October 2018 Canadian Parliament Request

Canada’s Federal Backstop Carbon Pricing Policy Should Be Carbon Fee and Dividend

The scientific proof of the threat of climate change is incontrovertible and cannot be dismissed. We must cut emissions. Almost all economists agree that putting a price on carbon pollution is the most economically efficient way to reduce greenhouse gas emissions.

Citizens’ Climate Lobby advocates for a specific form of carbon pricing called carbon fee and dividend, an incrementally rising price on carbon pollution where 100% of the fees collected are returned to Canadians by cheque. It is championed by Canadians for Clean Prosperity and has been specifically endorsed by the PostMedia Editorial board.

Carbon fee and dividend is a policy where all sides win. It will appeal to a broad spectrum of Canadians, whether they support small government, free markets, strong environmental policy, or expanded government benefits. Thus, carbon fee and dividend has built-in policy persistence.

In their historic March 2018 report, Perspectives on Climate Change Action in Canada—A Collaborative Report from Auditors General, Canada’s Auditors General concluded that Canada is not on track to meet its greenhouse gas emission targets.

Transforming the economy will not happen overnight. Julie Gelfand, Canada’s Environment Commissioner, said that Canada needs time to “bend the curve”. Importantly, carbon pricing is projected to account for more than half of Canada’s prospective total emissions reductions through 2022. The Pembina Institute calls carbon pricing an essential component of a cost-effective climate plan. According to the World Bank Carbon Pricing Dashboard, 25 percent of the world’s nations, including China, are already pricing carbon.

We applaud the federal carbon price as outlined in the Greenhouse Gas Pollution Pricing Act and appreciate the Government’s commitment to peer review of fossil fuel subsidies under the G20 process.

 We recommend the following going forward:

1. That the carbon fee be applied upstream, at the wellhead, coal mine, or point of entry into the economy; that the policy cover all GHG emissions, and include best practices for estimating fugitive methane emissions from oil and gas operations.
2. That the national carbon price continues to rise past 2022, with the objective of Canada exceeding its Paris targets and becoming a world leader in tackling the climate crisis and in the clean technology industry.
3. That the Federal government work with provinces and territories to ensure their carbon pricing policies keep pace with the rising federal minimum carbon price without imposing any additional burden on low to middle-income Canadians. In this regard, the federal government should lead by example, implementing a revenue-neutral fee and dividend system as its backstop carbon pricing policy.
4. That Canada’s Output-Based Carbon Pricing be temporary and be replaced with Border Carbon Adjustments to level the playing field for emissions-intensive trade-exposed domestic industries that compete in international jurisdictions without a comparable carbon price.
5.  That the Federal government end financial subsidies to fossil fuel companies, as promised in the 2015 election, thereby ensuring that consistent policy is applied to the process of combating climate change.

CCL is grateful for your service to Canada, and for your recognition that the climate crisis is inextricably linked with the many other problems facing societies and governments. This is a race against time. Effective carbon pricing policy will help secure the future of Canada and all Canadians.