Beyond Kyoto


The National Post has invited candidates for the federal Liberal leadership to share with readers their vision for the country. The following was submitted by Michael Ignatieff.
Canadians want to reduce the gap between our strong environmental values and our weaker environmental record. While most Canadians rate the environment as one of their top concerns, we know that we haven't done all we can: Canada recently ranked 28th out of 29 nations in the Organisation for Economic Co-operation and Development in a study of environmental performance in 10 categories, including air, water, energy, waste, climate change and transportation.
The evidence is conclusive that rising greenhouse gas emissions pose an unacceptable risk to our planet's climate. But there is a growing consensus that Canada may not be able to meet its Kyoto target of cutting greenhouse gas emissions to 6% below 1990 levels by 2012. This cannot be a license for the Conservatives to abandon Kyoto, however. We must remain leaders in the Kyoto process, and Canada should continue to work with our international partners to set mandatory targets for reducing emissions. "Made in Canada" solutions mean nothing unless they are part of an international agreement with teeth.
But we must bolster our Kyoto commitments with stronger action at home. We need to make tough choices now because the cost of neglect is just too high.
Tough choices mean recognizing that it's just not enough to rely on voluntary initiatives and subsidies to encourage reductions in harmful emissions. The rules of the free market dictate that emissions will continue to rise unless the environmental cost of emissions is reflected in the financial cost of doing business. If we are serious about adressing climate change, we need to implement policies that provide financial and regulatory constraints to prevent the free dumping of emissions into the atmosphere. We need an open national debate on the options available to us.
We need to understand, first of all, that environmental policy should not pit one province against another. Policies can be designed to make sure that they do not penalize one region of the country or sector of the economy. Secondly, we need to understand that a good environmental action plan should be implemented gradually, in step with the normal rate of new investment. We need to show the world environmental leadership without jeopardizing our international competitiveness.
Good environmental policy needs to be developed in consultation with all the stakeholders, including the provinces, the energy sector, experts and environmental groups, but it shouldn't be captured by any one group. It must serve all Canadians.
One policy which should be considered is a direct tax on greenhouse gas emissions. Mr. Harper has made it clear that a direct federal tax is not even on the table for consideration. He wants Canadians to believe that even a balanced, revenue-neutral plan to curb emissions is political death in energy-producing provinces such as Alberta. That would be to ignore the passion that all Canadians, including Albertans, feel for their environment, and the deep desire of all segments of the population, including the energy sector, to be good stewards of their natural resources.
Some people try to paint a direct tax on greenhouse gas emissions as a plot to punish Alberta for its success. Let's be clear about this: Any direct emissions tax must not be a disguised transfer of Alberta oil and gas wealth. Tax payments should not be included in federal general revenues. An emissions tax should be offset by reductions in other taxes, so that there is no net tax increase. This would represent an environmental tax shift from taxing activities we want to encourage to taxing activities we want to discourage. Any payments received in excess of the tax reductions would be returned to the source province to fund emissions reductions and other programs, which can be the catalyst for a boom in sustainable development. We need to work in partnership with the energy sector if any climate change plan is to succeed.
Putting a price on carbon emissions creates a real bottom-line incentive to make choices that reduce emissions over time. An emissions tax should be set at a modest level at first but could be scheduled to rise gradually, so it affects new investment decisions immediately but does not render existing equipment unprofitable.
To protect our international competitiveness, industries whose exports were threatened by a domestic tax on emissions could be given some tax exemption and assistance with emissions reductions.
Critics of a direct emission tax suggest there are many different approaches to tackling climate change. It is true that getting the policy mix right is crucial and requires a frank and principled dialogue. But in the end, I am unequivocally committed to pursuing a solution that effectively answers the climate change challenge. We need to get tough, and we need to do it before it is too late. Positions based on mere political convenience and rhetoric are not an option.
One proposed alternative to a direct emissions tax that needs to be evaluated is a program to allow carbon-emitting industries to trade emission allotments among themselves under a gradually reducing cap. Under such a regulatory regime, industry would be required to buy permits for emissions above their permitted amount. Like the direct emissions tax, a cap-and-trade program puts a price on the cost of industrial emissions. It also requires, over time, the development and adoption of non-emitting technologies, thereby creating business development opportunities in this field.
Other possible additional market-oriented regulations include a carbon-management standard and sequestration requirement, so that the fossil-fuel industry takes responsibility for the fate of the carbon it extracts and stops releasing it into the atmosphere. We also need tougher standards for vehicle emissions, and for power consumption by buildings and appliances. The federal government must also work with the provinces to set a standard for the development and use of alternative energy sources such as biofuels and wind power.
In addition to these efforts to reduce greenhouse-gas emissions, a responsible environmental policy must include a plan to clean up, protect and conserve our freshwater supply. The quality of the air that we breathe must not be compromised further, and we need a plan to address smog in our urban centres. Let's be the very best in the world at making cleaner cars, cleaner trucks and world-class public transportation systems.
Canada can be a world leader in sustainability. Canadians know that we are the stewards of the world commons, the climate and our biosphere. We hold our environment in trust for our children and the generations that follow, and we take that responsibility seriously. We reject the false polarity between meeting environment challenges and economic success. Leadership means finding balanced and effective solutions.
A great leader once observed, "People and nations behave wisely -- once they have exhausted all other alternatives." The time for action is now.
- Michael Ignatieff is the Member of Parliament for Etobicoke-Lakeshore, and is a candidate for the leadership of the Liberal Party of Canada.

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