Canadian Manufacturing

Carbon price can’t cost manufacturers their competitiveness, CME says

The industry association says Ottawa must ensure its carbon pricing system doesn't add to manufacturers' overall tax burden


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Manufacturing accounted for 13 per cent of Canada’s emissions in 2014, down from 18 per cent of the country’s total in 1990, CME says

OTTAWA—The federal government’s plan to put a nationwide price on carbon must not compromise economic growth or the global competitiveness of Canada’s manufacturing industry, Canadian Manufacturers & Exporters says.

The industry group submitted its recommendations to Ottawa last week as the government holds consultations on how to best implement its carbon pollution pricing system, also known as the backstop.

Ottawa’s carbon plan would force each province to adopt their own pricing method, such as a carbon tax or cap-and-trade program, or use the federal government’s backstop. Most provinces have backed the upcoming legislation, with the notable exception of Saskatchewan Premier Brad Wall, who has vowed to fight the tax in court.

“The economy and the environment are not opposing forces. Through innovation, technological breakthroughs and smart planning we can strengthen the health of our environment and our economy,” Dennis Darby, the CME’s president and CEO said in a statement.

“The evidence of the past 25 years clearly shows that improvements in environmental performance and economic growth go hand-in-hand,” he added.

To ensure the manufacturing industry is able to continue growing, CME argues the government’s legislation must strike a balance between environmental safeguards and economic performance.

“As investment in new machinery and equipment increases, companies are more productive, and emissions and energy intensity decrease,” Darby said. “At the same time, these investments make manufacturers more competitive, enabling companies to invest further in their workforce, and in new products and technologies, as they expand their business.”

In 2016, manufacturing accounted for about 11 per cent of Canada’s total economic output, and in 2014, it generated approximately 13 per cent of Canada’s total greenhouse gas emissions, the industry association noted. The sector’s contribution to Canada’s overall emissions has decreased since 1990, when it accounted for 18 per cent of total emissions.

While the CME said it supports a balanced approach to environmental policy, it added that any new carbon taxes should not add to the industry’s total tax burden. Instead, it said the government should offset higher emissions taxes with reductions in other business levies, such as payroll and corporate taxes.

“Higher costs for energy, infrastructure, transportation, and regulatory compliance will erode profitability and therefore the ability of companies to invest in the new technologies that are required to make further progress in reducing emissions. Companies can only invest in the adoption of new clean technologies if they are profitable and have cash to invest,” CME said in the letter.

Meanwhile, the industry association said any revenue collected from manufacturers through the carbon plan should be returned to the industry to support investments in technology that improves efficiency or trims emissions.

You can read the complete submission here.


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