What do you say in terms of people understanding the meaning of that analysis?

PBO: The analysis looks at the world where the we have a carbon tax versus the absence of a carbon tax which is how we do economic analysis. So the impact of a carbon tax on the economy will have impacts on some sectors; the transportation sector to take one example, or the oil and gas sector, lower employment than would otherwise be the case or lower profits than would otherwise be the case. So that translates into economic impacts on average for households: lower employment, lower profits, lower dividends for those who own stocks Etc. so these are the economic impacts.

CBC: This is where the analysis has caused some confusion and drawn some criticism because the analysis only compares the impact as you said of a carbon price versus nothing, and nothing isn’t an option right? It doesn’t compare carbon pricing versus other options that other experts would say could be even more expensive. So how should people assess the political arguments we’re seeing without a clear comparative analysis of the options?

PBO: So my mandate is to provide cost estimates of policy proposals by the government or policy measures that the government has introduced. My mandate does not include providing cost estimates of alternative scenarios or multiple options. So you’re right that doing something else to reach International targets or a Canada’s commitment under the Paris Accord would also have costs. For example if we were to introduce massive subsidies for new technologies to wean ourselves off fossil fuels, that would obviously have costs. Introducing regulations also has costs and these costs could could be measured if we knew exactly what these alternatives are but there’s no clear policy proposal from the government as what would be the alternative to a carbon tax. So it’s difficult to cost something that has not been proposed yet.

It’s true that the consensus among economists is generally speaking a carbon tax is probably the least disruptive way to reduce emissions. That being said we see that the government itself is not relying solely on a carbon tax for various reasons. So the government itself is introducing subsidies for clean fuel and many regulations.

CBC: So you can’t assess this compared to another proposal because there is no other proposal to assess.
You also don’t factor in the cost of climate change. We’ve seen massive wildfires still burning from
last year throughout the winter In British Columbia and in Alberta; you know the extreme weather on
the East Coast, flooding and storms, all of that has a massive economic impact as well and a
loss of productivity and cost to governments.

The idea is to stop that from getting worse or more frequent,
how do we assess that versus the cost
of using carbon pricing to lower emissions.

PBO: That’s a very difficult field to to venture into because the number of unusual weather events that’s
occurring. We don’t know which ones are due to climate change and which ones would have
occurred anyways, or whether their extent would have been smaller or even worse, probably
smaller especially in a short period of time. We’ve tried to estimate the impact of climate change
between now and the year 2100 and we find that there is a cost to climate change but for the next
few years between now and 2030 it’s very difficult to determine precisely the cost of climate change.  It’s an area that we ventured into but it’s not easy and not that many institutions and organizations have established clear parameters under which to estimate the cost of climate change.

It’s very unlikely that there’ll be significant technological breakthroughs between now and
2030 sufficient to even partially offset the cost of a carbon tax for example, or any measures to mitigate or reduce our carbon emissions. But it’s quite possible that Beyond 2030 once technologies become more mature they’ll be able to offset some of the costs that we’ll we’ll have to incur to reduce our greenhouse gas emissions. So that’s why it’s difficult to say whether the costs will be offset by the benefits over the longer term but between now and 2030 it’s clearly not going to happen.

I’m providing unbiased nonpartisan information, information not pronouncements, not verdicts on policies. It’s up to decision makers and Canadians to make up their own minds based on the information we provide them so they can decide whether a carbon tax or other measures are the best way forward to reduce carbon emissions. We’re not passing judgments as to whether a policy is working or not.

My Observations

This interview shows that the carbon cult narrative
subverts rational policymaking in three significant ways.

Firstly, there is no accounting of all the economic and social damage done by the multitude of federal government climate policies and regulations (139 that McKitrick found in the Emission Reduction Plan). Secondly the benefits to offset the carbon tax costs consider only saving some damages from extreme weather. This is problematic in two ways. There is no certainty that imposing these costs on Canadians will have any effect on CO2 levels, or  that climate and weather will be any different for having made the effort.

Add to that the ignoring of actual benefits to humankind and to the biosphere from rising atmospheric CO2 and warming temperatures. Virtually every year global agricultural production sets records because of warming and CO2 enhancing photosynthesis. That puts food on the table for billions of people. What insanity to pursue things like carbon capture to rob the biosphere of CO2, while dreaming of a cooler future planet. Both objectives would threaten the world food supply and can hardly be benefits to justify emissions reductions.

Finally CCI gives the game away when they say, in effect:
“You don’t like the carbon tax, but doing nothing is not an option.”

In fact doing nothing to reduce CO2 emissions is the best option, though politicians are loath to admit it. Few nations are achieving their Paris Treaty targets, and their emissions dwarf Canada’s.

The prosperity that comes from hydrocarbons can serve to build and maintain robust infrastructure and means of production for humanity to adapt to any changes in the climate, such as those in the past likely to happen again beyond our ability to stop them.