The good news is that there's more time to enjoy the skyline.

Photographer: Henry Georgi/Getty Images

Toronto's Traffic Validates Carbon Tax Opponents

Christopher Flavelle writes editorials on health care, energy and environment for Bloomberg View. He was a senior policy analyst for Bloomberg Government and chief speechwriter for the leader of the Liberal Party of Canada.
Read More.
a | A

For opponents of a carbon tax, Toronto -- and more specifically, the 2,700 square miles of fast-growing suburbs that surround the city -- offers plenty of ammunition.

I grew up in Toronto, and returned last week to visit family. These days, that means lots of driving: Surging housing costs have pushed the city's population growth into what is known as the Greater Toronto Area, which stretches about 50 miles west, east and north across what used to be farmland and forest.

Climate Change

If you're a homeowner, or aspire to be one, the sprawl is a boon. The median price in November for a house in Orangeville, a 50-mile drive northwest of Toronto, was $395,000 -- a little more than half the $698,000 cost of the median house within the city boundaries. Partly as a result, Toronto's suburbs are projected to grow in population three to five times faster than the city itself from 2012 to 2021. 

If you're among those who fret about the environment, that trend spells disaster. People who worked in the GTA had an average commute of 33 minutes in 2011, the longest in Canada. And that's unlikely to get better: Despite the GTA's impressive commuter-rail network, which has gotten $9 billion and 10 new stations over the past decade, 70 percent of commuters still got to work by car in 2011, essentially unchanged from five years earlier.

The urban spread means more greenhouse gas. Canada spewed more carbon per person in 2011 than any other major industrialized country after Australia and the U.S., as a culture of big homes and the highways that enable them took root. (Thanks, America.) Don't blame the cold; the average Swede accounts for about one-third as much carbon as his Canadian counterpart.

The stock answer to car-heavy residential and transportation patterns is to change consumers' behavior by sending a price signal -- for instance, with a carbon tax, which increases the cost of gas and electricity, making big houses and long commutes less attractive. If the revenue is returned to the public, say through rebates or tax cuts, there would be no cost, only benefits, for taxpayers in the aggregate.

At least, that's the argument that proponents have made. In 2008, the Liberal Party of Canada -- not usually a bastion of radical ideas -- included a carbon tax as a centerpiece of its platform. (Disclosure: I once worked as a speechwriter for Stephane Dion, the party's leader at the time.) The Liberals lost, though Prime Minister Stephen Harper, a Conservative, hinted this month that he might be open to a carbon tax.

But the lesson from Toronto is that politicians' reluctance isn't just a question of ideology. It also acknowledges that although a revenue-neutral carbon tax would leave the total tax burden unchanged, its cost would be disproportionately borne by specific groups of people, especially those who have settled in the exurbs in recent years.

Compare the hypothetical impact of the tax on two types of young couples. The first hasn't bought a house, and might respond to a carbon tax by choosing a small property closer to the city center. That's how the tax is supposed to work, by encouraging greener behavior.

But consider the effect on a couple that has already bought a large home in the suburbs, 45 minutes' drive from their jobs in the city and with no easy access to public transit. It's too late for a carbon tax to influence their decision, but a combination of higher gas and higher power bills means they would certainly be hurt.

Not only will their monthly expenses increase, but any significant shift in energy costs would probably reduce the value of their home. And because this is Canada, that couple is probably heavily mortgaged, leaving them especially vulnerable to any change in home prices.

Advocates of a carbon tax -- and I count myself in that group -- need to think about that second couple just as much as they think about the first, and maybe more. Toronto is growing faster than most urban areas, but similar patterns have been at work in many U.S. cities. What happens to those who can't respond to new price signals, because their behavior reflects decisions that can't easily be reversed?

This doesn't mean a carbon tax is unworkable; it could be phased in gradually, with plenty of warning, and some of the revenue could be used to expand mass transit. The cost could also be offset by using some of the revenue to assist those most affected with greater subsidies for making their homes more energy efficient, or for buying low-emission cars. But such solutions are expensive, and as the Liberals learned in 2008, using the money from a carbon tax to pay for new spending is a quick way to erode support.

Those solutions are also incomplete: Significant cuts to emissions will mean getting more people to forgo the suburban lifestyle, not just making the suburbs greener. For those who have already built their lives (and their finances) around suburban life, a carbon tax raises questions of fairness, and those questions might not have altogether satisfying answers.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Christopher Flavelle at cflavelle@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net