Debate over carbon pricing might be helped by release of available facts

Conservatives are demanding the release of government memos on pricing carbon, but beneath the partisanship, there are at least two serious matters: one involving government transparency, the other about the cost of combating climate change.

Conservative motion calls on government to release internal projections around impacts of pricing carbon

Interim Conservative Leader Rona Ambrose alleges a 'carbon tax coverup.' (Adrian Wyld/Canadian Press)

Interim Conservative Leader Rona Ambrose stood during question period one afternoon last month and alleged that the prime minister was refusing to "tell Canadians how much his carbon tax will cost."

"In fact, this is now becoming widely known as the carbon tax coverup," she said, rather hopefully.

In this case, "becoming widely known as" might be understood to mean "being portrayed by Conservative MPs as." Originating with Pierre Poilievre, the phrase is now being pushed as a hashtag, though one that seems mostly popular with members of the Conservative caucus.

More seriously, the Conservatives put their concern to the House of Commons with a motion that calls on the government to release internal projections around the impacts of pricing carbon.

That motion, with Liberals, New Democrats and the Bloc Québécois voting against, was defeated Tuesday (the motion also referred to pricing carbon as "regressive"), which no doubt gives the Conservatives new reason to cry foul.

But beneath the posturing and trouble-making, there are at least two serious questions of public policy: one involving government transparency, the other about the cost of combating climate change.

A tale of 2 memos

At issue here are two internal government memos, written by officials in the Finance Department, that Poilievre received through Access to Information requests. One of them deals with the impact of a price on carbon, the other looks at several options for mitigating greenhouse gas emissions.

But both documents were heavily redacted by officials before being released. And no specific cost analysis is included in the public versions.

Emissions from Dofasco in Hamilton in 2013. It may be difficult to assess the cost of the Liberal carbon pricing policy without knowing exactly how each province will implement a price. (Lynda Lukasik/Environment Hamilton)

Some of the information is excluded under provisions of the Access to Information Act that allow the government to withhold details of the advice that civil servants provide to ministers. In theory, such rules exist so that officials can communicate candidly, without fear that their analysis will later be made public.

As noted in a 2015 report, however, each of the last four information commissioners has raised this particular exemption as a point of concern. Unfortunately, successive governments, including the previous Conservative government, have left the relevant rules unchanged.

All of which could be fodder for the next review of the Access to Information system.

How much will it cost?

The public sphere would surely only benefit from seeing the analysis of the finest minds at the Finance Department. But it's not entirely clear how well those memos would reflect the government's policy.

Both memos actually predate the current Liberal government. The first was distributed on Sept. 11, 2015, the second on Oct. 20, 2015. The Liberals weren't sworn in until Nov. 4 of that year and didn't announce their policy on pricing carbon until October 2016.

Prime Minister Justin Trudeau and Alberta Premier Rachel Notley, left, meet in December 2016. (Justin Tang/Canadian Press)

According to economists familiar with the issue, it would also be difficult to assess the cost of the Liberal pricing policy without knowing exactly how each province will implement a price. 

Though the Liberals have set a schedule that provinces must match (starting at $10 per tonne of emissions in 2018 and rising to $50 per tonne in 2022) and have vowed to impose a pricing mechanism on provinces that refuse to comply, it will otherwise be for provincial officials to decide how the price is applied and whether the resulting revenue is used to provide rebates or reduce other taxes.

Ballpark $1,100 per household

That said, potentially relevant estimates already exist.

Trevor Tombe, an economist at the University of Calgary, looked at the impact of a $50 per tonne price on carbon last fall and came up with a "ballpark" estimate of $1,100 in annual direct and indirect costs to households, before any rebates or offsets.

In a separate analysis, Tombe and Nicholas Rivers, an economist at the University of Ottawa, estimated that the first year of carbon pricing in Ontario ($18 per tonne) and Alberta ($20 per tonne) would cost the average household between $230 and $300.

In its most recent budget, the British Columbia government estimated that a two-income family of four earning $90,000 will pay $236 in direct carbon costs related to the province's $30 per tonne price.

At a higher level, the federal government has provided estimates that suggest carbon pricing could slow the average annual rate of GDP growth by 0.02 to 0.08 per cent.

Cost of not acting?

But for the sake of a decent discussion, those numbers also need context.

Specifically, any consideration of the costs of pricing carbon would have to include both the cost of not acting and the cost of acting in some other way.

The federal government currently estimates that the social cost of carbon — that is, the estimated cost of each tonne of emissions on agricultural production, human health, flood risk and ecosystems — is $40.70 per tonne.

To use a different measure, the National Roundtable on the Environment and the Economy estimated six years ago that the impact of unmitigated climate change could cost the Canadian economy as much as $29 billion per year by 2075.

Of course, significantly mitigating climate change will require global action. But as an argument against acting that raises questions too. Would Canadians be better off waiting? Or is there a moral or economic case for acting now?

Regulation cost

Last, but not least, the benefits and costs of pricing carbon would have to be compared to the benefits and costs of an alternative policy.

Strict regulations, for instance, carry a cost as industries and companies are compelled to change their practices. Those costs are just less obviously advertised.

Conservative leadership candidate Erin O'Toole released a plan last week that relies on giving tax breaks to companies that cut emissions, but there isn't yet any agreement among the critics of pricing carbon on a counter-proposal. Presumably the next leader of the Conservative Party will have to offer some kind of position.

All of the above would make for a truly robust debate — one that would only benefit from more and more analysis.