The Problem with Axe the Tax

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On September 12, 2024, in the midst of a hotly contest by-election in Montreal, national leader of the New Democratic Party (NDP) Jagmeet Singh stated, “We want to see an approach to fighting the climate crisis where it doesn’t put the burden on the backs of working people, where big polluters have to pay their fair share. And so we’ve been working on a plan, and we’ll be releasing our plan, our vision for how we can do that in a stronger way, in the coming months.” These comments are misguided and demonstrate a deep misunderstanding of who benefits from the carbon pricing program. Carbon rebates are actually a transfer of wealth downward and help to maintain a lower living wage in the country.

Singh coming out against the program was a move that many believe will be the death-knell to the carbon pricing program that was introduced by Canada’s governing Liberals in 2018. Provincial premiers have also opposed the program. Saskatchewan’s Scott Moe has stated that “farmers have already lowered their emissions.” Alberta’s Danielle Smith argued that industrial carbon pricing would be more effective, following a report from the Canadian Climate Institute. Nova Scotia’s Tim Houston pitched something that he felt was “better than carbon pricing.” Even fellow Liberal Andrew Furey of Newfoundland and Labrador asked for a premier’s meeting to discuss carbon pricing, ahead of a planned increase.

The notion that we can merely throw carbon pricing out and exchange it for another program at this point in our environmental history is a deeply misguided understanding of how much Canadians emissions need to be reduced in a very short time frame.

The notion that we can merely throw carbon pricing out and exchange it for another program at this point in our environmental history is a deeply misguided understanding of how much Canadians emissions need to be reduced in a very short time frame. Carbon pricing has been projected to remove only between nineteen and twenty-two million tonnes of emissions from the Canadian air by 2030. This is a small portion of the 512 MT that Canada is required to remove by 2030 under the Paris Climate Accord but it is necessary to do as much as possible, as quickly as possible. Canada is in no way on track to do its fair share to keep global warming to 1.5 degrees.

The withdrawal of support from the program comes after years of misinformation and targeting of the policy on the part of the Conservative Party of Canada (CPC). Conservative leader Pierre Poilievre has effectively branded carbon pricing as a big contributing factor to “Justinflation” that was actually caused by “pent-up demand following the easing of public health restrictions in early 2022.” The implication was that post-lockdown inflation was caused by Prime Minister Justin Trudeau. United States President Joe Biden suffered similar problems south of the border, even though economists have made it clear that this is misleading. Furthermore, Poilievre has provided no details on what his climate policy would be.

Former Liberal Minister of Environment and Climate Change Catherine McKenna has pointed to the conservative roots of carbon pricing. Former Progressive Conservative Prime Minister Brian Mulroney and British Columbia (BC) Premier Gordon Campbell established Canada’s first carbon pricing system in BC. Progressive Conservative Quebec Premier Jean Charest and Republican California Governor Arnold Schwarzenegger established a carbon market that faced public opposition but also facilitated growth in both economies. It is also noteworthy that in 2007 the conservative heartland of Alberta became the first Canadian province to legislate greenhouse gas reductions from large industrial emitters via a carbon levy. The resulting investment in low carbon technology helped to make Alberta one of the most competitive jurisdictions in the country, in transitioning to green energy.

The Honourable Jean Charest, Eric Newell, and Elizabeth May at the How to Sell Carbon Pricing to Canadians in Ottawa, ON: April, 2013. They are sitting on chairs in front of audience and all three are smiling
The Honourable Jean Charest, Eric Newell, and Elizabeth May at the How to Sell Carbon Pricing to Canadians in Ottawa, ON: April, 2013. “How to Sell Carbon Pricing to Canadians, 2013” by canada.2020 is licensed under CC BY-NC-ND 2.0.

In the 2015 federal election, Trudeau won on a platform of making carbon pricing a national policy. The program was legislated by the Liberal government in 2018. Trudeau was returned to power in 2019 with a minority government and achieved the same in the 2021 election. Then CPC leader Erin O’Toole proposed a conservative plan to replace Trudeau’s carbon pricing with a lower carbon levy of their own, which did not win the election for conservatives. The policy has been tested at the ballot box three times.

Tying carbon pricing to inflation and the current Prime Minister has been good politics for the CPC as they have massively risen in the polls but bad policy for many in the lowest income brackets. As the David Suzuki Foundation has stated: “Around 80 per cent of households get more back than they spend on the levy. Rural residents receive an additional 20 per cent rebate.” CBC reporter Andrew Chang has also effectively demonstrated that those on the lower end of the income spectrum consistently receive more rebates than they pay in carbon pricing. Furthermore, the program has added only .15 percent to Canadian inflation.

