By William Kimber
On the face of it, Australia and Canada have much in common. The two countries are rich with vast natural resource endowments and economic structures which are commodity-based, open to trade and highly greenhouse gas emissions intensive.
Yet, approaches to energy and climate change policy in the two countries are poles apart. On July 10, 2011, the Australian Government outlined a national carbon pricing scheme to tax greenhouse gas emissions at $23AUD per tonne, while the Canadian Government has set emissions targets but has yet to announce a plan for de-carbonizing economic growth.
Canada’s lack of a plan to tackle carbon intensity in our economy presents a risk to this country’s future prosperity.
The two countries have riches across a diverse array of commodities from minerals to energy resources to agricultural products. International trade in natural resources is a critical feature of both economies and an activity which generates huge wealth and prosperity. Both countries have rule of law, strong investment environments and performed above the OECD average on in terms of GDP growth in 2009 at the height of the global financial crisis.
But Australia and Canada are one and two in the developed world for the highest greenhouse gas emissions intensity per capita, and both have much to lose from the environmental and economic effects of climate change. Both regions are exposed to damaging environmental changes predicted by scientists. On the economic front, Canada is home to the second largest oil reserves in the world, while Australia is the world’s largest exporter of coal.
There is risk for both countries in continuing to drive towards a highly carbon intensive model for economic growth in the face of a changing world. A world with emerging constraints on carbon intensive activities in export markets and one where the growth technologies and industries of the future are likely to be greener.
The Australian Government’s plan is to reinvest revenues from the carbon tax to promote renewable energy, energy efficiency and environmental improvements in Australia’s land sector. Importantly, over half the money raised by the carbon price will be fed back to assist households. The prospect of multi-billion dollar wealth transfers within the community has led opponents of the scheme to suggest that it is “socialism masquerading as environmentalism.”
However, Prime Minister Julia Gillard appears so far to have succeeded in getting the numbers to narrowly scrape the plan through the Parliament by December of 2011.
In contrast to the highly centralized approach in Australia, Canada’s debate has recently focused on the need for a national energy strategy to address a broad set of environmental concerns of which carbon is one, along with issues like market diversification for Canadian energy exports and pan Canadian collaboration on regulation, energy efficiency and technology.
As part of this, stakeholders, including business and environmental groups, have indicated that a national carbon pricing regime is needed to avoid “balkanization” across the country. As such, the Australian Federal and State relations experience in this area may be of value to Canadian policymakers.
It’s clear that the transition to a low carbon growth plan in both countries will be both long and costly in terms of public and private investment. While there is no cost free way to make these transitions, delaying appropriate action now is likely to result in more pain and higher costs later on.
Canada’s Energy and Mines Ministers are meeting in Alberta on July 17 to discuss a Canadian energy strategy and carbon pricing is currently off the table. The issues covered by a Canadian energy strategy are too broad and pervasive across the economy to be segmented into departmental or portfolio responsibilities. To make real progress, ultimately, there has to be a level of executive leadership from the Prime Minister of Canada, Stephen Harper.
William Kimber is Vice President, Research with the Canada West Foundation, the only think tank dedicated to being the objective, nonpartisan voice for issues of vital concern to Western Canadians. Visit us on-line at www.cwf.ca.
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