The federal carbon tax is going up on Monday across most of the country – adding 3.3 cents to a levy that will now be 17.6 cents on a litre of gasoline.
Everyone knows what Conservative Leader Pierre Poilievre thinks: the fuel charge is a ruinous public policy and he would rescind it if his party wins office.
A lot of Canadians agree. An Angus Reid poll released this week found that 40 per cent want the tax abolished and another 11 per cent want it lowered; meanwhile, 27 per cent support keeping it where it is; and 22 per cent want it increased, as planned.
What’s certain is the federal fuel charge, applied in most provinces on fossil fuels such as gasoline and natural gas for home heating, is in jeopardy, given the Conservatives’ lead in the polls. The increase in the tax, despite quarterly payments to households, has for some become intertwined with the higher cost of living after several years of inflation.
As support for the consumer carbon tax teetered last fall, this space argued for the importance of durable climate policies, those that withstand changes in popular sentiment and changes in government. The main focus has to be on what Canada, and the world, is trying to achieve: it’s about slashing greenhouse gas emissions, rather than ensuring the survival of a tax loved by economists and loathed by others.
While Mr. Poilievre has been vocal about what he would get rid of, he has been so far less forthcoming with details about how he would fill the gap left by the absence of a price on fossil fuels used by Canadians every day. On Tuesday, in a response to premiers calling for a carbon tax reversal, Prime Minister Justin Trudeau noted the absence of other ideas and said Ottawa remains “open to proposals for credible systems.” The potential shift in power after the next federal election, however, has climate policy experts hustling to demonstrate that the consumer carbon tax isn’t the end-all, be-all of climate policy. It is an argument this space has made before: decarbonization isn’t only one policy. Again, it’s about cutting emissions, not having a carbon tax.
A contradiction has emerged. The consumer carbon tax gets more of the spotlight than it merits. A new report from the Canadian Climate Institute, a policy advocacy group, makes that clear. In its analysis, the federal fuel charge through to 2030 would be responsible for up to 14 per cent of reduced emissions – and as little as 8 per cent.
Even with a rising carbon tax, not everyone is going to go rush out to buy an EV. There will be a lot of cars running on fossil fuels on the road for some years to come. The fuel charge on which Mr. Poilievre has staked so much of his political capital is only a part of the climate picture.
Where the Climate Institute sees the biggest emission reductions in the 2020s is from the industrial carbon tax, estimating it could account for upward of half of all lowered emissions. The institute advocates for, as this space has, tightening the rules around industrial carbon pricing.
How Mr. Poilievre would approach this side of the carbon tax equation isn’t certain but other conservatives, such as premiers in Alberta, Saskatchewan and Ontario, have said little about the levy on industry, which also increases annually, and have their own provincial rules in place, quietly ticking away and unnoticed by most people.
Other important measures, with potentially greater impact in the 2020s than the consumer carbon tax, are regulations on methane emissions in the oil industry, already a success story, and the proposed oil and gas emissions cap. But while no single policy is make-or-break, the Climate Institute is definitive about the need to push forward: “backtracking on policies that are making an impact or failing to implement planned policies without credible alternatives will set back Canada’s emission reduction progress.”
Beyond the 2030 marker, the key policy is clean electricity, which underpins decarbonization across the economy, including the charging of electric vehicles. The federal Liberals last summer published draft regulations that aim to cut most emissions from power generation by 2035. The Liberals in February released wide-ranging revisions and analysts suggest that Ottawa appears to have heard criticisms of the initial draft and answered them for provinces such as Saskatchewan that rely on fossil fuels for power generation.
If the Conservatives kill the carbon tax, it does not necessarily mean the collapse of Canada’s climate ambitions. But there has to be serious thinking on what will fill the gap.