Canada’s heated political conflict over carbon pricing to continue into 2024 – National | Globalnews.ca

The price Canada pays for pollution is supposed to help combat global warming, but as its fifth anniversary approaches, nothing in Canadian politics is hotter.

Conservative Leader Pierre Poilievre has so successfully convinced Canadians that carbon pricing is to blame for inflation that he even earned grudging respect for his “cut taxes” campaign from Prime Minister Justin Trudeau.

Of course, Trudeau disagrees with Poilievre’s sentiment.

But he has acknowledged that the Conservative leader’s message is working in an atmosphere where the cost of living dominates discussion at most tables, as it has for months, if not years.

Trudeau was even convinced to change his signature climate policy in October, eliminating it from heating oil for three years after relentless pressure from his Atlantic caucus and a plummet in polling support on the East Coast.

There are some arguments for the move. Heating oil costs four times as much as natural gas, so while the carbon price was designed to create more reasons to switch to greener fuels, the incentive was already there.

But the reaction was immediate. Premiers in other provinces immediately demanded the same treatment for natural gas, which is more important as a heating source outside of Atlantic Canada.

Saskatchewan Premier Scott Moe is pledging to simply stop charging carbon pricing for the federal government in January.

The new premier of the Northwest Territories has demanded a complete exemption from the carbon price for his communities, pointing out that the fuel has been so expensive in the North for so long that if there were alternatives, people would have already made the switch.

And Ontario First Nations sued, arguing they are being left out of the carbon price rebate program because people only get it if they file federal income taxes. Many people who work on reservations don’t do it.

Meanwhile, a conservative private member’s bill seeking an exemption to carbon pricing on natural gas and propane used on farms came to the fore, as Poilievre made its passage a priority.

Bill C-234 passed the Senate in mid-December with multiple amendments requiring it to return to the House of Commons for another vote.

The amendments now limit that bill to temporarily exempting propane used to dry grain. If it passes with the support of the Conservatives, the NDP and the Bloc Quebecois, who voted in favor of the bill the first time, it will mean another exemption.

All this makes it clear that the conflict over the carbon price will continue well into 2024.

Trudeau is adamant that he will not open the door to more exemptions.

The Liberals are willing to work with First Nations to ensure the reimbursement system works best for them, or discuss possible adjustments with the Northwest Territories. But the prime minister said there would be no more exceptions.

Michael Bernstein, executive director of the advocacy group Clean Prosperity, said he believes in Trudeau.

“I don’t anticipate that the current federal government is going to dismantle or … further exempt the program that they have in place,” Bernstein said.

If Poilievre wins the next election, the consumer side of the carbon price will surely disappear as quickly as he can put pen to paper.

“It’s very clear where Mr. Poilievre stands on this issue,” Bernstein said.

But carbon pricing is a complicated policy that’s not just a fuel tax at the gas pump or on home heating bills.

Poilievre’s “reduce taxes” mantra has not been clear about exactly what part of the plan he would eliminate. He has expressed his willingness to maintain some form of industrial carbon pricing.

The consumer carbon price, or what Ottawa calls the fuel charge, applies to the fossil fuels people buy to power their cars, heat their homes or keep the lights on.

Large industrial emitters – more than 560 organizations and companies including tar sands, mines, automakers and natural gas power plants – do not pay the carbon price for the fuel they buy to operate. Instead, they pay it for a portion of what they actually emit.

The system is similar to one that former Conservative Prime Minister Stephen Harper planned but did not implement in 2007.

In both versions, companies that emit more than a set limit pay a price.

Most economists agree that carbon pricing is the most effective way to reduce emissions, and business leaders generally prefer it.

“From an economist’s point of view, it is simply the most efficient way to reduce emissions with the least government interference, mandates or regulations,” said Heather Exner-Pirot, special adviser on energy policy at the Business Council of Canada.

“It just focuses on emissions. And if you can reduce emissions, you will pay a lower price. So it’s very simple. He doesn’t choose favorites, he doesn’t choose sectors. Let the market do all the work.”

The Liberals have carbon regulations and pricing, and sometimes those policies compete with each other.

Regulations are more prescriptive and typically more expensive to implement, Exner-Pirot said, and companies would generally prefer a carbon-only price.

Climate change has its own high price tag, but any policy to address it will also come at a cost to businesses and families.

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Harper himself acknowledged this in 2007, when he told the Toronto Star in an interview: “You can’t reduce greenhouse gases, you can’t impose them, without some short-term economic cost.”

Currently, consumers pay about 14 carbon cents for every liter of gasoline and 12 cents for every cubic meter of natural gas. They receive the money through a rebate the Liberals call the “climate action incentive.”

Ninety percent of the revenue from carbon pricing returns to households this way, with the other 10 percent going to climate grant programs for small businesses and government organizations like schools and hospitals.

The rebates are intended to prevent most families from losing money from carbon pricing, while leaving an incentive to save more by reducing fossil fuel consumption. People get the same amount no matter how much fuel they use.

The Parliamentary Budget Office says that when the carbon price reaches $170 per tonne in 2030, the average Canadian household will get $388 more from the rebate than they pay in the carbon price. Lower-income households that pay less for fuel will benefit even more.

Much of the burden will fall on small businesses, which pay the carbon price but do not receive rebates, although they can apply for grants to help reduce emissions.

The Canadian Federation of Independent Business estimated in March that small businesses pay almost half of the total revenue collected from the carbon price, most of which goes back to consumers.

Getting rid of carbon pricing would leave most families with less money and could have major international implications.

Europe is likely to begin imposing border adjustments or import taxes on goods from countries that do not have a carbon price floor.

“This has to be a consideration,” Bernstein said.

“For Canada, maintaining the international competitiveness of our exports may depend in part on whether we have an effective carbon pricing program.”

But he acknowledged that that is a difficult sell at home.

A Leger poll for The Canadian Press in September found that while nearly three in four respondents were anxious about climate change, only two in five wanted to change their behavior if it cost something.

Support tends to be higher when Canadians are asked more specific questions explaining the carbon rebate system, Bernstein said, adding that the federal Liberals have been terrible at communicating it.

At first, the confusing-sounding “climate action incentive” was initially included as a line item on tax returns. It is now presented as a quarterly direct payment, similar to those received by families of young children, seniors and people with disabilities. But many still don’t understand what it is.

Exner-Pirot said the constant political battle over whether the carbon price will remain in place is damaging because it reduces predictability.

But even if voters elect a leader who would dismantle the system, companies will continue with their own climate plans, he said, although timelines could change if carbon prices or regulations disappear.

“They have committed in their business plans to their shareholders that they will have a climate policy,” he said, regardless of what the Conservatives do or don’t do.

“But obviously they will do it in a way that works for their businesses and keeps them competitive and profitable.”