Want the best climate policy? Let the market decide

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Governments need to proceed more cautiously with zero-emission vehicles and heat pumps – and let consumers lead the way

A dump truck works near the Syncrude oil sands extraction facility near the city of Fort McMurray, Alta., on June 1, 2014. emissions with Ottawa committing to achieving a “net-zero” GHG economy by 2050. However, governments need to proceed more cautiously with two of their key policy levers – zero-emission vehicles and heat pumps – and let consumers lead the way.

Markets are powerful. Prices can efficiently allocate resources between buyers and sellers, and signal misalignments between them, such as shortages or surpluses. For this reason, many economists favour pricing carbon emissions, and letting markets work to integrate that information into transactions.

Transitions take decades and Canadians need more time. The federal government ought to eliminate year-based targets. At a minimum, it ought to allow flexibility for significantly greater numbers of popular hybrid vehicles. Other easy, consumer-friendly ideas: abolishing Canada’s 13-per-cent duty on bicycles and eliminating restrictions on the use of so-called “Class 3″ electric bicycles, which are slightly faster and allow longer commutes.

Canadians have relied on natural gas for more than a century: distributors, contractors, building managers and homeowners are familiar withinfrastructure and equipment and how to maintain them. While heat pumps can be the best choice in many cases, they are not always the best in all climates or power-price environments. Canadians are still getting used to them. Adoption elsewhere is uneven, too: heat pump sales are falling in the U.S. and Europe despite policy pushes.

 

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