As the federal government comes under pressure to freeze plans to increase the carbon tax, policy experts are calling for a calmer debate about the bill and its role in the country’s climate change goals.
Conservative Party leader Pierre Poièvre joined seven other prime ministers in calling for a halt to the rate hike, scheduled for April 1, saying it would only worsen inflation. The Conservative Party has threatened a vote of no confidence in the government over the issue. failed on thursday.
Let’s take a look at how this policy works and how effective it is.
How much will taxes increase?
The carbon tax, also known as the carbon price, went into effect in 2019 at $20 per tonne. Since then, the price has steadily increased each year and is scheduled to increase from $65 to $80 per ton on April 1st.
The price is expected to increase by another $15 per tonne until 2030, reaching $170 per tonne. The gradual increase is intended to act as an economic incentive for people and businesses to change their behavior to reduce the burning of fossil fuels and move to more environmentally friendly forms of energy.
For example, homeowners may need to renovate their homes to save on heating, install heat pumps, or switch from gasoline to electric vehicles.
Christopher Ragan, director of McGill University’s Max Bell School of Public Policy, said the current carbon price is not high enough to have a major impact on consumer behavior, but as the levy rises there will be more incentives to reduce fossil fuel use. Says. University.
“We shouldn’t be thinking about this in terms of months or even years. We should be thinking about this policy over the long term,” said Ragan, who is also a former chair of the expert group Ecological Finance Committee. . He advocated a carbon tax.
The price increase on April 1st will only increase by about 3 cents per liter of gasoline. But by 2030 carbon prices will rise by nearly 40 cents per liter. Ragan says the planned increases need to be maintained so businesses can plan their costs and make decisions accordingly.
“Especially companies that are planning for the future want to have some certainty about where carbon prices are going,” he said.
Where in Canada does it apply?
The carbon tax applies to residents of Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island, Ontario, Manitoba, Saskatchewan, Alberta, Yukon, and Nunavut.
Ninety percent of government revenue is returned to households in these states through a quarterly rebate program, with households receiving quarterly payments based on family size.
The remaining 10 percent is meant to help grant recipients, such as businesses and schools, reduce their fossil fuel consumption.
British Columbia, Quebec and the Northwest Territories have their own carbon pricing mechanisms that meet federal standards and are therefore not part of the federal tax or rebate.
Seven prime ministers have called on Prime Minister Justin Trudeau to suspend or cancel the upcoming carbon tax hike for consumers, citing the following reasons: Cost of living Concerns.
Saskatchewan went further, saying it would not remit carbon taxes on natural gas to the federal government after Ottawa exempted household heating oil.
Will emissions be reduced?
the study suggest Putting a price on carbon could play a role, but it’s only part of what Canada needs to do to meet its climate goals.
“The Liberals are pointing to this as a major climate change policy, but I think that’s a mistake,” said Jessica Green, a political science professor at the University of Toronto who studies carbon pricing.
“The evidence shows that’s not true. If we want to decarbonize, we need other tools.”
Greene argues that the federal government should stop underwriting the fossil fuel industry with “billions of dollars in subsidies that make emissions cheaper.”
There are two systems for carbon pricing in Canada. One system applies to fuel prices, which applies to consumers, and the other system applies to industrial emitters.
federal government estimated All carbon pricing is expected to account for up to a third of Canada’s emissions reductions in 2030.
Almost a third of that is due to industrial pricing, which a new study by the Canadian Climate Institute says is far more effective.
Researchers found that carbon pricing applied to large industrial polluters would reduce 53 million to 90 million tonnes by 2030, while pricing to consumers would reduce 19 million to 22 million tonnes. It has been found.
But another recent research Relying on carbon pricing alone has proven to be “insufficient” to limit global warming to between 1.5 and 2 degrees Celsius by 2100, the goal set by the Paris Climate Agreement.
These researchers recommended stricter regulations and incentives, such as decarbonizing transportation systems by expanding the use of electric vehicles and encouraging building renovations.
Neil Willcott, assistant professor of finance at Memorial University of Newfoundland and one of the report’s authors, said: “Carbon pricing is just one of the board’s tools; it’s the only thing we do. That can’t be the case.”
What about rebates?
From the beginning, the federal government stated that the carbon tax wasrevenue neutral” which means all the money will be returned to the state where it was collected.
However, they are having trouble communicating this clearly to individuals concerned about high prices.
Last month, the Liberals renamed the quarterly payments households receive the “Canada Carbon Rebate.” Previously known as the “Climate Action Incentive”.
Critics say the carbon tax is an unfair economic burden on Canadians, but research shows showed That said, such pricing is not a significant factor in the rising cost of living.
Eight Canadian environmental organizations sent an open letter this week accusing politicians of “shamelessly exploiting the real economic pain of Canadians for political gain.”
“Climate policy has nothing to do with the hardships facing Canadians, yet these politicians are ignoring the real causes of the cost of living crisis and carbon price scapegoating,” the letter said. Stated.