Can Justin Trudeau spread Canada’s carbon price and help save the world?

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This article was published 01/11/2021 (1151 days ago), so information in it may no longer be current.

The Star’s Heather Scoffield is travelling with Prime Minister Justin Trudeau to the G20 Summit in Rome and the United Nations’ Climate Change Conference in Glasgow, covering Canada’s role in the shifting world order and the global fight against climate change.

GLASGOW—Justin Trudeau has decided to make his mark on the world by trying to take Canada’s controversial carbon tax global.

It’s an intriguing idea.

If everybody puts a price on carbon, then no one will attempt to undermine their neighbour by luring away investment by virtue of not having such a tax. And emissions will fall dramatically as a result.

But we know from history that for big initiatives like this to succeed, we’d need time and diplomatic heroics. The verdict is out on both of those.

Trudeau has taken some solid initial steps. First, in his speech on Monday to the entire COP26 plenary, he flagged the need for a global carbon price, putting other countries on notice that there was a big idea in the works.

He’ll tell anyone who will listen that Canada is the only oil and gas producer that has figured out how to slap a significant and transparent price on carbon that escalates steeply and redistributes the revenues back to regular people.

He followed up on Tuesday with a “carbon pricing event” on the sidelines of the summit, showcasing a panel that gathered some serious heavy hitters on global economic policy: the head of the International Monetary Fund, the head of the World Trade Organization, the president of the European Union, and Mark Carney. Aside from being a former Bank of Canada governor, Carney is the U.N. special envoy on climate action who is also forging a multi-trillion-dollar effort to have investment funds sign on to net-zero emissions in their investments.

With the economic-policy glitterati at his side, Trudeau set out a clear and ambitious goal. He wants 60 per cent of the world’s emissions covered by a price on carbon by 2030.

But those allies want to see other countries step up right away and make commitments this week.

“If there’s a voice in the G7 that can really make that case, he is a terrific exemplar of a pragmatic approach to carbon pricing. But pragmatic doesn’t mean any less ambition. It just means being sensible about implementation,” said Lord Gregory Barker of Battle, who is the head of the World Bank’s initiative on putting a global price on pollution.

Carney believes there’s a growing realization among governments that carbon pricing is an essential tool in cutting emissions. The private sector is demanding transparency so they can invest accordingly, Carney says. And once they get clarity, they will pile on.

He wants to see action in the next few days, as leaders and their negotiators meet at the Glasgow COP26 conference.

“We need to come out of COP with a clear recognition of all governments that this is part of the solution,” he told reporters.

With recent commitments from China, he figures about 30 or 40 per cent of the world’s emissions are covered by some kind of carbon price.

The thing is, there are 69 different countries with 69 different ways of pricing carbon. The IMF sees a global system where there are different prices for rich, emerging and developing countries. And although there are signs the United States may be warming up to the idea, the White House has resisted carbon pricing until now.

All the goodwill and ambition about climate change won’t diminish the technical difficulties around that.

We have a recent example to work with, one that Trudeau keeps evoking: the global minimum corporate tax. Governments grappled for years with how to stamp out tax havens and make sure big, digital multinationals paid their fair share of taxes in the countries where they make their money.

It wasn’t until U.S. Treasury Secretary Janet Yellen came along last spring with a high-profile solution that the logjam broke quickly, at least by global diplomacy standards. The G20 leaders approved it on the weekend.

But does Trudeau have that kind of stature?

NDP Leader Jagmeet Singh says no. Of course, he is Trudeau’s political adversary, but he actually quite likes the idea of a global carbon tax.

“The idea is good,” Singh said in an interview at the summit. “The problem with Canada right now, or Justin Trudeau, having been the only G7 nation that’s increased emissions since he’s been in power doesn’t really give him the position or stature to be able to push.”

He points out that until a year ago, the Liberals’ ambition on climate was lacklustre and emissions had not fallen. But to Trudeau’s argument, the price on carbon that has since been dramatically steepened — and it should make a big difference in our emissions.

That’s where allying with powerful international financial institutions and climate leaders can help Canada, says climate policy analyst Dan Woynillowicz of Polaris Strategy and Insight.

“Canada has won credibility on domestic carbon pricing given its durability — through several elections now — and the scale and schedule of the price. But on its own, that doesn’t provide the sufficient heft,” he says. “Collaborating with Mark Carney and the EU adds the heft.”

As Trudeau knows better than anyone after having to fight repeated political and legal battles to entrench the carbon price, even heft doesn’t guarantee much when it comes to asking people to pay.

But it’s worth a try.

Heather Scoffield is the Star’s Ottawa bureau chief and an economics columnist. Follow her on Twitter: @hscoffield