Steven Guilbeault rises during Question Period in the House of Commons on Parliament Hill, in Ottawa on June 17, 2022.PATRICK DOYLE/The Canadian Press
A grown-up conversation about the challenges of climate change would go something like this: Carbon taxes are costly, but are by far the most efficient, and fairest, way to wean the Canadian economy from its dependence on fossil fuels and to blunt this country’s contribution to global warming.
We are not having that conversation.
Instead, the federal Liberals continue to insinuate that, somehow, decarbonization will be painless – it will put money in your pocket! – based on a narrow view of the costs and benefits of federal carbon pricing. They doubled down on that claim on April 1 as the federal carbon price rose to $65 a tonne, equal to 14 cents on a litre of gasoline.
In return, the Conservatives have sought to exploit that hyperbole by playing up the costs of carbon pricing while ignoring the fact that any alternative, including doing nothing, will inevitably be more expensive.
What both parties share is an unswerving unwillingness to tell Canadians the obvious truth: Our free ride on carbon pollution has gone on far too long, and ending it will be costly.
Enter the Parliamentary Budget Officer, whose updated report last week on the cost of federal carbon pricing provided a welcome note of clarity to the debate over climate policy. According to the PBO’s analysis, the majority of households in most provinces (Nova Scotia is an exception) will receive more cash in quarterly rebates than they pay out directly and indirectly for the federal fuel charge, including the GST paid.
That is the measure that the Liberals lean on, heavily, when claiming that eight in 10 households are better off under federal carbon pricing. Those claims have grown more strained as the cost of living has soared. In December, the Liberals even proclaimed that carbon pricing, with quarterly payments, would make “life more affordable for Canadians.”
To be very generous, that is a carefully constructed statement. The whole point of decarbonization policy is to push structural changes in the economy to drastically reduce the use of fossil fuels. Once the cost of those changes is taken into account, the math shifts dramatically.
According to the PBO, a majority of households in all provinces subject to the federal fuel charge will be worse off financially, as the fuel charge increases through to fiscal 2030-31, because of lost jobs and foregone investment income. Only the poorest fifth of households will consistently be net beneficiaries, reflecting their lower energy consumption and the fact that they have less investment income at risk.
The PBO acknowledges that there may be long-term economic benefits from the green transition, but says those are unlikely to appear by 2030. Calculations from Clean Energy Canada back up the PBO’s view: the environmental think tank projects a bonanza of green jobs by 2050. But through to 2030, the economic upside is much more limited. The group calculates that the carbon tax and all other federal climate change measures will boost the size of the clean energy sector by just over $14-billion (in 2015 dollars) by 2030. That’s a rounding error in the country’s economy.
None of that is an argument for doing nothing; the social and financial costs from global warming and extreme climate events are already enormous, and climbing fast.
But equally, none of the above changes the fact that there is a substantial short-term economic cost that must be part of any moderately mature debate over climate policy.
The Liberals, however, continue to make valiant efforts to cheerlead past this fact, repeating the mantra of carbon pricing as a net benefit for most households. And over the weekend, Environment and Climate Change Minister Steven Guilbeault added tax-the-rich rhetoric to the mix. He asserted that carbon pricing functioned as a progressive tax, writing “the richest among us will be asked to pay more.”
True, higher-income households tend to pay more in fuel charges, but that is because they tend to have bigger carbon footprints. A well-to-do condo dweller without a car would likely be better off under carbon pricing than their poorer rural cousin with a pickup truck and an oil furnace. And the cost of living for that rural Canadian is set to climb sharply as the fuel charge rises – until it becomes painful enough to trade in the pickup and swap out the furnace.
That is the entire reason for a carbon tax: to create financial pain that pushes Canadians into a future (mostly) free of fossil fuels. Getting to that future will require sacrifice, and any pretense otherwise is just so much hot air.