Fact is, Layton and Dion supported a price on carbon — that should have been more important than the details on how that price was created. By making it an election issue, Layton helped sabotage any momentum to price carbon in Canada, making it a toxic issue that to this day no federal politician without suicidal tendencies will touch.

My argument is that we need to get over this fear of a carbon tax (or carbon pricing in general), create a discussion about it — both nationally and in Ontario — and recognize how putting a price on carbon can help get our fiscal house in order and strengthen an otherwise weak climate strategy.

See column below:

——————————————————–

Tyler Hamilton

It’s hard to hold a grudge against Jack Layton.

Passionate. Likeable. Well-intentioned. Caring. These are all words to describe the former federal NDP leader.

He had a lot of things right, but many still don’t forgive Layton for helping to sabotage a proposal in 2008 that called for the creation of a national tax on carbon emissions.

The idea came from then Liberal leader Stéphane Dion, who called his plan “the Green Shift.” Money collected from a carbon tax would be used to lower personal income taxes and invest in social and environmental programs, ultimately reducing Canada’s dependency on fossil fuels and assisting the shift to a low-carbon economy.

Layton aggressively attacked the plan, contributing to a Liberal implosion at the polls and a Conservative re-election that gave us our current do-little climate strategy.

It’s not that Layton opposed putting a price on carbon; he just favoured a different approach — a complex cap-and-trade system that would let the market set the price and let the government set and adjust the emissions cap.

And it’s not like Dion did himself any favours. He had a decent policy in his hands but he did a horrible job of selling it to the public and failed miserably in defending it against Prime Minister Stephen Harper’s campaign of smear and fear.

The bitter pill is that Dion and Layton both had the goal of putting a price on carbon. Both saw it as necessary for making our industries more resource-productive while achieving meaningful emissions reductions and fulfilling international climate obligations.

But many blame Layton for playing the spoiler, and as a result, for taking talk of a serious carbon-pricing plan off the table, where it rests toxic to this day.

“You basically can’t speak of it in political company,” says Alex Wood, senior director of policy and markets at Sustainable Prosperity, a green economy think tank in Ottawa. “There’s no political home for it.”

Not federally, at least. British Columbia took the big step in 2008 with the same kind of revenue-neutral carbon tax proposed by Dion. As controversial as it was and continues to be in many circles, it hasn’t plunged the B.C. economy into an abyss.

Quite the opposite. The province now has the lowest per-capita consumption of gasoline in the country and the lowest income tax rates. Its GDP has grown over the past three years at a time when the global economy is struggling, and the expectation is that B.C. will outperform the Canadian provincial average in 2012.

Carbon emissions, meanwhile, appear to be heading in the right direction. Next year the tax will rise to $30 per tonne of CO2 equivalent emissions, pulling in nearly $1 billion for the province, which will redistribute that revenue mostly through income tax cuts.

Each year that passes makes it harder to kill the B.C. carbon tax, says Wood. “No government will be able to come in and say we’re cutting this but we’ve got to raise your taxes. Politically it’s achieved an almost untouchable status.”

So when Harper insisted Dion’s plan would “screw everybody,” as The Economist magazine recently reminded us, it’s instructive to look at B.C. as we head into climate talks next week in Durban, South Africa, and ask: are we collectively getting screwed by not having a national carbon-pricing scheme?

We have a sense of the economic costs of not acting. The independent National Round Table on the Environment and the Economy estimated in September that climate impact costs for Canada would reach $5 billion annually by 2020 and as high as $43 billion a year by 2050.

Australia, a kindred spirit to Canada with similar resource-dependent industries, has seen that writing on the wall. It decided after years of Canadian-style foot-dragging that a carbon price is good for the country’s long-term economic health.

It is now poised to introduce a national carbon tax in July 2012 that will morph into a cap-and-trade system after a few years. The policy is part of a larger economic reform initiative aimed at making the transition to a clean energy economy.

An optimist might hope that Australia’s move will rub off on Canada, which could use the revenues from a carbon tax (or cap-and-trade system) to help get its fiscal house in order. It could generate tens of billions of dollars annually by 2020 that could go toward lowering income taxes, reducing the deficit, or boosting investment in climate-friendly public infrastructure projects.

If not federally, maybe it will rub off on Ontario. Saddled with what’s expected to be a $16-billion deficit this year, the province could benefit by slapping a price on carbon.

That was the plan in 2008 when Ontario joined the Western Climate Initiative, a group of Canadian provinces and U.S. states (including California) trying to set up a regional carbon cap-and-trade system. But six U.S. states recently pulled out and Ontario, which was supposed to launch on Jan. 1, is now waffling.

