Why a carbon price alone would not make Ontario’s climate plan work

The Globe and Mail’s June 10th editorial argued that Ontario’s climate strategy should be boiled down to one, and only one, measure: putting a price on carbon. We strongly disagree.

A price signal is one of the most efficient measures to change behaviour. But it isn’t the only one needed, especially for essential goods and services like energy and transportation. And especially in a market where the carbon price is very low.

Changing the infrastructure and incentives that lead to less fossil fuel use requires multiple actions if we are going to do it at a speed needed to avoid dangerous climate change and retool Ontario’s economy to be competitive in this rapidly changing world.

A price alone is not enough to discourage carbon-intensive behaviours. Consider this real life example of putting a price on something many would like to decrease or eradicate – smoking. Over the years, various governments have increased the tax on tobacco in an effort to curb smoking. Today, taxes account for two thirds of the price of a pack of cigarettes. In fact, there’s more tax on a pack of smokes than Ontario’s cap-and-trade program will add to the average heating bill each month. Yet two million Ontarians still smoke in 2016.

Complementary policies needed

The reality is to ride a bike to work, a variety of factors must be present. These include safe bike paths and bike parking, something that many parts of our cities lack. Cyclist accidents and fatalities continue to be far too common. Walking to work requires urban design that enables housing to be close to work and schools. Getting people out of their cars and into public transit requires that transit be available and reliable, again something lacking in many areas of our communities.

A carbon price that just increases drivers’ gas costs but doesn’t provide any other options for getting around is bound to fail economically and politically. Complementary policies that fund better public transit and bike networks, and enable better city planning are essential if we want to cut carbon emissions from transportation.

Significant consumer barriers also exist for the up-take up of electric vehicles (EVs) – charging infrastructure, and exaggerated fears about how far an EV can get you between charging. One might argue that with the right price incentive (tax), the market would provide solutions to this. But the car industry is built on a model where profits come from selling pricey gas-guzzling pick-up trucks and SUVs. And conventional car dealership networks are resistant to EVs because dealerships make most of their money on maintenance, and EVs require very little maintenance. Not surprisingly, many dealers are reluctant to advertise or sell EVs or keep them in stock. Upstarts like Tesla are shaking up the car manufacturing industry, but barriers to entry are high, making it hard for new entrants. Finally, there’s all the advertising dollars spent by the auto industry. It takes a dedicated and informed consumer to cut through the slick spin, go against everything he or she is being told by most car makers, their ads and army of salespeople and choose to buy an electric car.  

Premier Kathleen Wynne’s comprehensive climate plan is a step in the right direction. And if our fight against smoking is any indication, she’s right not to put all her policy eggs in the price basket.

Ed Whittingham, Executive Director, Pembina Institute
Tim Gray, Executive Director, Environmental Defence
Sidney Ribaux, Director General, Equiterre

 See our letter to the editor on this topic in the June 20 Globe and Mail.