Walking the walk: Canada’s prime minister secures a deal for a national carbon price

http://www.economist.com/news/americas/21711890-he-may-need-more-carrots-keep-provinces-his-side-canadas-prime-minister-secures-deal?fsrc=rss

TALK is cheap. Since 1997 Canada has signed five global climate deals pledging to lower its greenhouse-gas emissions. However, it has never implemented a national climate plan. Instead, its ten provinces and three territories have mostly been free to do their own thing.

Provinces rich in hydropower, such as Quebec and Ontario, made big strides, and British Columbia (BC) even introduced a carbon tax. However, big fossil-fuel producers such as Alberta sat on their hands. The results were predictably disappointing. In 1990, the base year for the Kyoto accord, national emissions were 613m tonnes. By 2014 they had risen to 732m tonnes, the world’s ninth-highest total. Canada withdrew from Kyoto in 2011 after deciding that its targets were unattainable.

But following nearly two decades of inaction, Canada may have reached a turning point. On December 9th Justin Trudeau, the prime minister, and 11 of 13 provincial and territorial leaders announced that they had agreed on a national climate framework. The deal combines disparate provincial efforts, and overlays them with two federal imperatives: by 2018 each province must have in place either a carbon tax or a cap-and-trade scheme that puts a minimum price on carbon of C$10 ($7.63) a tonne, rising to C$50 a tonne by 2022; and by 2030 coal will no longer be used to generate electricity. If implemented, the plan would put the country on track to hit its 2030 target, set out in 2015 in the Paris accord, of 523m tonnes.

The most immediate reason for Canada’s about-face was Mr Trudeau’s election. His Conservative predecessor, Stephen Harper, was a big fan of fossil fuels. By the 2015 election, his attitude proved out of step with public opinion. Mr Trudeau made tackling climate change a central plank of the Liberal Party’s platform, and was rewarded with a surge in turnout from young green voters. This October two out of three respondents told Abacus, a pollster, that Mr Trudeau was on the right track in promising a national carbon price.

However, Canada is highly decentralised, and no national plan would be politically viable without the assent of the provinces—many of which rely on polluting industries. One stroke of luck for Mr Trudeau was that in 2015 Alberta, home of the carbon-belching tar-sands oil patch, elected a premier from the left-wing New Democratic Party, ending 44 years of unbroken rule by the centre-right Progressive Conservatives. That removed what was likely to be a strong source of opposition.

Even then, it took Mr Trudeau a year to herd the fractious premiers towards the deal. Both BC and Alberta had longstanding requests for the federal government to approve oil and gas projects, including one to export liquefied natural gas from northern BC, and another to transport Albertan crude to a port near Vancouver. The public favours these initiatives: three out of four respondents to the Abacus poll said they would accept more approvals. However, environmentalists and indigenous groups threatened to block construction.

Even though the new infrastructure would yield more fossil-fuel production and carbon emissions, Mr Trudeau has authorised three big projects. According to Paul Boothe, a former deputy environment minister, that decision may well have brought Alberta and BC on board. “They needed to be assured they can develop their resources,” he says. “It was a very important part of the political calculus.” Mr Trudeau also allowed Nova Scotia to continue burning coal for electricity after 2030, so long as it cuts other emissions by an offsetting amount.

Two provinces are still holding out. Manitoba is expected to join, assuming it can extract a satisfactory increase in health-care funding. But even though provincial governments are free to spend the revenue raised by a carbon tax or emissions-credit sales however they wish, Brad Wall, the premier of Saskatchewan, remains unconvinced. He fears that a carbon price will hinder the energy, mining and agriculture industries, and particularly harm companies that compete with American firms that do not have to pay for their emissions. He is also concerned that Donald Trump may reverse Barack Obama’s environmental efforts, and argues that Canada’s climate policy should not get too far ahead of its largest trading partner’s.

Mr Trudeau could probably trudge ahead without Saskatchewan, which generates just 4% of Canada’s GDP. However, other provinces would surely look askance if Saskatchewan were seen to be free-riding on their sacrifices. And any more defections might prove fatal. For now, the federal government has only secured handshake commitments from the premiers, leaving their successors free to reverse course. BC will hold an election in May. Ontario, Quebec, New Brunswick and Nova Scotia all follow in 2018. Although the federal government says it has the right to impose a carbon tax unilaterally on recalcitrant or backsliding provinces, that power has not been tested in court.

For now, nothing besides the fear of a flip-flop binds the premiers to their word. So Mr Trudeau will have to work fast to fill in details that require provincial agreement, and to encourage the provinces to pass the necessary laws promptly. To grease the wheels, the federal government is offering at least C$49bn in green handouts, for everything from public transport to helping provinces link their electricity grids. It is also deciding how much money to give the provinces for their health-care systems, an unrelated issue that might sway wavering premiers. Mr Trudeau’s charm is formidable. But it could take some old-fashioned bribery to turn his vision of a green Canada into a reality.

http://www.economist.com/news/americas/21711890-he-may-need-more-carrots-keep-provinces-his-side-canadas-prime-minister-secures-deal?fsrc=rss