Maybe former TD Bank economist Don Drummond can talk some sense into Premier Dalton McGuinty. Drummond is expected to issue a report in January that will advise the McGuinty government on how to proceed with economic reforms.

Drummond is a fan of carbon pricing, particularly the idea of a carbon tax, having endorsed Dion’s Green Shift plan for the benefits it could bring to the Canadian economy.

It’s not entirely impossible that Drummond might try to stimulate talk of an Ontario carbon tax for Ontario, as toxic as the two words might be.

No thanks to Jack.

But seriously, isn’t it time we had an honest and adult discussion about it?

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies. Contact him at tyler@cleanbreak.ca.

My disappointment comes not with the Liberals losing, it comes from the fact that the idea of a carbon tax is unlikely to be entertained on the Canadian political scene for some time now given the rough ride the Liberals got. It’s for this reason I’m someone elated that the idea is being given serious attention in the United States, and not just by Al Gore and friends. Republicans appear quite happy to entertain the idea, and so too are some of the major oil companies — Exxon Mobil included.

Now, who knows where this will go? But it’s nice to know that, in a continental context, the idea is still alive and that people are willing to compare and contrast the benefits of a carbon tax against a cap-and-trade system that many, including myself, perceive as inefficient, complex and prone to manipulation.

The fact that a day after Obama is elected that the Canadian government comes out and says, hey, let’s make a deal, let’s establish a continental cap-and-trade regime — well, it just stinks to me. Why hasn’t Ottawa pushed this idea before? Why didn’t the Conservatives put it out there earlier for public discussion and to show that Canada can show leadership on the climate file? (Note: It was disclosed in the Conservative platform a week before our Oct. 14 election but didn’t get much coverage. See comments below).

The feds say they didn’t introduce push it before because there was no point in initiating talks with a lame duck U.S. administration, but that’s difficult to believe given the Conservative party’s track record on climate. The more likely reason is that Prime Minister Stephen Harper was waiting to see if Obama *didn’t* get elected so he could continue to align Canada with less aggressive Republican climate policy. (Note: But I’m willing at this point to give him the benefit of the doubt).

Now that the writing is on the wall — Obama is in and has made energy and climate his top priorities — the Conservatives figure the best strategy now is to appear proactive and cooperative with the U.S. in hopes of being able to negotiate a cap-and-trade regime that’s maybe not so tough on Canada, which through its oil-sands developments is acting these days like a petrostate. Canada will be swept up anyway by U.S. changes, so coming out now with talk of deal-making allows the Conservatives to take credit later for something it has resisted but which Canadian provinces like Ontario and British Columbia have promoted.

It must hurt Harper and executives in the oil patch to see stories like the one on Dow Jones yesterday with the headline: “Under Obama, Dark Days Seen Ahead for Fossil Fuels.” According to the story, under Obama “energy and environment policy marks a tectonic shift for the nation. He would move the U.S. away from petroleum as its primary energy source and towards renewable energy, advanced biofuels, efficiency and low greenhouse-gas-emitting technologies.” In fact, Obama wants to create a windfall tax on oil that trades over $80 a barrel, and the funds from that would be used to create a government venture capital fund and incentive program aimed at renewable energy and clean technologies. He’s also focused on reducing U.S. transportation fuel consumption by doubling CAFE efficiency standards. And, with respect to his plan to create a national cap-and-trade regime, the aim is to return the United States to 1990 levels by 2020.

The Conservatives plan to lower greenhouse gases three per cent from 1990 levels by 2020, or 20 per cent from 2006 levels over that same period. But few believe there is a serious plan in place to get anywhere close. And rather than establish hard caps on emissions, Harper has emphasized initial caps on carbon intensity, meaning an individual barrel of oil might have a lower carbon footprint but the planned overall increase in oil-sands production would still lead to emission increases.

The desire now to engage Obama in a continental cap-and-trade regime is likely an attempt to negotiate some key concession for Canada’s oil sands, playing on Obama’s promise of getting the United States off of Middle East oil within 10 years. And it’s a good cunning thing to play on. It’s doubtful Obama could achieve such a goal without relying on increased production and imports from Canada’s oil sands. The Harper government knows it, and likely sees this as its strongest — perhaps its only — card to play.

Given all this, it will be interesting to see how Obama’s administration responds to the Harper government’s invitation to negotiate a continental cap-and-trade pact. The good news is it will draw a lot more attention — and scrutiny — to the oil sands, its environmental footprint and the unsustainable way it is currently being developed.