‘There is an information gap out there’
Canada Climate Institute report says consumer levy will have less impact than industrial charge
OTTAWA It’s the climate policy at the heart of the political storm around carbon pricing. And now a new report concludes the muchcontested levy on consumer fuels — the target of Conservative Leader Pierre Poilievre’s “axe the tax” campaign — will have less of an impact on the reduction of greenhouse gases than other federal measures.
Published Thursday, the report from the Canadian Climate Institute uses emissions modelling to calculate that the federally-imposed “fuel charge” will be responsible for eight to 14 per cent of projected emissions reductions over the next six years.
That’s significantly less than the other prong of the federal carbon pricing scheme, which requires provinces to build their own or adopt an Ottawa-made pricing system for heavy industries like steel and cement manufacturing. According to Thursday’s report, industrial carbon pricing systems across Canada will account for 20 to 48 per cent of projected emissions reductions by 2030.
The finding adds fuel to the ongoing feud over Prime Minister Justin Trudeau’s carbon levy, as Poilievre’s Conservatives rail against the policy without clarifying whether they would keep or scrap the federally mandated industrial pricing scheme. On Thursday, the Tories called for an immediate “carbon tax election” and forced debate on a non-confidence motion in Trudeau’s minority government.
“There is a pretty heated debate right now. And it’s not our job to get into the politics there, but it is our job to bring some good numbers to bear,” said Dale Beugin, who coauthored the report.
“There is an information gap out there. There isn’t a good grounding in analytics about which of these policies matter most, which of them are going to emissions reductions,” he said.
As Beugin explained, the institute’s report found that industrial pricing systems “are the biggest thing” in terms of projected emissions reductions, despite how the consumer levy gets most of the political attention.
Environment Minister Steven Guilbeault hailed how the report’s conclusions showed carbon pricing is “the most important measure” in achieving Canada’s 2030 emissions target. The federal government itself has estimated up to one third of emissions reductions that year could come from carbon pricing. “Without it we don’t know how we could get there,” he said.
Guilbeault suggested it is still worth defending the carbon price’s consumer levy, arguing that it would be difficult to find any other single policy that could account for up to 14 per cent of Canada’s projected emissions reductions.
“It takes political courage,” he said. “That’s usually the case for difficult things.”
While Poilievre has been clear he wants to scrap the levy, he has never clarified whether he would also remove the federal industrial carbon pricing system.
Last week, in New Brunswick, Poilievre did not clearly state whether he would scrap the federal industrial pricing system, which he described as an “exemption” from the levy he is committed to repealing.
Asked about Poilievre’s statements, Guilbeault said the new report shows industrial pricing is the “most effective” policy on hand to reduce emissions, and accused the Conservatives of planning to weaken federal climate action if they win power.
“They will kill just about every measure that we have put in place,” he said.
Under the Liberal government’s law that created national carbon pricing, all provinces and territories must have a minimum level of carbon pricing for consumers and heavy industries. If provinces don’t create their own systems that meet federal standards, Ottawa imposes the federal “backstop” that consists of a fuel levy on consumer fuels and a pricing system for heavy industry.
Several provinces led by governments that denounce carbon pricing have still designed their own industrial systems, including Alberta, Saskatchewan and Ontario.
But these provinces refused to build their own consumer pricing systems, so the federal fuel levy applies in their jurisdictions.
This levy also includes quarterly rebates that are meant to offset the added costs of the levy, and will be worth $280 every three months for an Ontario family of four. Federal statistics show the next scheduled hike to the levy will add roughly 3 cents per litre to the cost of gasoline, making the policy responsible for about 17 cents per litre.
Beugin said his institute’s research shows climate efforts across Canada have lowered emissions that cause global warming — but that even if all measures that have been legislated, developed or announced are implemented, the country would still fall short of its 2030 emissions target.
Under international talks to avoid the catastrophic extremes of climate change, which includes more frequent extreme weather, species extinctions, disappearing ice caps and more, Canada has pledged to slash emissions to at least 40 per cent below 2005 levels by 2030. The most recent government tally shows emissions were down 8.4 per cent from 2005 in 2021, after climbing 1.8 per cent from the year before, when the COVID-19 pandemic struck.