Climate change is more expensive than the carbon tax

The carbon tax that took effect on Monday has increased gas by 4.4 cents a litre in Ontario, New Brunswick, Manitoba and Saskatchewan – and those who oppose emissions-pricing are complaining that it’s a lot. Well, the Insurance Bureau of Canada paid out $1.9-billion in damage from extreme weather events last year, and that doesn’t cover uninsured repairs that came out of people’s pockets.

It also doesn’t account for other climate-related charges to individuals and businesses, such as air-conditioning use, which tripled in B.C. between 2001 and 2018. The costs are real; we were paying them before April 1, and we’re going to keep on paying them.

On Tuesday, Environment and Climate Change Canada reported that this country is warming twice as fast as the global average. The annual average temperature in most of Canada has gone up 1.7 degrees since 1948.

Industries are already being affected, which is why Saskatchewan’s continuing legal challenge against federal pricing is being opposed by the National Farmers Union. The union refutes that the tax is unconstitutional, telling the court that only national (and international) co-operation can help offset the “water security, infrastructure damage, drought, erosion, wildfires and other weather-related” issues food providers are already experiencing.

A scenario in which we don’t pay to slow down climate change, and also don’t pay to deal with its effects, is imaginary. Stabilizing the climate means reducing the amount of carbon that humans pump into the atmosphere and oceans, a complicated process that won’t be free.

That said, it doesn’t have to be ruinous. There’s even money to be made, but the longer we wait, the more expensive it’s all going to get.

“There’s a narrative in Canada that some leaders are using that says you can’t have both, you have to pick between the environment and the economy, and it really is a false choice,” said Stewart Elgie, a professor of law and economics at the University of Ottawa, in a phone interview.

He’s also the executive chair of the Smart Prosperity Institute, a think tank focused on developing robust economies that are also environmentally sustainable. It argues that the change required for decarbonization has already proven to be affordable.

Prof. Elgie points to British Columbia, where this week’s federal backstop is irrelevant, since carbon pricing has been in place for a decade. “Its GDP growth has been twice the rest of Canada since its carbon tax came in,” he said. “That’s not because of the carbon tax, obviously, but the carbon tax didn’t hurt its growth.”

Meanwhile, “pretty much every study” finds that slowing climate change now is cheaper than adapting to it later, he said. Such modelling exercises are speculative, of course, but he cites one of the most discussed projections, a 2006 report by former World Bank economist Nicholas Stern.

Then, Mr. Stern offered two options. Countries could spend 1 per cent to 2 per cent of annual GDP on emission-reduction policies and programs. Or, they could budget 5 per cent to 20 per cent of GDP to deal with extreme weather, health costs and food-security issues.

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Either way, someone is going to pay, and either way, the costs will land more heavily on some groups than others. Tuesday’s report noted that temperatures are rising faster, and higher, in Canada’s Far North: Like most environmental disruption, the changes are being felt most keenly by Indigenous people, as well as those on the coasts.

Shifting to a low-carbon economy is hardest for industries that are the biggest emitters. In Canada, that means fossil-fuel producers. The blow is real, but meant to be softened by the complicated system of emission-cap levels for different industries.

“The world’s economy is going to change, whether Canada likes it or not,” Prof. Elgie said. That’s why developing fair transition options for workers is urgent. We still need energy, and the World Bank puts global clean-tech opportunities at US$23-trillion through 2030. Enabling young people to embrace those jobs is essential, but politicians have neglected the task for years.

Instead, many spent their weekend taking gas-pump selfies, including Conservative Party of Canada Leader Andrew Scheer, whose climate-change plan is eternally forthcoming. He and others also shared photos of gas-station price boards before and after the 4.4-cent change, never mentioning the rebate meant to offset increased household costs.

Besides which, the era of belching carbon without consequence is over. Hopefully, Canadians disagree that ensuring good livelihoods and a livable planet for their children and grandchildren is too expensive to bother.