Photo By: Markus Spiske from Unsplash

If you are at all engaged with the issue of climate change, you’ve likely heard some things coming out of the 2021 United Nations Climate Change Conference, known as COP26.

While most of it is smoke and mirrors, as well as a great chance for the fossil fuel industry to aggressively lobby United Nations member states, there were a few interesting soundbites to come out of it, including one from none other than Justin Trudeau.

Now entering his third term, and not growing any more popular with Canadians, Trudeau seems to be on a mission to secure himself a legacy. Regardless of your thoughts on his performance, it certainly marked some unique shifts from previous prime ministers that should land him a place in the history books. Whether it was forming the first ever gender balanced cabinet, or making Canada the second country in the world to legalize marijuana, or even being the first prime minister to break federal ethics laws, Trudeau Jr. is sure to be remembered for his time as prime minister.

The issue of climate change, particularly with the introduction of the federal carbon tax, is another area where Trudeau left his mark. While I personally have many issues with his government’s carbon pricing structure, it’s fair to say that a federal carbon tax is a step in the right direction when it comes to tackling climate change. It provides a massive national structure that future governments will (hopefully) build upon and continue to improve as years go on.

Now, with all of that out of the way, back to COP26; the reason I bring up carbon pricing is because Trudeau’s big moment at the summit was directly related to his experience in this area. More specifically, he called for the creation of an international price on carbon, the first I’ve heard of any such proposal from a world leader.

While he offered no specifics and certainly there is no chance that an international carbon price sees the light of day any time soon, having conversations about potential policy ideas like these are important. As even just recent history shows, starting the debate is how you build credibility and support for new and bold ideas. 

Take universal basic income for example, the first I started hearing about it on any type of national scale was in 2016/2017, and it was promptly laughed out of the room. Now, there have been basic income pilot projects across the globe, and even here in Canada we experimented with the idea (albeit in a watered-down, means-tested format) with the Canada Emergency Response Benefit. 

So while talk is generally cheap, I do have to give Trudeau credit here. Starting the conversation on international carbon pricing is important and a valuable effort (if only a minimal one). 

It also gets to the heart of the issue with any type of national regulations in our highly-globalized world today; it prompts a race to the bottom. What I mean by that is, if “Multinational Company A” is looking to do business in the United States or Canada, let’s say hypothetically that all costs are equal. However, this company is going to have to pay considerably more under the Canadian carbon pricing system. So naturally, the company is more likely to choose to set up shop in America.

So in practice, what this means (and what we see play out across the globe) is that any efforts to regulate or tax the behaviours of multinational corporations or incredibly wealthy people have to be reigned in dramatically, so as to avoid causing that person or company to leave your country or your province or your city to go to one with lower taxes, fewer regulations, etc. 

This is what creates the race to the bottom, wherein we see governments across the globe eager to provide the path of least resistance for companies and wealthy individuals so as to entice them to do business there instead of somewhere else. While this is great news for super wealthy companies and individuals, it’s not so great for the world’s poor, for the environment, and so on, as any redistributive measures meant to address wealth inequality, climate change, gender equality, wildlife protection, Indigenous rights, and so much more, get pushed to the side in order to meet the needs of highest (or in this case, the lowest) bidders.

Conceptually, the way around this is simple: internationally agreed-upon minimum regulatory standards. Recently, United States Treasury Secretary Janet Yellen spearheaded an effort to set a minimum international corporate tax rate of 15 per cent, and did so successfully. That is a great example of what could possibly be done in the fight against climate change as well.

As with everything the devil is in the details, but when dealing purely in abstraction, it’s clear to see that setting an international carbon price is a good thing for government revenues, for our communities, and for our future on this planet. Obviously, specifics are important (though how specific can you be with an international agreement?), but the fact that this conversation has at least begun publicly between our world leaders is a major first step. 

While I wouldn’t expect to see any news of an international price on carbon being set anytime soon, at least the ball is rolling. When it comes to the climate crisis, one thing’s for sure; we don’t have much time. We need drastic action today.