Trudeau’s carbon-price threat might backstop more foes than friends

It's not going to be so easy for Justin Trudeau's Liberal government to manage federal-provincial affairs in 2018. It's starting with a warning shot.

The new federal carbon tax legislation doesn't just threaten consequences for naysayers, such as Saskatchewan, or serve as a flashpoint for a campaigning Jason Kenney in Alberta. It tightens the screws on friends in power, such as New Brunswick's Brian Gallant.

The premiers have been expecting it, but it's still got plenty of potential for conflict. The draft legislation that Environment Minister Catherine McKenna released Monday was 236 pages of complex regulatory mechanisms, but it all amounted to a thinly veiled threat to the provinces: impose your own carbon tax, or we'll impose this one.

For Mr. Trudeau's government, the threat – dubbed the "backstop" – is a necessary step to live up, in part, to its promises to act on climate change.

But it's going to have an interesting political impact in the provinces. If Mr. Trudeau's government follows through with fear or favour, it will put the squeeze on Liberal governments in New Brunswick and Nova Scotia.

The biggest winner in provincial politics might just be Ontario Progressive Conservative Leader Patrick Brown, waiting in the wings to take over power from a key Liberal ally: Ontario Premier Kathleen Wynne.

Only four provinces, Ontario, Quebec, Alberta and B.C., already have their own carbon-pricing schemes in place in a way that satisfies the criteria Ottawa has set. Many of the others are making elaborate motions to pretend they do, too.

New Brunswick's is the most transparent ruse. They announced that revenues from their existing gas tax would be devoted to climate change, thereby transforming it into – Presto! – a carbon tax.

Too bad that clashes with the criteria Ottawa has set for a carbon price – in particular, that it lead to an additional incremental incentive to reduce greenhouse-gas emissions.

"The way I read that, New Brunswick and Nova Scotia – the proposals they've put forward are not going to be sufficient," said Dale Beugin, executive director of Canada's Ecofiscal Commission.

Nova Scotia insists it is onside. The province proposed its own cap-and-trade system. Yet the language suggests the price on carbon will be low, and unlikely to increase much. That doesn't seem to be what was intended by Ottawa, which proposes a carbon price that starts at $10 a tonne and increases to $50 by 2022. The whole idea is to create an incentive to reduce emissions, and make it progressively more stringent.

Unless carbon-pricing is reduced to a cartoon, Mr. Trudeau's government is going to have to call foul on those Liberal premiers, and that's likely to be a political embarrassment for allies such as Mr. Gallant. There are two other Liberal-run provinces, Prince Edward Island and Newfoundland and Labrador, that will have to finally come up with a plan, too.

In Manitoba, Progressive Conservative Premier Brian Pallister has imposed a $25-a-tonne carbon tax, meaning the province will be compliant with the federal rules for the first two years – and then, presumably, clash with Ottawa.

What about those Tories farther west, who are kicking and screaming about any carbon tax? Saskatchewan's Brad Wall made refusing to adopt any such thing a point of pride, but he'll be replaced later this month by a new Saskatchewan Party leader. Yet the new leader isn't likely to suffer if they follow Mr. Wall's ways – why not kick and scream, blame Ottawa for imposing carbon-pricing in your province, then pocket the revenue?

The same applies to Alberta's Mr.Kenney, the United Conservative Party Leader running against Alberta Premier Rachel Notley's carbon tax. He can run against a Liberal PM, too, and threaten to take the feds to court, and maybe get political mileage out of the whole thing.

The biggest potential winner could just be the last guy that Mr. Trudeau's Liberals want to help this year: Ontario PC Leader Patrick Brown, who is preparing to take on Ms. Wynne in a June election.

Mr. Brown has struggled with his own climate policy – to win over the political middle, he has to have some kind of plan, but carbon taxes anger a sizable portion of his party's own antsy political base. He has promised a carbon tax, but stayed vague on details, even though Ms. Wynne's cap-and-trade system will probably keep the carbon price lower. Yet Mr. Trudeau's "backstop" gives him an easy-to-explain carbon-price policy: Ontario will have to have a carbon price, at the level Ottawa demands, and voters can forget the details. Mr. Trudeau's carbon-price backstop might just back up political adversaries more than friends.