Emissions from industrial activity

How do we ensure the price of fossil fuels includes the costs of pollution, environmental degradation and climate disruption? The simplest way is to put a price on carbon emissions. (Photo: Nik Shuliahin via Unsplash)

One of the world’s best-known climate scientists is discouraged that almost 40 years of study and warnings haven’t convinced humanity to adequately address the climate crisis. But James Hansen understands why we’ve stalled.

“As long as fossil fuels seem to be the cheapest energy to the public, they’ll keep using them,” Hansen recently told Bob McDonald of CBC Radio’s Quirks and Quarks. “We’re up against an industry that would prefer to just continue to do things the way that they have been because they’re making a lot of money.” His solution: Ensure the price of fossil fuels factors in the costs to society.

Hansen is a former NASA scientist and now director of Columbia University Earth Institute’s climate science, awareness and solutions program. He’s been researching climate science since the early 1980s and in 1988 testified to a U.S. Senate committee that global warming was occurring because of greenhouse gas emissions, mainly from burning fossil fuels.

How do we ensure the price of fossil fuels includes the costs of pollution, environmental degradation and climate disruption? The simplest way, as Hansen and most scientists, economists and energy experts know, is to put a price on carbon emissions. University of Alberta economist Andrew Leach says, “A carbon price leverages the power of the market to enable emissions reductions at the lowest possible cost.”

Pricing carbon, through a carbon tax or cap-and-trade system, has proven to be effective. Sweden implemented a carbon tax in 1991. Even though the price has risen steadily — from about C$37 per tonne of CO2 in 1991 to $170 in 2018 — the country’s carbon dioxide emissions have decreased by 26 per cent, without negatively affecting the economy, even as the population grew. In other Scandinavian countries, carbon pricing is seen as a sensible solution that rarely generates debate or news coverage. It works, as at least 46 countries with carbon pricing policies are learning.

A carbon tax is the simplest method to price carbon, although some opponents cringe at the word “tax.” It’s a fee, often rising annually, levied on fossil fuel production, distribution and use based on the amount of carbon pollution emitted. By making fossil fuel use more expensive — reflecting more accurately its societal costs — governments can encourage conservation, efficiency and cleaner alternatives. Many jurisdictions offer rebates or reductions on other taxes so they can target carbon emissions without creating a burden for most citizens.

Under a cap-and-trade system, a government caps the amount of greenhouse gas emissions an industry can emit or that can be emitted overall in the economy. Governments auction allowances, generating revenue to invest in the clean economy. Companies that exceed their limits can buy allowances from companies that remain below the cap, or bid for them in the auction. The cap is reduced every year, and total emissions fall.

With either system, the more someone pollutes, the more they pay. Although ideas vary regarding the best way to price carbon, amounts to be charged and what to do with money collected, we can’t afford to do nothing. The costs of climate change are mounting — from floods, droughts, wildfires, health-care costs and degradation of natural services, among others — and will worsen if we don’t act.

Most people in Canada know climate change is an urgent, human-caused problem that must be addressed. Recent polling shows almost 80 per cent agree with the idea of carbon pricing, and more than 80 per cent already live in jurisdictions with some form of it.

Under the federal government’s plan, provinces can implement their own systems, as long as they meet overall emissions-reduction goals. It will only implement carbon pricing for provinces and territories that don’t develop their own systems.

There’s no shortage of solutions for global warming. Carbon pricing is one of many. With carbon pricing in place, Canada can seize the opportunity to compete in the emerging clean economy, encouraging job creation, renewable energy development, conservation and efficiency while shifting away from fossil fuels.

Hansen believes a price on carbon might save civilization, giving new meaning to the expression, “Taxes are what we pay for a civilized society.” As more people understand the urgency of confronting climate change and the effectiveness of carbon pricing, they’ll find many reasons to get behind it.