Carbon tax takes effect as Trudeau reels before elections

Source: Jean Chemnick, E&E News reporter • Posted: Wednesday, April 3, 2019

Canada’s federal government imposed a carbon price on four provinces yesterday that refused to adopt their own programs as tensions over climate policy flare ahead of this year’s national elections.

The provinces of Ontario, Manitoba, New Brunswick and Saskatchewan, all opponents of Prime Minister Justin Trudeau’s effort to establish a nationwide price on carbon, saw levies on fossil fuels take effect yesterday despite their objections.

This comes after a carbon price took effect in those provinces on New Year’s Day for industrial emissions from manufacturers of cement and steel. The levy imposed yesterday affects the transportation and electricity sectors.

Under all of these programs the incremental cost of CO2 is 20 Canadian dollars ($15.03) per ton for 2019, and it will rise by CA$10 every year until 2022. Trade-exposed industries, like cement and steel, would see only a portion of their emissions taxed to limit their exposure to competition from countries that lack similar policies, like the United States.

“Starting today, it’s no longer free to pollute anywhere in Canada,” tweeted Trudeau, who has spent much of the last four years constructing the Pan-Canadian Framework on Clean Growth and Climate Change.

The program is intended to help Canada meet its commitments under the Paris Agreement to cut emissions 30% below 2005 by 2030. The provinces of Alberta, British Columbia and Quebec had carbon programs of their own that Ottawa deemed to meet the federal requirement, and thus aren’t subject to the federal backstop.

But Saskatchewan and Ontario, which have Conservative Party governments, hope the levies will be short-lived. They’re suing Ottawa, contending that the nationwide system tramples the Canadian Constitution’s proviso that provinces set energy policy.

Saskatchewan’s government presented its case to the province’s highest court in February, and Ontario gets its day in court later this month.

Isabelle Turcotte, director of federal policy at the Pembina Institute, noted that Manitoba asked for and published a legal opinion affirming that Ottawa had the constitutional authority to impose the levy.

“There is a lot of political grandstanding, unfortunately, but we’re pretty confident that the federal government does have the jurisdiction to take action on one of the most important issues for Canadians’ health when provinces are failing to step up,” she said.

Kenneth Green, a resident scholar on energy and the environment for the Fraser Institute, agreed that the program is unlikely to be overthrown by the courts.

“Which means the only solution then becomes political — changing the government,” he said.

The federal program rebates revenue from the levy back to taxpayers. The government estimates that 80% of households could get more money back than they pay in higher power rates stemming from the climate tax.

Supporters hoped that the rebate would result in public buy-in for the policy, but Turcotte said its opponents in the Conservative Party seem so far to have succeeded in framing it as a federal cash grab instead of a positive response to climate change. Carbon policy has become a key issue in areas like Calgary — which goes to the polls this month — and as parties prepare for federal elections in October.

“What they really have on lockdown is that affordability narrative that really speaks to Canadians,” said Turcotte, referring to carbon tax opponents.

Green disputed the government’s claim that its carbon policy would have no net cost for most Canadians, saying all taxes have the potential to slow the economy.

He said Ottawa’s carbon levy on unwilling provinces would be seen negatively by many western Canadians, who he said are increasingly alienated under the current government.

The move comes as Trudeau faces fallout from revelations that his office pressured former Attorney General Jody Wilson-Raybould when she prosecuted a Quebec-based engineering firm for bribing Libyan officials. Polls show Conservatives pulling ahead of Liberals recently.

“What’s the optics of ramming this through as we approach a federal election where the prime minister is now battling some scandals that have taken the bloom off the rose?” Green asked.

Conservative Party Leader Andrew Scheer hasn’t put forward a climate policy of his own, and he has backed off past statements that Canada should meet its Paris pledge, though he isn’t seen as supporting a Canadian withdrawal from the climate deal. If he replaces Trudeau after the October election, greens worry that Canada could become an international laggard on climate action, as it was under former Prime Minister Stephen Harper.

“I feel nervous that the politicization of action in Canada will mean that climate action is seen as a barrier to political success, or that parties will receive the message that killing climate action wins them political points,” said Catherine Abreu, executive director of Climate Action Network Canada.

“And I think the actual situation we find ourselves in is far more complicated than that, and that there’s this way in which nuances of climate action are being really minimized in the polarization of the debate.”