On carbon, it’s government first, then the markets

When the Canada-U.S. free-trade agreement was signed 20 years ago, governments did not try to soft-pedal the implementation. There was a phase-in period, but everybody had to take the consequences – good and bad – of increased competition. Why can’t we follow the same rules for reducing greenhouse gas emissions? Why are Ottawa and the provinces fudging on targets and delaying on action?

We know that voluntary measures do not bring transformative change. After 17 years of voluntarism (the first targets were set by the Mulroney government in 1990), we have failed utterly to reduce emissions. Now the Arctic ice cap is collapsing and the federal Clean Air bill has died.

What governments have to do is give the right market signals to both producers and consumers so they change the way they produce and use oil, gas and coal. Without a road map from governments, few companies and consumers are going to walk the talk.

Canadian consumers know we have to clean up our act. When representative groups of Ontarians considered the energy challenge in 2004, they made it clear that voluntary measures won’t work. One consumer told Canadian Policy Research Networks that “we need a kick in the pants.”

The kick he was referring to was full-cost pricing for electricity – prices that cover the cost of producing, delivering and replacing the electricity supply. The only qualifier was that all customers should be charged a reasonable rate for basic service. If you’re heating a swimming pool, you pay full cost.

After years of costly delays by the Harris and McGuinty governments, Ontario has to strike a new energy bargain with the public.

The strategy would have two goals: To reduce greenhouse gas emissions and to bring electricity demand and supply into better balance. A key element will be higher electricity prices.

The Globe and Mail (Canada)