A couple weeks ago, thousands of students in Canada and around the world decided to march for a solution to climate change in a movement called a climate strike. But, climate change is a problem that is not very intuitive for many people.
One study found that not only is climate change not well-understood by those who don’t believe it is happening, often many of those of us who do believe it’s happening don’t know how it works.
This is understandable. It can be difficult to connect how the greenhouse gas emissions that are released from driving a car can lead to world-changing environmental problems. Regrettably, whether you understand the mechanics behind how it works or not, climate change is here.
Unfortunately, carbon prices—the solution that Canada, along with 45 other countries around the world, has decided to use to solve climate change—are hardly any easier to understand.
Put simply, a carbon price is a policy that makes polluters pay for the cost of their pollution. Without a carbon price, polluting is completely free, which means polluters have no reason to not pollute unless they choose to stop out of the goodness of their hearts.
Given the actions of some of the world’s biggest polluters, relying on choice is risky at best. A carbon tax removes that risk by creating a direct incentive to stop polluting: the polluter’s bottom line. Polluters won’t want to pollute anymore if it becomes more expensive.
There are a few different forms of carbon pricing. One of these forms is a carbon tax, the policy brought in by Prime Minister Justin Trudeau. Another is a cap-and-trade system, which Ontario had before Premier Doug Ford eliminated it.
However, all of these policies work in basically the same way. The only difference is that the price gets applied to different energy sources based on how much pollution they create.
Coal, one of the dirtiest forms of energy, will become much more expensive under a carbon tax system, while gasoline will only get slightly more expensive. The price of solar energy will stay about the same.
But, because the cost of coal will go up and the price of solar energy will stay the same, solar energy will become less expensive in comparison to coal. This encourages electricity producers to stop burning coal and start relying more on solar.
The money that is generated through the tax goes to the government. This has caused some to dismiss carbon prices as “tax grabs,” while others worry that lower-income Canadians might be vulnerable to the increased costs.
But, if you look closely, those criticisms don’t really make any sense. That’s because about 90 per cent of the money the government gets from carbon taxes in Canada goes towards rebates that go back to Canadians.
The idea behind this is that the money can help protect Canadians—especially lower-income Canadians—from the increased costs of using polluting energy sources. For instance, let’s say a commuter drives to work every day. If the price of gasoline goes up a little, they might start taking the bus to work twice a week to save money. At tax time, they will be paid the rebate and end up with just as much or even more money than before the tax. But, because their behaviour has changed, carbon emissions go down.
Essentially, carbon pricing works. It has been shown time and again to decrease emissions of the greenhouse gases that contribute to climate change, while having a minimal impact on the economy.
Carbon prices are able to decrease emissions more cheaply than any other alternative that has been tried. This is not just important because of how it affects the economy, but because it allows us to address climate change with the urgency that it deserves.
A problem as significant as climate change is beyond any single individual, but it is not beyond all of us changing our habits together. A carbon tax allows climate action to take place in a way that allows everyone to contribute a little, for a result that matters a lot.
Graphic by Paloma Callo
