Prime Minister Trudeau has just changed his mind again on climate change. After admitting at the recent G20 meetings in China that Canada is "not ready" to ratify the Paris Agreement, Trudeau has now decided to ratify it before any agreement on carbon pricing has been reached with the provinces.
Worse, the Minister of Environment and Climate Change, Catherine McKenna, has said that Canada would continue to use the same unambitious mitigation targets for Paris originated by the Harper Conservatives, and previously criticized by the Liberals!
Faced with resistance to carbon pricing from Saskatchewan (now joined by Nova Scotia), the federal government appears ready to "go it alone" on this issue, imposing a federal carbon tax, which in their view will act as a "floor price" for carbon.
This smells more and more like a Meech Lake-type strategy, dragging the provinces kicking and screaming into a one-size-fits-all agreement. A bad idea historically, and not the consensus-based approach the Liberals promised during their election campaign.
So why choose this fractious route, when additional time, effort and a bit of flexibility could produce consensus? There is really no pressure to ratify the Paris Agreement, though the Liberals probably want to be part of the Big Party when the magic minimum of ratifiers is reached (as it soon will be).
Ratification will go ahead with or without Canada, and so it is far more important in the long run to achieve a consensus on the means used to meet our Paris commitments, than to use ratification as a blunt tool to force agreement.
What's the best way to achieve a genuine national consensus? There are many options, but in my view the most effective approach would be the following:
1. Work with the provinces and territories to develop a more practical and more ambitious set of Nationally Determined Contributions -- the target documents produced by 195 countries which are basis of the Paris Agreement. The NDC submitted by the Conservatives in 2015 has been widely criticized as inadequate, and Canada has the right to revise it under the Paris Agreement.
They should do this forthwith, using the re-opening of the NDC as a means of getting the provinces back to the table. Ideally, the revised NDC would include a formula stipulating proportionality in the provincial and territorial contributions -- in short, guaranteeing that they contribute to the goals on a fair and equitable basis, by whatever method is most suitable.
2. With this in hand, negotiate a phased and flexible approach to carbon pricing, using a mixture of methods including regulations, cap and trade and taxes -- a truly national carbon mitigation program. Allow those provinces that have already committed to carbon pricing -- B.C., Alberta, Ontario and Quebec -- to institute their current programs without federal interference and with no "top up" tax. The other provinces (and territories) would commit to mitigation goals consistent with the federal goal, but would be allowed to use different methods and a realistic schedule to achieve them.
A national "accounting system" would be set up, monitoring the annual contributions of the provinces in meeting the federal goals, with provision for voluntary adjustments as needed (higher taxes, lower caps, more stringent regulation). To ensure that there is a realistic chance of meeting the national targets, these "adjustments" could include penalties administered by the federal government for provinces and territories that do not meet their own interim targets.
3. Offer the "carrot" of carbon offsets as an alternative means of achieving both the national and provincial goals. Offsets are the surplus credits (measured in tonnes of CO2 or its equivalent) achieved by participants in a regulatory or market-based system of carbon mitigation. The surplus results from the fact that some participants will emit less than the targets or caps imposed by the central authority.
The EU, for example, allowed participants in its cap-and-trade system to purchase offset credits to satisfy a set percentage of their reduction commitments. These offset credits could be obtained from other European companies or (on a limited basis) from external sources such as the Clean Development Mechanism (CDM).
In Canada, Alberta allowed some limited trading of offsets among participants in its Specified Gas Emitters Regulation (SGER) program; both Ontario and Quebec plan to do likewise as part of their participation in the cap-and-trade program of the Western Climate Initiative (WCI), and BC also permits limited offsets from select government mitigation projects.
How would this work? Let's say that Saskatchewan agrees to work with Canada to meet the NDC targets, but prefers to do so with its current system of targeted regulation rather than with carbon taxes or cap-and-trade. To ensure that this happens as planned, the agreement with the feds would stipulate that if Saskatchewan did not meet its proportional commitment to the NDC targets, it would have to use credits purchased from other provincial programs, or from the CDM and other credible international programs, or indeed from the WCI.
As long as these offsets meet the standard set out in Article 6 of the Paris Agreement -- that offsets must be additional to business-as-usual and have "real, measurable, and long-term benefits" -- they would allow Saskatchewan to meet its commitments without an imposed carbon tax, ensuring that the province shares the burdens set out in the NDC.
In the long run, the feds may be able to wrestle the provinces into a broad consensus on carbon pricing, but at what cost in economic and political terms? Clearly, a go-slow approach in which the provinces work together to set targets and then adopt a hybrid and varied approach to meeting these targets is more likely to produce a stable and uniquely Canadian solution to the climate change conundrum.
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