Canada, carbon pricing and the “charitable sacrifice” narrative

Mike Moffatt
May 7 · 2 min read

Been doing a fair bit of speaking lately on environmental-econ issues (Hello Winnipeg!) and there’s a couple of comments/ideas/memes that keep cropping up again and again on the subject of GHG policy. These two ideas are part of what I call the charitable sacrifice narrative of climate change:

  1. Only 1.6% of global emissions come from within Canada’s borders, so our reductions don’t matter (they’re simply “charity”).
  2. Carbon pricing mechanisms, such as a carbon tax, “pull money out of the economy” or increase the cost of doing business, harming both jobs and GDP and risking a recession. (Yes, that’s a direct quote, and yes, I’ve been asked about recessions).

Put the two together and you get the argument that Canadian emissions reductions (through carbon pricing or some other mechanism) have no benefits, but have real costs.

There’s a whole bunch of counterarguing strategies people use to counter this, including:

  • Leaning into the charity frame, by insisting Canadians do their fair share.
  • Pointing out Canada’s high per capita emissions.
  • Pointing out that the money is returned back into the economy in one form or another, so isn’t “pulled out”.
  • Pointing out that there’s no evidence of carbon pricing causing a recession anywhere.
  • Looking at the research on the economic impact of carbon pricing, along with forecasts of future impacts. (Speaking of which, you should all read my report).

Etc. Etc.

I’ve argued in the past, and will continue to argue in the past that if we’re going to accelerate both economic growth and environmental performance, we need to stop thinking in terms of sacrifice, and start thinking in terms of opportunity. We need to adopt a more entrepreneurial mindset. By doing so, we turn the problem on its head. Our two points now become:

  1. Roughly 98% of emissions reductions will take place outside of Canada. How can Canadian companies take advantage of this opportunity? What is the policy environment to ensure that Canadian companies and Canadian technologies win the market for emissions reductions?
  2. Carbon pricing, whether it is carbon taxes or cap-and-trade, will generate revenue for the government. How can governments best use this revenue stream to enhance environmental and economic performance? Is it through spending, or through cutting other, more economically damaging taxes (I’m looking at you, Ontario Employer Health Tax).

I wish I knew how to motivate more people to start thinking in terms of opportunities rather than sacrifice. Could explain why I’m an economist and not a marketer.


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    Mike Moffatt

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    Senior Director, Smart Prosperity. Assistant Prof, Ivey Business School. Exhausted but happy Dad of 2 wonderful kids with autism. I used to do other stuff.