Environment Committee on Jan. 28th, 2019

[David Sawyer]

I have a quick comment. Policy interactions always go on. Prime Minister Harper's vehicle efficiency regulations and coal-fired power phase-out make it easier for the carbon price to do its job later on, because cars are more efficient and we're using less fuel. Yes, there are more people and we're driving more, but those cars are using less energy and therefore have fewer emissions. Emissions aren't as high, and therefore a carbon price or another policy to hit the target can be lower.

We have all these policies, packages, that are squeezing these emission margins all over the place. We have regulations, subsidies, carbon pricing, and they're all making it easier to hit the target, ultimately.

[Wayne Stetski]

In 2007, I got a cheque from the B.C. government, before they implemented their carbon pricing in 2008. I'm feeling a little left out. Do you think B.C. should adopt Canada's new policy, so I and all my constituents get a cheque in the mail?

[Mark Cameron]

I think the federal policy is quite well designed. It's basically a fee and dividend model that gives an almost equal per capita dividend. B.C. gave some money to lower- and middle-income households. They also cut both corporate and personal income taxes, and then they started fooling around with different kinds of tax credits and things like that, which I wasn't as enamoured of.

Sure, I think the best approach would be simply to rebate the money—or at least all the money from the consumer sector—directly to consumers as rebates or cheques.

[Wayne Stetski]

Thank you.

[David Sawyer]

B.C. would have to raise their personal income tax rate to make up the shortfall.

[The Chair]

As a British Columbian, I'm not sure I want to hear that.

Let's move over to Mr. Fisher.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Thanks very much.

Thank you, gentlemen, for being here. I wish I had 40 minutes to ask you questions, to get some of this amazing stuff on the record very clearly.

We've heard very often that pricing pollution is just one tool in the tool box to fight climate change. For the record, bottom line, does putting a price on pollution work? I'll go with Andrew.

[Dr. Andrew Leach]

Demand curves slope downward, so yes.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Thank you.

In my riding of Dartmouth—Cole Harbour, clean tech is booming. I can see it everywhere.

I had a conversation with a business owner who does wind and solar. In the last four or five years, I think, he has gone from six employees up to 60. He said that he would take as many trained technicians as he could possibly get, but now he just can't get enough people to upscale as fast as he wants to.

How does putting a price on pollution help grow that clean technology sector?

[Dr. Andrew Leach]

It's not necessarily going to change the problem where you're not finding people for the job, or the salaries you're offering. A carbon tax isn't going to make that happen. Where carbon tax is going to play is that it creates a market for those better technologies. It rewards companies that can reduce emissions in their supply chains, etc.

I would point you probably to David Popp's piece that he wrote for C.D. Howe, and his rules for governments looking to spur clean tech. His rule number one is carbon price, because it doesn't put the decision in the hands of government as to which innovations make sense. As I think my colleagues pointed out, it just creates a potential revenue stream or cost savings, which in turn creates value for the clean tech.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Excellent.

Mark, you said on Twitter, “I do believe that the carbon price program should eventually become a national program modelled after the federal backstop program.” Can you elaborate on your reasoning for that?

[Mark Cameron]

Yes, Dave McLaughlin, with the International Institute for Sustainable Development, and I actually wrote an op-ed in The Globe and Mail on that.

We thought that ultimately—this is something that we're looking at post-2020—the federal backstop model would actually make sense as a national model for a couple of reasons. One is to achieve that consistency and harmonization across the board that the other panellists have talked about. The other is the output-based allocations or emissions performance standards that have been brought forward in different provinces to deal with competitiveness challenges. Another way of dealing with that is border carbon adjustment, but that's really something that could only be done at the national level. I think a national-level carbon price with a consumer rebate, and then moving output-based allocations to a border carbon adjustment, would be, in the long run, a policy worth looking at.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Do you see that happening in the long run?

[Mark Cameron]

If I could predict that, I could be doing other things.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

David, with regard to the report you prepared on this topic—and Dale touched on this a bit—using the data from your report and using Ontario as an example, under the federal backstop plan, can you explain how the average Ontario family would do financially under the backstop?

[David Sawyer]

It's pretty simple. Your carbon exposure in your household is a function of your building, the cars you own, and the number of people in your building. So, it's your heating, the cars you own, and then your consumption of non-energy goods. In fact, any of us could probably answer this question. When you add that all up and figure out what the carbon exposure is in groceries, as that carbon price gets passed through supply chains and as the electricity sector passes some of that cost through, as the cement sector passes it through, you see that prices rise, absolutely. When we do our busy work and use our sharp pencils and figure that out and then compare it to the size of the rebates that are coming, for most houses their carbon exposure is lower than the rebate. As Mark said, eight out of 10 are better off.

That's pretty straightforward.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

What about lower-income families?

[David Sawyer]

Lower-income families are interesting. A higher percentage of their income goes to energy, so they're disproportionately exposed and there are concerns over that. Lots of jurisdictions have given out an extra bump or top-ups to low-income households, but because overall they don't spend a lot of money on energy relative to the size of the rebate, they come out ahead. It's very beneficial.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Do I have any more time?

[The Chair]

You still have a minute.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

I heard Dale's comments on that. I thought maybe I'd go to Andrew on that same question.

[Dr. Andrew Leach]

On the low income...?

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Well, it's on the first portion. Using Ontario as an example, how will people fare financially under the federal backstop plan?

[Dr. Andrew Leach]

I don't have solid numbers on Ontario. I did bring some Alberta numbers, where we now see about 40% of households in Alberta ending up better off overall as a result of the rebate. It's a lower percentage than when the price was first put into effect because the government hasn't raised the rebate. That share is going to be larger in the federal backstop reach. I think Dave has some really good numbers on that.

What I would also emphasize, though, is that even when we look within those groups, people are all going to be individuals and they're all going to be affected differently, so the carbon price lets individuals and firms decide how to react, but there's no way to say necessarily that everyone in this group is going to be better off, because people have a lot of differences in how they use emissions. It will be different across different ridings, different occupations, etc., so we should be careful about generalizations that everyone who looks like this is going to be better off.

[Darren Fisher, Liberal, Dartmouth—Cole Harbour, NS]

Thank you, Mr. Chair.