At long last, Canada’s silly war over carbon pricing is over. As often happens in historic moments like this, the armistice came in the form of a simple statement, this one from Conservative Leader Erin O’Toole: “We recognize that the most efficient way to reduce our emissions is to use pricing mechanisms.”
Mr. O’Toole waved what amounts to a white flag on Thursday as he unveiled his party’s new plan to reduce Canada’s greenhouse gas emissions.
Of course, Mr. O’Toole didn’t pitch this as a surrender. But as the new leader of a party that has spent years portraying the Trudeau government’s carbon-pricing scheme as a “job-killing tax,” and whose previous leaders vowed to eliminate it if ever elected to power, this explicit endorsement of carbon pricing is a complete policy reversal.
And a very welcome one. Good for Canada, and good for the Conservatives.
Putting a price on carbon – whether through a cap-and-trade system or a tax per tonne of emissions – is the most transparent and uncomplicated way of prodding consumers and companies to change their behaviour. By comparison, government subsidies for electric cars, or for investing in renewable energy, often amount to hidden taxes that only deliver marginal GHG reductions.
But while the Liberals in Ottawa have, since 2018, set a minimum national carbon price, and imposed a backstop in the form a federal carbon tax on provinces that don’t play ball, Conservative politicians at all levels have tried to paint carbon pricing as an insidious, ineffective, left-wing tax grab.
This has been in spite of the fact that using the market lever of price to reduce the use of fossil fuels started life as the essence of conservative economic policy.
It has also required Conservative premiers and previous federal Tory leaders to deliberately obscure the fact that the backstop doesn’t apply in provinces that do their own carbon pricing, such as Quebec and British Columbia, and that elsewhere it’s a revenue-neutral scheme that returns almost every penny to provincial taxpayers, in the form of a tax rebate.
In fact, most households get back more money than they pay in federal carbon taxes, and lower-income households get richer rebates than higher-income ones, according to the Parliamentary Budget Office.
But rather than debate these facts, until this week Conservatives had tried to turn carbon pricing into a bogeyman by misrepresenting its attributes.
In doing so, they painted themselves into a corner, and marginalized the party in the global debate. Canada’s oil industry leaders favour carbon pricing as a business-friendly way of reducing emissions. And the American Petroleum Institute, the lobby for big U.S.-based oil companies, came out in support of the principle of carbon pricing in March.
That sea change in the U.S. just happened to come on the same day that the Supreme Court of Canada ruled that Ottawa has the constitutional right to impose a minimum national price on GHG emissions.
Conservative opponents of the federal carbon tax were out of arguments, and Mr. O’Toole deserves credit for obliging his party to accept reality.
He said Thursday that he would scrap the federal backstop if elected prime minister, and would instead create a program where consumers get cash rewards for every dollar spent on fossil fuels – money that would be collected as a carbon tax, and which people could use to buy things like bicycles, transit passes or electric vehicles.
It’s an affinity program, but for green products instead of shampoo and plane tickets. The reward money would go into each Canadians’ personal “Low Carbon Savings Account.”
Canadians now have a choice. They can vote for a party that collects a price on carbon at the gas pump and on heating bills, and then returns it to them at tax time to spend on anything they want. Or they can choose a party that does something similar, but puts the revenue onto a personalized gift card, to be spent on items that reduce emissions.
The current federal price on a tonne of emissions is $40, with the Liberals planning on raising it to $170 by 2030; Mr. O’Toole says his price will start at $20 and top out at $50.
There’s much to debate about Mr. O’Toole’s plan but, as of Thursday, all parties are at least debating in the same language. That’s because the Conservatives finally accept a critical principle: Carbon pricing works.
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