Canada’s [provincial] premiers have been riling up Canadians lately about the wrong climate tax. Stirring up anger over a tax on carbon pollution, a tax whose revenue is largely rebated back to Canadians, while the cost of climate inaction rises dramatically is something else, particularly when those premiers offer nothing in terms of policy or legislation to rapidly decarbonize their own provinces, and while the provinces they purport to govern deal with the costs of climate inaction: drought, deluge, crop failures and increasing property insurance costs. That is what is really taxing Canadians – let’s call it the “climate inaction” tax.
Think of the climate inaction tax as the difference between Canada’s existing emission reduction policies and the rapid decarbonization that Canada agreed to when it ratified the Paris Agreement. To keep below the “well under two degrees” of heating guardrail in that agreement, Canada needed to do its part to halve emissions by 2030. We haven’t, but at least the federal government has emission reduction policies along with its carbon price backstop to get the emissions trajectory headed in the right direction. To be fair, the inadequacy of present policies is indicative of what is politically possible. Nothing highlights that more than the willingness of premiers to demonize a price on carbon pollution, particularly when it was the preferred emission reduction policy of their political brethren not long ago.
Climate inaction is taxing Canadians in a number of ways. Obviously, increasing heat is negatively impacting production of grains and oil seeds, livestock and the everyday luxuries of coffee, tea and chocolate. A recent paper in [the scientific journal] Nature indicates that temperature increases projected for 2035 “implies upward pressure on headline inflation of 0.3-1.3 percentage points per year on average globally.”
Considering that the Bank of Canada aims to keep inflation at two per cent, the rising cost of food will be a significant headwind.
Financial services are where climate inaction is going to profoundly tax Canadians. A hotter atmosphere holds more moisture. Increasing precipitation is making flooding more common in Quebec. Desjardins Credit Union recently decided that it will no longer mortgage flood-prone properties, and other mortgage lenders across Canada will inevitably follow.
Canadians whose homes aren’t on flood plains aren’t high and dry though. The cost of insuring property is rising with the increasing strength of storms. The insurance industry used to consider plain old convective thunderstorms as “secondary perils.” Ernst Rauch, chief climate scientist at Munich Re, the world’s biggest reinsurer, said in a recent article in the Financial Times: “We no longer can call such events secondary, they have reached in the aggregate the order of magnitude of a major hurricane or tropical cyclone or winter storm.” The chief executive of Swiss Re, another of the world’s biggest reinsurers, remarked in a recent speech that rising insurance premiums were a kind of carbon price.
Although disguised as inflation, the climate inaction tax is cutting into Canadians’ household budgets. That premiers are out inciting anger and confusion over one of the few effective policies Canada has for reducing emissions suggests they either don’t understand the economic peril or are still denying the now-observable impacts that climate science foretold. Homes cannot be mortgaged if insurance is not available or affordable. Nothing sends economies into crisis faster than a sudden collapse in the value of housing, and that is the direction Canada’s premiers are taking us.
Andrew Henry is a resident of Chelsea.