'Pollution isn't free': Catherine McKenna makes her case for pricing carbon

Environment Minister Catherine McKenna arrived at the podium in the foyer of the House of Commons and promptly told reporters what is apparently already understood.

"Canadians realize that polluting isn't free," she said.

The minister has said this before: she made the observation last October, for instance, a day after the Liberal government dramatically announced that a price on carbon would be applied in all provinces.

But in the case of those remarks last fall, she waited 2,100 words to say it.

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Now McKenna is leading with it and tweeting it and putting it on official graphics.

"We know that carbon pollution causes droughts, fires and floods across our country and across the world, and that it impacts on our health through issues like asthma, premature mortality and more emergency room visits," she continued, reviewing the consequences of climate change and dirty air.

"Making polluters pay is a critical part of any climate plan."

This, unlike motherhood statements about the environment and the economy going hand-in-hand, has the benefit of being an actual argument about dealing with climate change and pricing carbon.

Technical paper on carbon

The reason for McKenna's appearance in the foyer was her department's release of a "technical paper" on the "federal carbon pricing backstop."

If you are particularly interested in "inter-jurisdictional commercial transportation requirements" and such, you will want to carefully review all 26 pages. If you are interested in estimated financial impacts, there are three charts laying out how a levy might increase the price of various fuels.

But, in broad terms, McKenna's comments are useful fodder for debate and examination.

What has generally been described as a "price on carbon" is now described by McKenna as a "price on pollution" or a "price on carbon pollution," presumably because someone in the Liberal government decided the word "pollution" was more evocative.

It's hard to be mad at carbon. Pollution, on the other hand, has a bad name. So, in the course of her short meeting with reporters, McKenna made two dozen references to a price on pollution.

Cost of carbon

But whatever it is called, a price on carbon can be theoretically designed for two purposes: discouraging actions that create greenhouse gas emissions and reflecting the cost to the planet of producing those emissions.

The latter is estimated in a measure known as the social cost of carbon, which is currently set at $40.70 per tonne. That is, a tonne of carbon emissions is estimated to produce $40.70 in damages.

Climate change, fuelled by carbon emissions, will result in significant consequences, which is the entire basis for doing something. 

And there has been agreement that the polluter should pay for the damage from its pollution, at least when the issue is something like an oil spill.

An inconvenient cost

But that general belief in the "polluter pay" principle apparently begins to break down when the polluters in question are those who drive a car, heat a home or otherwise utilize the modern amenities and practices that rely on burning fossil fuels (i.e., everyone).

Federal Conservatives, for instance, with the exception of Michael Chong and the minority of members who support him, are loudly opposed.

"Mr. Speaker, the government has told the provinces that if they refuse to impose a carbon tax, the Liberals will impose it for them," Pierre Poilievre lamented in question period on Thursday afternoon. "Today, a technical document showed that the federal carbon tax will cost at least 11 cents a litre for consumers at the pumps, and of course thousands more for home heating, electricity and groceries."

McKenna responded: "Mr. Speaker, unlike the party opposite, Canadians know that polluting is not free."

Poilievre's long-standing complaint is that the federal government has not released a comprehensive accounting of the fiscal and economic impacts of a price on carbon. In fairness, much depends on precisely how the policy is applied in each province.

If Saskatchewan persists in its objections, the federal government might at least end up having to produce a costing for that province.

But, in the meantime, the University of Calgary's Jennifer Winter has estimated the direct and indirect costs for consumers in each province. At $50 per tonne, the price that is scheduled to be in place for 2022, annual costs range from $603 (in British Columbia) to $1,120 (in Nova Scotia). 

Those estimates don't account for any changes in behaviour. But for the sake of a full debate there would also need to be clarity on two other things: whether any of the revenues from a levy would be used to provide rebates or lower other taxes, and what, if anything, is being offered as an alternative.

Lowest-cost approach

At present, Conservatives are nearly united in opposing the Liberal plan. But the counter-proposals are few and vague. And, in lieu of magic, any proposal to reduce greenhouse gas emissions is sure to include costs.

"It's the lowest-cost way to reduce emissions," McKenna said of pricing carbon, playing one of the cards in the carbon-pricer's hand (economists will testify that pricing carbon is, in general, the most efficient means of reducing emissions).

Canadians might understand that pollution isn't free, but that cost is still abstract.

The cost of pricing carbon, on the other hand, might be readily apparent on your electricity bill or easily blamed for economic hardship.

The Liberals are now tasked with making that cost seem worth it.