Kaija Belfry Munroe - Business in a Changing Climate: Explaining Industry Support for Carbon Pricing

Explaining Industry Support for Carbon Pricing

Kaija Belfry Munroe

University of Toronto Press

Toronto Buffalo London

University of Toronto Press 2016
Toronto Buffalo London
www.utppublishing.com
Printed in the U.S.A.

ISBN 978-1-4875-0055-9

Printed on acid-free, 100% post-consumer recycled paper with vegetable-based inks.

Library and Archives Canada Cataloguing in Publication

Munroe, Kaija Belfry, 1981, author
Business in a changing climate : explaining industry support for carbon pricing / Kaija Belfry Munroe.

Includes bibliographical references.
ISBN 978-1-4875-0055-9 (cloth)

1. Carbon taxes Economic aspects. 2. Climatic changes Government policy. 3. Industries Environmental aspects. I. Title.

HD2753.A3M85 2016 363.738'746 C2016-905831-X

University of Toronto Press acknowledges the financial assistance to its publishing program of the Canada Council for the Arts and the Ontario Arts Council, an agency of the Government of Ontario.

It was a rather unexpected response. On 7 January 2008, Canadas National Round Table on the Environment and the Economy (NRTEE) released a report on climate change calling for government to implement an economy-wide emission price policy (). As the politically indecorous term carbon tax began appearing in the headlines of all of Canadas major news outlets, the political class both government and opposition responded with derision. In this context, swift condemnation from industry could only be expected. After all, a carbon price was anticipated to increase the costs of production in Canada. Yet despite the business communitys history of campaigning against climate change action, particularly the Kyoto Protocol, no such condemnation came from Canadas major business associations or large firms.

On the contrary, the Canadian Council of Chief Executives (CCCE) the voice of big business in Canada was unambiguous in its support, calling the report a sound and comprehensive policy blueprint (). This left the federal government to oppose its own advisory board and the public to wonder what was going on in climate politics in Canada.

Why would two of Canadas largest business associations come out in favour of a policy instrument whose purpose is to increase their members costs? Did other associations and firms agree with this stance, or are these groups an anomaly among economic actors in Canada? Why and when did these associations shift their climate change policy preference away from the voluntary programs and subsidies to which they had been committed for over a decade? How can one explain this puzzling turn of events in Canadian environmental politics?

These questions are significant, as they point to an under-researched area of Canadian and, indeed, global political economy: the public policy preferences of major firms and business associations. Scholars in Canada and elsewhere have argued that big business has considerable, if variable, influence over public policy outcomes (see, for instance, ). If this is indeed so, then what business wants, and why, has a significant impact on Canadian politics. In this case, however, not only is it uncertain what climate change policy instruments the Canadian business community supports; it remains unclear how and why it developed these preferences in the first place. The easiest explanation that business groups look to the cost of compliance in determining their climate change policy instrument preferences does not appear to provide an explanation of the case.

Upon further examination, the puzzle only deepens. In 2008 I conducted interviews on business preferences for climate change policy instruments with executives at all of Canadas heavy-emitting industry associations and a selection of large firms from the cement, forestry, and oil and gas sectors. CAPPs and CCCEs support for carbon pricing did not represent an anomaly in the business community in 2008 and 2009. Of the thirty business associations and large firms that participated in the survey, twenty-seven declared strong support for carbon pricing.

There was, however, variation in the type of carbon price they supported. Four associations and seven firms stated an explicit preference for cap-and-trade, and although only CAPP preferred a modified form of carbon taxation, four firms articulated a clear preference for that instrument. Moreover, of the five firms and seven associations that had no official preference for a particular type of carbon price, representatives at four associations and one firm articulated unofficial or personal support for taxation. This is interesting, as it suggests greater support for taxation among industry executives than would otherwise be apparent. Finally, although there was overwhelming support for carbon pricing in 200809, it seems that preference was relatively new. Representatives of firms and associations traced their preferences back to 200607, when the Canadian business community appears to have overwhelmingly shifted its support away from voluntary agreements and subsidies to carbon pricing. lists the preferences of participating firms and associations in the study.

Table 1. Preferences for Carbon Pricing, Selected Industry Associations and Firms, Canada, 2009