Political conflict over carbon pricing continues

Canada’s price on pollution is supposed to help battle global warming, but as it nears its fifth anniversary, nothing in Canadian politics is hotter.

Conservative Leader Pierre Poilievre has so successfully convinced Canadians the carbon price is to blame for inflation that he even earned begrudging respect for his “axe the tax” campaign from Prime Minister Justin Trudeau.

Of course, Trudeau doesn’t agree with Poilievre’s sentiment.

But he has acknowledged the Tory leader’s message is working in an atmosphere where the cost of living is dominating the discussion around most dinner tables, as it has for months, if not years.

Trudeau was even convinced to upend his signature climate policy in October, removing it from heating oil for three years following relentless pressure from his Atlantic caucus and a nosedive in polling support on the East Cost.

There are some arguments for the move. Heating oil costs four times more than natural gas, so while carbon pricing was designed to create more reasons to switch to greener fuels, the incentive was already there.

But the reaction was swift. Premiers in other provinces immediately demanded the same treatment for natural gas, which is more prominent as a heating source outside of Atlantic Canada.

Saskatchewan Premier Scott Moe is pledging to simply stop collecting the carbon price for the federal government in January.

The new premier of the Northwest Territories demanded a full exemption from carbon pricing for his communities, noting fuel has been so expensive in the North for so long that if there were alternatives, people already would have made the switch.

And First Nations in Ontario launched a lawsuit arguing they’re being left out of the carbon price rebate program, because people only get it if they file federal income taxes. Many people working on reserves do not.

Meanwhile, a Conservative private member’s bill bill looking for an exemption for carbon pricing on natural gas and propane used on farms shot into the spotlight, as Poilievre made passing it a priority.

Bill C-234 passed the Senate in mid-December with multiple amendments that require it to go back to the House of Commons for another vote.

The amendments now limit that bill to temporarily exempting propane used for drying grain. If it passes with support from the Conservatives, NDP and Bloc Quebecois, who all voted for the bill the first time, it will mean another exemption.

All of these things make clear that the carbon pricing conflict will continue well into 2024.

Trudeau is firm that he isn’t opening the door to any more exemptions.

Liberals are willing to work with First Nations to ensure the rebate system works better for them, or discuss possible tweaks with the Northwest Territories. But the prime minister said there would be absolutely no further carve-outs.

Michael Bernstein, executive director of the advocacy group Clean Prosperity, said he believes Trudeau.

“I don’t anticipate that the current federal government is going to further dismantle or exempt the program that they have in place,” Bernstein said.

If Poilievre does win the next election, the consumer side of carbon pricing will surely disappear as fast as he can put pen to paper.

“It’s very clear where Mr. Poilievre stands on this issue,” Bernstein said.

But carbon pricing is a complicated policy that isn’t just about a fuel levy at the gas pumps or on home heating bills.

Poilievre’s “axe the tax” mantra hasn’t been clear about exactly how much of the plan he would eliminate. He has signalled an openness to maintaining some form of industrial carbon pricing.

The consumer carbon price, or what Ottawa calls the fuel charge, is applied to fossil fuels people buy to run their cars, heat their homes or keep the lights on.

Big industrial emitters — more than 560 organizations and companies including oilsands, mines, automakers and natural gas power plants — don’t pay the carbon price on the fuel they buy to operate. Instead, they pay it on a portion of what they actually emit.

The system is similar to one that former Conservative prime minister Stephen Harper planned but didn’t implement in 2007.

In both versions, companies that emit more than a set limit pay a price.

Most economists agree that carbon pricing is the most effective way to reduce emissions, and business leaders generally prefer it.

“From an economist’s kind of thinking, it is just the most efficient way to reduce emissions with the least government interference or mandates or regulations,” said Heather Exner-Pirot, a special adviser on energy policy at the Business Council of Canada.

“It just focuses on emissions. And if you can reduce emissions, you pay a lower price. So it’s very simple. It doesn’t pick and choose favourites, doesn’t pick and choose sectors. It lets the market do all of the work.”

The Canadian Federation of Independent Business estimated in March that small businesses pay almost half the total revenues collected from the carbon price, most of which goes back to consumers.

Getting rid of carbon pricing would leave a majority of families with less money and could have major international implications.