Tying carbon pricing to inflation and the current Prime Minister has been good politics for the CPC as they have massively risen in the polls but bad policy for many in the lowest income brackets.

The 2024 Living Wages for Newfoundland and Labrador, Nova Scotia, and Prince Edward Island report stated that “the Canada Carbon Rebate has a big impact on low-income households.” Depending on where a low-income family lives, they could receive $1400 a year from the program (p.26). The program is actually a transfer of wealth downward, which probably explains why conservatives are so opposed to it. This makes Singh’s comments about “carbon pricing putting the burden on the backs of working people” particularly misguided.

It has been effectively demonstrated by Oxfam that the vast majority of emissions are created at the top of the income scale and sixty-six percent of global emissions are created by the top one percent. Larger rebates and more money back for the working class are exactly what should be happening with an effective climate pricing policy. You would expect the NDP to support such a program. However, the details of the complex program have never been clear to Canadians, making it susceptible to misinformation campaigns. The CPC have taken pains to muddy those waters. Neither the Liberals nor the NDP have effectively defended the program.  

In 2021, Trudeau was invited to speak on carbon pricing at the Conference of the Parties (COP) 26 in Glasgow, Scotland. He called for a global price on pollution. At that time, Trudeau stated: “We know it, leaders know it, scientists know it and the private sector knows it: putting a price on pollution is the most efficient and powerful way to keep 1.5 alive.” COP was established in the early 1990s to help oversee the implementation of the United Nations Framework Convention on Climate Change and future climate agreements.

COP was established in the early 1990s to help oversee the implementation of the United Nations Framework Convention on Climate Change and future climate agreements.

Referring to carbon pricing at the same conference, the most senior European Union official and German politician Ursula von der Leyen stated: “It’s been proven — it helped us decouple growth from greenhouse gas emissions. So you can prosper while cutting emissions,” she said. Notably, reductions in emissions have occurred across the electricity industry in Europe, where carbon emissions have been down by approximately 45 per cent since the European cap-and-trade system was first implemented.

Admittedly, carbon pricing in Canada was introduced as a strategy for “clean growth,” growing the economy while addressing climate change. However, Economic Anthropologist Jason Hickel has argued, while appearing before the Dutch Parliament, that at existing rates of emissions reductions, the Netherlands alone would take 200 years to meet net zero and burn its fair share of the carbon budget seven times over. Hickel maintained that if all nations were to overshoot their carbon budget in this way, we would be headed for around four degrees of global warming. None of the G20 nations are achieving emissions reduction at a pace that is consistent with 1.5 degrees and more action is clearly needed. Carbon pricing is necessary but alone it is not sufficient.

In fairness to the Trudeau Liberals, they have implemented many other programs and rebates to address climate change in Canada, However, Canada’s efforts have fallen far short of the $780 billion Inflation Reduction Act in the United States.

Good public policy implemented in this decade is our last best chance to avoid the worst impacts of climate change.

Climate change is arguably the greatest threat to human civilization, at a time when there are many global threats. Good public policy implemented in this decade is our last best chance to avoid the worst impacts of climate change. This is not the time for seizing political advantage by attacking a program that has worked well in other jurisdictions. The threat of climate change clearly calls for serious policy and not politicking. We need politicians to stop polling and to start being leaders in providing the public with factual information. The last thing this moment calls for is destroying good public policy. That is especially true since carbon pricing alone is necessary but not nearly enough to save us.

Feature Image: Canada’s Prime Minister Justin Trudeau, second left, and Mark Carney take part in a panel discussion on carbon pricing at COP26 in Glasgow, Scotland on Tuesday, Nov. 2, 2021. “2021.11.02.” by hailey.sani is marked with Public Domain Mark 1.0.
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Lori Lee Oates

Teaching Assistant Professor at Memorial University of Newfoundland
Lori Lee is a Teaching Assistant Professor in the Department of Sociology at Memorial University of Newfoundland. Her Ph.D. is in global and imperial history from the University of Exeter, focusing on the global movement of ideas in the nineteenth century. Lori Lee's current research interests include the resource curse, and women and climate justice. At present, Lori Lee is working on her first monograph for SUNY Press and a special issue on Gender and Climate Justice for Atlantis: Critical Studies in Gender, Social Justice & Culture. She has been a contributor to the CBC, The Globe and Mail, Canada's National Observer, and The Hill Times. Lori Lee has advised national environmental groups on the political economy of climate change and a just transition off fossil fuels.

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