Northern Ontario lives by harvesting wood. Wood is roughly 50% carbon, so the northern economy is built on harvesting carbon. The contribution to carbon sequestration puts Northern Ontario on the front line in the fight against climate change.
In 2006 Ontario’s sawmills supplied 1,842,136,700 kg. of sequestered carbon. At current prices this represents twenty-eight million dollars worth of climate protection. If we believe Jerry Rubin, the chief economist at CIBC, carbon prices will have to at least double. By 2010 northern sawmills will be underpaid by over fifty million dollars a year.
They won’t get the money because Canada has an anti-forestry climate-change policy.
Canada is the world’s leading exporter of forests products. You would think that the world’s biggest commercial carbon sequestration operation would fight to have its contributions recognized. The default system under the Kyoto Protocol only counts newly planted forests, but there is provision for counting wood products. Because the Canadian government has not developed a credible accounting system, by 2010 we will be leaving over a billion dollars worth of carbon credits a year on the table. That billion dollars could be flowing to the communities that take care of Canada’s forests.
Once we can account for wood products, the simplest and most sensible strategy would be to introduce a SYMMETRIC carbon tax for Canada as a whole. It has to be symmetric, because economics tells us we should reward collecting carbon just as clearly as we charge for emitting carbon.
Why are the conservatives ignoring this opportunity? After all, Mr Harper did promised a “Made In Canada” climate change policy. Do they think other governments will pay to develop an accounting system to tell them how much they owe us?
A much more convincing explanation is that Mr Harper is afraid to antagonize Alberta and the oil industry. Neither Alberta nor the oil companies want to pay for their carbon emissions. Harper probably asked himself “Who would I rather tangle with – Exon or White River?” Remember, Exon has a high-powered staff of eXonomists, lawyers, media specialists, and lobbyists. White River’s high-powered team is mainly Marilyn Parent-Lethbridge.
But poor Mr Harper is caught between the rock of science and his hard political promises. He came to power committed to rolling back Canada’s Kyoto commitments. He sent Rona Ambrose out to unwind the Liberal’s slowly growing program. She got clobbered. Finally realizing popular opinion was against him, he sent John Baird out with instructions to act like he wants to fight climate change. Baird set out to implement a cheap and, chopped-down version of the Dion program. Then the scientists at the Intergovernmental Panel on Climate Change told the world that the argument is over. Anyone who says we don’t have a problem is either a liar or a lunatic. Worse yet, ex-World Bank head Sir Nicholas Stern tells the world that only bad economists oppose fighting climate change. Stern says that good economists support carbon taxes. Harper and Baird made another effort to explain Canada’s Kyoto targets are impossible but those darned Europeans suddenly announced plans that are far more ambitious than anything that Canada ever considered.
Under all this pressure how can the government avoid paying the forest industry for its services? There is a way. The government can adopting a cap and trade system. The underlying logic is simple. Imagine you are a small municipality with a municipal dump and you don’t charge for dumping. When you realize you can’t afford to run the dump for free, you propose a tipping charge. Along comes a fellow from the Garbage Producers Association. He has a better idea.
He wants you to let him keep dumping what he currently dumps for free (that is the cap). If you accept this idea he will charge others to use his dumping rights (that is the trading part). Cap and trade means you sign the dump over to the Garbage Producer’s Association for free.
The oil companies are manoeuvring for a cap and trade system: they want to own the rights to the atmosphere. You might prefer to charge them for their emissions so we can use the money health care, education, or to support the forest communities that store carbon in wood products and forests.
If the oil companies continue to control Harper’s mind, Northern Ontario loses. If they pay to emit, we can get paid to collect carbon. Choose your side. There are hundreds of million of dollars at stake.
Dave Robinson is a professor of economics at Laurentian University. He can be reached atdrobinson@laurentian.ca
