GREEN: Canadian governments should ditch the ‘climate policy’ stew and start over

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By Kenneth Green

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In the great Hollywood musical Man of La Mancha , sings the protagonist Don Quixote of his quest “To dream the impossible dream, to fight against the invincible enemy, to endure an unbearable pain, to run where the brave dare not go.”

It is from Don Quixote that we derive the idea of ​​a “quixotic effort”, that is, an obsessive fixation on doing the impossible, however ridiculous it may seem in the end. In the real world, politicians around the world are adapting Don Quixote for a new generation, pursuing the impossible dream of a net zero carbon emissions world. And not simply as an ideal, but as a difficult goal with a defined timeline.

In Canada, our politicians have grown fond of the “all of the above approach”, but in the real world, this does not work. Not to mix metaphors, but if you are making a stew, at a certain point, when you add more ingredients, they collide with the ones already in the pot and the result is not a better stew but an inedible mess.

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That’s where we are today with climate policy in Canada. And here’s why the big three climate policies – regulations, carbon caps, and carbon taxes – don’t work well together.

Regulations, by their nature, distort price signals. For example, if the government says that manufacturers cannot sell you a new gasoline car, the market’s ability to price new gasoline cars is destroyed and the market for old gasoline cars is grossly distorted. Since you can’t own a new gas-powered car at any price, your used car (probably with higher emissions) that previously could have had a lower value is now a higher value product.

Carbon taxes, on the other hand, could set a price signal in isolation, using the discovery power of markets to guide people toward lower greenhouse gas-emitting activities that fit their budgets, But pre-existing regulations also ruined that idea. , distorting the market’s ability to find lower-cost approaches to reducing GHG emissions across the board.

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Ironically, strict limits on emissions degrade the value of carbon taxes and regulations by making the idea of ​​setting a price pointless (you will not be allowed to emit carbon on the net date X past at any price) and completely changing the cost-benefit assessments made in preparing and complying with promulgated regulations previously they boasted an ongoing market economy in GHG emissions.

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And with utmost irony, these new quixotic carbon caps, by further disrupting energy and carbon markets, will ultimately undermine the transition to renewable energy sources like wind power. Yes, the net-zero Quixotes will in fact be “leaning against the windmills,” the very windmills they claim to favor.

Governments, at all points in the climate change saga, have had a choice of approaches to address GHG emissions. They could have opted for all regulation (which has many problems) or emission pricing instead of regulation (which also has many problems) or entirely from the start: strict limits for the whole of society on emissions of GHG with arbitrary compliance deadlines. Yet that approach was universally criticized as the worst possible political approach at all previous points in the climate change saga.

Of course, our governments did not choose a particular recipe for success, but rather an “all of the above” approach that has turned our stew of climate policy into a breakfast for dogs. At this point, in a healthy kitchen, the chef would empty the pot and start over. Or is it just another pipe dream?

Kenneth Green is a Principal Investigator at the Fraser Institute.

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