The carbon tax has its critics — do any of them have better ideas?

20 March 2024
The carbon tax has its critics — do any of them have better ideas?

What would Canada be doing to reduce its carbon emissions if Pierre Poilievre and the premiers had their way?

The Conservative leader has vowed loudly and often that he would repeal the federal carbon tax — though he has been evasive when asked whether he also would eliminate the federally mandated carbon price for industrial emitters. He is now joined by seven premiers who would like to see the carbon tax either frozen at its current rate or scrapped entirely.

Not to be outdone, Ontario Liberal Leader Bonnie Crombie now says she wouldn’t implement a provincial carbon tax, while New Brunswick Liberal Leader Susan Holt says she opposes increasing the federal tax. That at least suggests federal Liberals can’t expect much support from those provinces if Crombie and Holt win power.

Ontario Liberal Leader Bonnie Crombie says a government led by her would not introduce a carbon tax. (Patrick Morrell/CBC News)
It’s obviously telling that so many political leaders have calculated they’re now better off taking a position against the carbon tax. The sheer extent of that opposition does not bode well for Justin Trudeau’s Liberal government.

But opposing the federal carbon tax is also a relatively easy thing to do — particularly when you’re not responsible for explaining how Canada will do its part to reduce global greenhouse gas emissions.

The varying ambitions of the provinces

Canada currently is committed to reducing its greenhouse gas emissions by between 40 and 45 per cent below 2005 levels by 2030. If all planned policies are implemented, Canada could be in sight of reaching that target.

But that national target obscures significant disparities between provinces.

Important actions at the provincial level in years past — British Columbia’s adoption of a carbon tax in 2008, Quebec’s move to a cap-and-trade system in 2013, the phaseout of coal-fired electricity generation in Ontario and Alberta — have helped to stabilize emissions in Canada. But an analysis published by the Canadian Climate Institute last fall concluded that “if you add up [all of the provinces and territories’] formal emissions reduction targets, they amount to less than half the national target.”

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Several provinces — including British Columbia and Quebec — have targets that meet or exceed the federal goal. Five provinces have written their targets into law. But three provinces — Alberta, Saskatchewan and Manitoba, which together account for 51 per cent of Canada’s total emissions — don’t have overall targets. After coming to office in 2018, the Ontario government weakened its target and is now aiming to reduce its emissions by just 30 per cent.

Such large differences complicate the argument that the federal government should defer to provincial governments on climate policy. But because climate policy is viewed largely as a federal issue in Canada, provincial politicians can point in Ottawa’s direction whenever they want to assign blame or responsibility elsewhere.

The carbon tax in a vacuum

The Liberals may have undermined their own arguments for the carbon tax when they granted an exemption for home heating oil. And if the carbon tax eventually dies, the post-mortem inevitably will focus on whether the policy was fatally wounded by poor communication.

But the debate over the carbon tax continues to be conducted in a vacuum. If the carbon tax disappeared tomorrow, it’s not clear what, if anything, would replace it. It’s also not clear how that replacement might affect household budgets, the national economy and Canada’s greenhouse gas emissions.

While the Liberals tend to focus on reporting by the parliamentary budget officer that indicated the vast majority of households receive more from the rebate than they pay in additional costs created by the carbon tax, the Conservatives prefer to focus on a PBO report that includes the larger economic costs of putting a price on carbon. When those costs are included, the carbon tax appears not to fare as well.

Parliamentary Budget Officer Yves Giroux: “Doing nothing would also have costs.” (Adrian Wyld/The Canadian Press)
But the PBO’s economic analysis is another casualty of the political vacuum in which the carbon tax is being debated. In addition to not considering the economic benefits of reducing emissions, the PBO does not measure the carbon tax against any other policy.

“The PBO compares costs relative to a world in which Canada simply ignores its emissions — and faces no consequences. Obviously, that world does not exist,” the Climate Institute’s Dale Beugin and Rick Smith wrote in 2023.

Even the parliamentary budget officer himself has lamented how his office’s economic analysis has come to be used.

“Anything we do with respect to addressing or trying to curb climate change will have costs,” Yves Giroux said last year. “Doing nothing would also have costs.”

Doing something different, or doing less?

As recently as three years ago, Conservatives were running on a platform that said putting a price on emissions was the most cost-effective way to reduce emissions. But Poilievre has returned the party to its previous position of simply opposing the federal carbon tax — while also rejecting the government’s clean fuel regulations.

As loudly as Poilievre has opposed the “carbon tax” — technically, a fuel levy that applies to consumers — he has not yet said whether he also would repeal the carbon price that is paid by industry. The Conservative leader has said simply that he would subsidize clean energy and emissions-reducing technology, while making it easier for such projects to get regulatory approval.

But it remains unclear exactly what a Conservative government would do — or not do — to combat climate change, or how it would differ from what the Liberal government is already doing (federal subsidies for carbon capture already exist, for instance).

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As a result, it’s not possible to know what a Conservative government’s climate agenda would cost, or by how much it would reduce Canada’s emissions. If Conservatives have a plan that would achieve the same level of emissions reduction at a lower cost, they haven’t offered it up yet.

The only thing really standing in the way of a fuller debate on climate policy in Canada is political convenience — opposition parties like to withhold their own proposals until an election has been called.

In the meantime, it’s entirely fair to question the merits and practicalities of the Liberal government’s carbon-pricing policies. Every policy involves trade-offs and serious study of what the government has done might raise real questions about its implementation and design.

But it’s equally fair to ask whether the carbon tax’s critics are proposing to do something different to combat climate change — or something less.

Source: cbc

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