O’Toole’s “carbon border adjustment tariff” is misguided

When adjusting for population and development, China’s carbon emissions are more justified than Canada’s

Conservative Party Leader Erin O’Toole announcing his “Secure the Environment” plan (Source: Adrian Wyld)

Out of the convoluted mess that was Conservative Party Leader Erin O’Toole’s climate plan, one policy stood out as promising, as a potentially effective policy and something conservatives can rally behind: the “carbon border adjustment tariff.” The tariff would be imposed on products coming from “bad actor countries” — those that do not regulate carbon pollution. O’Toole singled out China specifically as a “bad actor.” It is no wonder such a policy is popular. After all, what hot-blooded Canadian wouldn’t like patriotic tariffs and the opportunity to police China? Yet, for the tariff to be constructive and just, we need to take into account the fact that China is a populous and developing country, whereas Canada is less populous and developed.

While it may be easy to label this tariff as cynical blame-shifting and pandering to O’Toole’s base, such a policy has some meritorious motivations. First, a carbon border adjustment tariff would offset any potential “carbon leakage” of the carbon tax (businesses relocating manufacturing to avoid the tax). O’Toole directly referenced this concern when introducing his tariff proposal, warning of “Canadian jobs being shifted to China.” Second, such a policy recognizing the reality that China emits around 10 billion tons of carbon per year as opposed to Canada’s 600 million tons — 29% to 2% of current total emissions. Meaning, even if Canada reduced its carbon emissions to a net-neutral level, carbon dioxide induced anthropogenic global warming would still be a problem. And third, international action is necessary to combat the “tragedy of the commons,” wherein one country reneges on its climate obligations for individual benefit.

As admirable as protecting manufacturing jobs from being outsourced to less regulated countries may be, there is no avoiding the fact that the carbon border adjustment tariff would have the consequence of rising prices for imported goods. Canadians would suffer higher costs of living to preserve jobs. One only needs to recall the steel shortages and the unintended consequences to secondary manufacturers in the aftermath of Canada’s retaliatory tariffs on American steel during the renegotiation of NAFTA.

More questionable, however, is the entire notion of labelling China as a “bad actor country” in the first place. While the large amount of emissions from China may seem extravagant — about 10 billion tons per year or 29% of current total emissions — it becomes more moderate when adjusting for population. After all, it would be absurd to suggest that China should have the same share of global emissions as Liechtenstein. Adjusting for population, China emits around 8 tons per capita per year, which is much lower than Canada’s 17 tons. In this respect, Canada is more of a bad actor than China.

Moreover, the natures of the polluting activities are diametrically opposed. Emissions in the developed world are “lifestyle emissions” as opposed to the developing world’s “survival emissions.” Also, Canada benefits from our historical emissions while China is just beginning to emit carbon. To put it another way, we industrialized by emitting carbon and are now able to wean off it, while China is just beginning to industrialize and needs to continue doing so to satisfy the needs of their population. It’s up to the developed world to reduce their emissions now; the developing world will be aided through the green transition when they are able.

This is a matter of fairness just as much as it is a matter of effectiveness. It would be patently unfair for the developed world to trap the developing world in poverty simply because we cannot bear reducing our emissions to appropriate levels. Furthermore, considering that tackling climate change is a global effort, such an unfair plan is unlikely to garner sufficient international support to be effective.

O’Toole’s carbon border adjustment tariff, while arising out of understandable motivations, carries troubling broader implications. For a country to be labelled as a “bad actor,” differences in population size and development must be taken into account. Such issues are nothing new, causing the withdrawal of America and Canada from the Kyoto Protocol and being a point of contention in the Paris Climate Agreement. As more and more countries start taking climate change seriously, the issue of distributing the burden of reducing emissions will be confronted more and more frequently.

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