Syncrude oil sands extraction facility near the city of Fort McMurray, Alta., on June 1, 2014.Jason Franson/The Canadian Press
Canada’s largest business group endorsed the use of carbon taxes as governments pursue climate-change policy, but argued Thursday that governments should rebate any revenues to taxpayers and cut other business burdens to protect the country’s competitiveness.
“Carbon pricing is generally the best way to reduce greenhouse gas emissions at lowest costs,” the Canadian Chamber of Commerce said in a report. It urged Ottawa to work with provinces to implement a carbon tax as “the main measure” to meet Canada’s commitment to lower emissions by 30 per cent from 2005 levels by 2030.
Its report comes as conservative politicians across the country campaign against carbon taxes, including the federal government’s plan to impose a broad-based levy in provinces that do not adopt either a direct tax or a cap-and-trade system. Ontario Premier Doug Ford cancelled the province’s cap-and-trade program after taking office in June, while Alberta’s United Conservative Party Leader Jason Kenney vows to scrap that province’s carbon tax should he win the election scheduled for May.
The critics, including federal Conservative Party Leader Andrew Scheer, argue the carbon tax imposes an undue burden on consumers and business, kills jobs and does not work to reduce emissions.
However, the Chamber of Commerce report concludes the world is on an irreversible path to a lower-carbon economy and that Canada needs to adopt policies that will make it an economic and environmental leader, including carbon prices, flexible regulations and efforts to sell lower-carbon commodities and clean technology to the world.
“We need a consistent carbon price, and we should be doing it in a way that coincides with the reductions of other, duplicative regulations to ensure the competitiveness of Canadian business,” Aaron Henry, the chamber’s director of natural resource and environmental policy, said in an interview on Thursday. Mr. Henry was a co-author of the report, which was financed in part by three of the country’s largest energy companies, Suncor Energy Corp., Enbridge Inc. and TransCanada Corp.
He said evidence indicates that a broad-based carbon tax does work to encourage consumers and businesses to reduce their energy use and switch to lower-emissions sources of energy. However, he did not comment on what level of tax would be needed to meet Ottawa’s emissions target, arguing the best strategy includes some mix of pricing, regulation and some form of credit for financing international emissions reductions.
At home, the Liberal government is facing a backlash against its climate policy, as Mr. Scheer vows to kill the carbon tax and three provinces – Ontario, Saskatchewan and New Brunswick – pursue court challenges to the federal plan to impose a levy in their jurisdictions. Starting on April 1, Ottawa will levy a broad-based tax of $20 a tonne in those three provinces, plus Manitoba, while other provinces will have their own system. The federal plan, which increases the tax to $50 a tonne in 2022, will rebate revenue to households in the provinces in which it was raised.
For large industrial facilities, Ottawa will impose the tax on a small percentage of their emissions – the exact amount depending on their efficiency compared with industry averages – to encourage GHG reductions while protecting their competitiveness. The Conservative opposition argues that approach amounts to a pass for large polluters, but the Chamber of Commerce endorsed it, arguing companies that use a lot of energy in their processes and are exposed to international competition need the protection, or else both the jobs and the carbon emissions will simply move elsewhere.
The chamber’s endorsement of carbon taxes stands in sharp contrast to the opposition of the Canadian Federation of Independent Businesses, a smaller organization that claims 111,000 small-business members. CFIB president Dan Kelly said the majority of members oppose any carbon tax, while an even greater number dislike the federal Liberal approach, which rebates tax revenue paid by businesses to households.