Stephen Harper is, without question, one of his generation’s sharpest political minds. But even he couldn’t have foreseen the Parliamentary Budget Officer role he created as part of his 2006 Federal Accountability Act would play a leading role in undermining support for climate policy in Canada in 2023. After all, its stated mission revolved around "ensuring budget transparency and promoting informed public dialogue with an aim to implement sound economic and fiscal policies in Canada.”
But after two consecutive reports on climate policy that seem determined to ignore the actual choices we’re facing, some people are starting to wonder if it’s trying to influence that dialogue rather than inform it.
The PBO’s latest report covers the economic impact of the federal government’s clean fuel standard, which requires producers of gasoline and diesel to reduce the carbon intensity of their fuels and is part of the federal government’s approach to meeting its climate targets. According to the PBO’s analysis, it could add as much as 17 cents per litre to the price of these fuels by 2030, and cost anywhere from $231 per year for lower-income households to $1,008 for those in higher-income brackets. Conservative politicians and pundits have taken to calling this “Trudeau’s second carbon tax,” and they’ve already weaponized the PBO’s analysis in order to attack the fuel standard.
That doesn’t sit well with Jason Dion, the Canadian Climate Institute’s senior director of research. In a tweet thread, he noted: “[The] PBO compares the costs to a scenario that does not exist: where Canada does nothing about climate change and faces no trade or competitiveness consequences for doing so. It uses the highest possible costs from the Regulatory Impact Analysis Statement, and rather than saying costs ‘could’ be that high, says that they ‘will’. And it doesn’t consider the benefits that may flow from the policy.”
If this sounds familiar, that’s because it should.
Back in March, the PBO released its updated analysis of the distributional impacts of the carbon tax and rebate, which also traded in the idea it’s all cost with no economic benefit. As Dale Beugin, the CCI’s executive vice-president, noted in his own thread at the time, “[The new] PBO report misses the point. It shows the costs of carbon pricing relative to a scenario that simply does not exist: a world where Canada does nothing about climate change, and faces no consequences for doing so.”
There’s value in creating a worst-case scenario, but only if it’s correctly labelled and identified as such. That’s clearly not the case here. And what makes the PBO’s stance here even stranger is the fact that it has, in the recent past, accounted for the cost of climate change. As Parliamentary Budget Officer Yves Giroux noted in announcing the release of a November 2022 report: “Recent increases in temperature and precipitation combined with future changes in weather patterns will reduce Canada’s real GDP by 5.8 per cent in 2100.” That figure, which amounts to more than $100 billion, is predicated on countries around the world actually living up to their climate pledges. “If climate policies remain closer to the status quo, the long-term impact of climate change on the Canadian economy will be larger.”
In fairness to the PBO, it’s hardly the only organization trading in some questionable economic analysis of climate policy of late. Take the Public Policy Forum’s own recent report, one that said an “accelerated phaseout” of Canada’s oil and gas production would cost the country $100 billion in foregone GDP by 2050. One small problem: the federal government isn’t proposing anything even remotely close to this, which makes the entire report’s conceit little more than a straw man. Here, again, we have a piece of climate policy analysis that draws a comparison to a scenario that doesn’t exist.
This is a bigger deal than it might seem. Our ability to respond correctly to the climate crisis depends on a properly informed public. That’s already a huge challenge, given the time and money the fossil fuel industry and its various proxies have invested in muddying the waters here, first on whether human-made climate change was even real and more recently on how quickly we need to respond to it. What we need, and what we’re not getting, is a greater willingness by Canada’s economic thought leaders to fully account for both the costs and benefits of climate action — and inaction.
We all know there's a huge price tag attached to climate change, and economic costs associated with slow-walking our response to it. So why do some economists keep pretending otherwise? @maxfawcett writes for @NatObserver
Their failure to do so, after all, plays right into the hands of those who have no interest in a dispassionate analysis of climate policy. As Environment and Climate Change Minister Steven Guilbeault said recently, "Pierre Poilievre is doing what he does best — scaring Canadians with bumper sticker slogans.” He’s right. But as I’ve said before, Guilbeault’s government has given Poilievre the opportunity to use those slogans by leaning too heavily on the PBO’s earlier work in order to sell its climate policies.
Trying to sell climate policy purely on its benefits was never going to work. Any meaningful attempt to reduce greenhouse gas emissions and protect the interests of future generations will come at a cost. But it’s up to our economists to give us a fuller sense of what those costs are, both over the next few years and the next few decades, and avoid comparing them to best-case scenarios that either don’t or won’t exist.
That’s the sort of fact-based discussion we desperately need to be having — and the one certain people in this country seem determined to avoid.