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The Right Carbon Tax for Canada

by John Brian Shannon

“Canadian business needs a fair, transparent, and proportional carbon tax to spur action towards a cleaner environment.”

Which is not the same statement asCanada must punish Canadian industry so the country can meet it’s COP21 emissions targets.”

See the difference?

Unfortunately, in the rush to meet Canada’s global air quality commitments (admirable) the federal government may have leaned more towards ‘action’ on the carbon file rather than ‘smooth implementation’ of the carbon file (forgivable) and now has at least two provincial premiers questioning the mechanics of the federal carbon tax plan.

In the end, both methods would result in Canada’s emissions targets being met, but one way is complimentary while the other is confrontational.

Which of the two ways exampled above would cause you to want to work with the federal government to reach Canada’s international emissions obligations?


No Need to Reinvent the Wheel – Just Fix the Broken Parts and Carry On

Federal Carbon Taxes: Small business always suffer in these scenarios, while large corporations already have multi-million dollar environmental + energy budgets — which means all that’s required for them to meet upgraded emissions targets is a shift in their budget allocations to meet Canada’s new emissions regulations.

Therefore, for polluters emitting less than one megatonne of CO2 annually, such companies shouldn’t pay any carbon tax until they surpass that limit and thenceforth begin to pay a $40. per tonne carbon tax (for example) on any emissions beyond the one megatonne threshold.

Likewise, large companies shouldn’t be required to pay carbon tax until the point in the year is reached where they surpass the one megatonne limit and only then begin to pay $40. per tonne of CO2 (or CO2 equivalent, because not all airborne emissions are of the CO2 variety) on each additional megatonne for the rest of the calendar year.

In this way, Canada’s carbon tax model would be a breeze to implement, a carbon tax that would be small business-friendly, and one that provides an incentive to bigger companies to work toward reducing their emissions over the longer term.


Carbon Taxes Administered by Provinces and Cities

Provincial carbon taxes: Provincial and city carbon taxes should be ‘flow-through’ carbon taxes where 100% of each dollar collected at the transactional level (a point-of-sale tax like a provincial sales tax) is spent on poverty alleviation, or on energy conservation + investment in green energy projects + green energy bonds. As is already done in some Canadian provinces.

Provinces and cities that face serious air quality problems would be thereby empowered by federal legislation to address their unique air pollution issues and be better positioned to help Canada meet its international emissions targets while lowering their healthcare and environmental spending associated with air pollution.


Annual Step-up Carbon Tax

Start with a low carbon tax: If the ‘year one’ federal carbon tax is set at $40. per tonne, the next year could be set at $50. per tonne, and ‘year three’ $60. per tonne, etc., it would allow Canada to continue to meet its emissions goals and to lower environmental and healthcare spending in Canada where a significant proportion of healthcare budgets are devoted to treat respiratory ailments brought-on or worsened by the poor air quality in Canadian cities (and some high land use agricultural areas) and could actually save provincial budgets millions of dollars per year.

If there’s one thing that markets and big business like, it’s a long lead time for new regulations and a ‘carbon-tax-free-zone’ that they can shoot for which will help them lower costs by increasing efficiency (which is closely tied to productivity, ask any economist) and a step-up carbon tax gives them the opportunity to adjust their operations several years ahead of the time when it could begin to get very costly for them.

Hitting Canadian companies with a $220. per tonne carbon tax (which is what Stanford University says is the true environmental and healthcare cost of each tonne of carbon) would prevent companies from attracting the funding required to lower their emissions.

In a perfect world, legislators would slap a $220. per tonne carbon tax on every level of government, each corporation and on citizens and all of them could afford to pay it. Sadly, that isn’t possible. But starting out at $40. per tonne allows companies to begin the process of lowering their emissions without stressing corporate finances.

If you doubt how costly pollution is to the economy, see the landmark study from Harvard Medicine which estimates coal-burning alone costs the U.S. economy between $330 billion and $500 billion per year.


The Need to Address Carbon Pollution

It’s indisputable to any educated person that Canada and every other country needs to address carbon pollution — but ultimately, carbon taxes must be designed to mesh with the overall economy — not entangle it.



Visit The Solutions Project to see how renewable energy can work in your jurisdiction to help citizens live healthier lives, care for the environment, boost the economy and help Canada meet its international air pollution targets.

Images below are courtesy of The Solutions Project

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 1.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 1. Click on image to expand it via your browser tools.

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 2.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 2. Click on image to expand it via your browser tools.

Our 100% Clean Energy Vision for Canada - The Solutions Project. Image 3.

Our 100% Clean Energy Vision for Canada – The Solutions Project. Image 3. Click on image to expand it via your browser tools.

Visit The Solutions Project main webpage here for more information.



Bonus Graphic courtesy of the Canadian Association of Petroleum Producers

 

While the federal government of Canada seeks to meet its international emissions targets, Canadian premiers press for a more business-friendly carbon tax regime.

While the federal government of Canada seeks to meet its international emissions targets, Canadian premiers press for a more business-friendly carbon tax regime. Image courtesy of the Canadian Association of Petroleum Producers. Click on image to expand it in your browser.