The most intriguing policy idea in the federal government’s new Emissions Reduction Plan is to fix something that is far shakier than it might appear: the carbon pricing system that is supposed to underpin Canada’s entire climate strategy.
And that political instability is a big impediment to carbon pricing fulfilling its biggest purpose, which is to incentivize big, long-term investments in clean technology that don’t offer enough financial upside otherwise. And it was equally encouraging to get the impression from Environment Minister Steven Guilbeault, in an interview with The Globe and Mail following the ERP’s release, that the government is readier to move than the exploratory language in the plan made it sound.
The arrangement would boil down to a transfer of risk from private investors to the government. A public entity, such as the Canada Infrastructure Bank, would commit in advance to paying a company investing in a clean-technology project a specific amount, based on the anticipated value attached by carbon pricing to that project’s reduction of emissions.
It’s also worth considering how much the lack of certainty may be costing the government at the moment. The less that industries can count on carbon pricing to make their emissions-reducing investments economical, the more they are able to make a compelling case for subsidies, such as the large carbon-capture tax credit expected in next week’s federal budget.
For that reason, the idea’s inclusion in the new climate plan – and Mr. Guilbeault’s talk of acting quickly – is liable to be painted by Conservatives as undemocratic, because of the way it could tie their hands in future.
Here’s the stupid media is let’s punish Canadians who admit less than one percent of the world’s total greenhouse gases while China and India are laughing all the way to the bank. The corruption of the legacy media