But is there a significance to the timing of this announcement?
Ross McKitrick, an environmental economics professor at the University of Guelph, says the Liberal government wants to use the social cost of carbon “as a justification in Canada to just keep increasing the carbon tax at an even faster rate, and ... to justify a new policy like a more restrictive clean fuel standard, for instance.”
A ‘New Tool,’ but Not a New Term
Guilbeault told attendees at the Net-Zero Leadership Summit in Ottawa on April 19 that the government used updated scientific and economic models to determine how much climate change costs Canadians. The social cost of carbon measures the financial impact every tonne of greenhouse gas emissions has on things like food production, human health, energy systems, disaster repair bills, and property values.“Every tonne of carbon we reduce this year saves society as a whole $261, and we are talking in terms of cutting megatonnes—millions of tonnes,” Guilbeault said at the summit.
‘Highly Speculative Assumptions’
McKitrick said the models Canada used to calculate the social cost of carbon could be flawed, as it’s possible to obtain a certain number you’re looking for if “you just feed a certain set of assumptions into a computer.”“I guarantee DICE and the other models for the social cost of carbon will have highly speculative assumptions, probably based on a few marginal outlier studies that give you a high carbon,” McKitrick said.
“But this is not something that’s playing out in the standard, peer-reviewed literature and economics on the subject. This is being done by bureaucrats in a Biden administration agency.”
“This doesn’t typically get talked about in policy circles. We end up not only bearing the cost of a lot of overly expensive policy, but it’s completely counterproductive for reducing global emissions because all we do is export a lot of industrial activity to more polluting countries,” he said.
Social Cost of Carbon ‘Not a New Creation’
Anthony Heyes, an economics professor at the University of Ottawa and Canada’s research chair in environmental economics, says that the social cost of carbon is not a new creation. It “has been completely common parlance in every circle in which carbon reduction is discussed for at least 25 years. It’s completely standard apparatus and terminology in government and academia,” he said.Heyes said the timing of Guilbeault’s speech suggests the Liberal government is signalling that “they intend to get tough on carbon,” despite the fact that historically Canada’s “rhetoric has been a bit stronger than actually the action.”
“I think the content of his speech is precisely saying that we’ve been using a social cost of carbon. [The carbon tax] is not driving the emissions reductions that we perhaps had hoped, and we’re going to be cranking it up,” he said.
Assumptions
Jack Mintz, president’s fellow of the School of Public Policy at the University of Calgary, says the timing of Guilbeault’s announcement could have been because the government wants to “justify its immensely costly carbon reduction policies.”“So to increase the social cost of carbon ... it’s quite surprising and could actually push up the costs quite a bit,” Mintz said.