Comment: Trudeau’s $50 carbon price too low, too high


Hats off to Prime Minister Justin Trudeau for drawing a line in the sand to address climate change by setting a floor on the price of fossil carbon dioxide emissions in Canada at $50 a tonne by 2022.

Economists agree setting a price on carbon emissions is the most efficient way to achieve reductions. Unfortunately, the level of carbon tax required to achieve the reductions needed is far above that which the general public is willing to accept.

Climate scientists agree that the world needs to cut CO2 emissions on the order of 80 per cent by 2060 to avoid catastrophic climate change, and 194 counties, including Canada, agreed in Paris that we will take action.

Economist Mark Jaccard’s latest paper predicts a carbon price of about $250 a tonne by 2030 would be required to meet Canada’s Paris commitments for 2030, and this price range has been confirmed by other researchers. Thus Trudeau’s price is too low to meet the Paris commitments.

The proposed $50-a-tonne carbon tax would raise the price for a litre of gasoline by about 12 cents. Hence, people might drive a bit less, but they are not going to give up their cars. Instead, people will just get angry and those in opposition will leverage that feeling, putting the government at risk of being voted out. We have seen this happen around the world. Thus, the tax is too high. So what is to be done?

There is another path. By using carbon-tax revenue more effectively, it is possible to have a much lower tax and a much higher impact. One excellent alternative is to direct carbon-tax revenue into direct CO2 reduction through zero-interest, 20-year term loans expressly for the purpose of building renewable-energy systems that feed into our current energy-distribution systems.

If such a plan were implemented across Canada, with a carbon tax of only $20 a tonne, enough renewable energy could be built by 2060 to meet the lion’s share of our energy needs. Canada could produce all the renewable electricity, renewable natural gas and renewable liquid fuels needed to support our current lifestyle without giving things up.

The loans could be administered by an arms-length organization responsible to the government, but separate from it, dedicated to getting the best CO2 reduction for the money, much like the Canada Pension Plan Investment Board, which takes and invests our CPP contributions to ensure the CPP is there for retirees.

With 90 per cent of the carbon tax going to zero-interest loans for renewable energy-projects, the remaining 10 per cent could be used to offset the minor extra costs imposed on low-income Canadians.

This plan would solve all of Trudeau’s carbon-price problems, as $20 a tonne is small enough that it could be easily absorbed by the typical Canadian. It would be the equivalent of five cents per litre of gasoline, two cents per kilowatt-hour for coal electricity, one cent per kilowatt-hour for natural-gas electricity and $1.12 per gigajoule for natural gas.

It would allow Canada to meet its Paris commitments if we keep a lid on expanded oilsands and LNG development. It couldn’t be called a government tax grab because all the revenue would go to renewable energy. Such an approach could provide the lowest-cost renewable energy possible (about one-half of current renewable-energy cost derives from interest on debt) while driving more than $10 billion a year into new renewable-energy projects that would result in tens of thousands of new jobs.

The result would be visible progress toward a fossil-free future, as people could see the projects, and, even better, this approach doesn’t mandate a large change in our lifestyle.

We at are dedicated to promoting this idea, not because it is the most efficient economically (it isn’t), but because it is the only plan that allows for massive reductions in CO2 emissions while being politically possible to implement in a democracy.

Don Gayton of Nanaimo is a clean-energy engineer and founder of

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