Canada Has Released a New Carbon Plan. What Does This Mean for Consumers and Affordability? What Leadership Is Needed to Support Canadians?
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Canadian Gas Association.
On December 11, 2020 Canadian Prime Minister Justin Trudeau announced what his government described as “Canada’s strengthened climate plan” officially titled A Healthy Environment and a Healthy Economy. According to the news release accompanying the announcement, $15 billion was being put aside to make life more affordable for people, communities more liveable, and to create jobs while spawning a cleaner economy.
Like most government press releases, it all sounded wonderful and simple. But as successive governments have discovered, whether it is meeting our commitments to reducing global greenhouse gas (GHG) emissions or trying to transition key economies or sectors of those economies, achieving goals is harder to do. While climate change skepticism seems less pronounced in Canada than it was five years ago, regional economic differences and “axe the carbon tax” populous politics haven’t gone away or raised the white flag of surrender.
If carbon pricing remains a political tool as opposed to an accepted reality in Canada — particularly among the federal Liberals and Conservatives as well as the federal Liberals and the current Conservative governments in Alberta and Saskatchewan — consumers will suffer. The battle over consumer-based carbon pricing is a bit like the Free Trade debates Canada went through in the 1980s and early 1990s. Specifically, if it is clear the economic system is being reshaped and resistance plays off the fear of transformation, no one is being served well. Stated more bluntly, if political hesitancy or opportunism is inhibiting what should be natural policy evolution, a slowness in getting to what should be the outcome will cost people. Potentially more than resisting the change in the first place.
Much like some of the genuine collaborative effort we have seen among Canadian leaders of all stripes during the pandemic, we need more of that approach here. Ottawa needs to be less climate sanctimonious, and provinces like Ontario, Alberta and Saskatchewan need not pull out their sabres over every utterance of the phrase “consumer carbon pricing.”
Equally real, applicable and achievable policy needs to be designed to reflect the rural-urban divide that is still very present in Canada. Massive transit investment is great and beneficial for most residents of Toronto but does little for the person farming in Taber, Alberta. To them, a consumer carbon price is a tax and a threat to their way of life. Better redistribution of tax revenue might be an option there. But it needs to be addressed because simply “axing the tax” is pushing the problem down the road.
Canada won’t have a truly strengthened climate plan until there is a real will to get past the polemics and get down to work on developing one. If the pandemic has taught us anything, it is that Canadian leaders can work together, and Canadians can handle the truth about the difficulty of the challenges they face.
“If the pandemic has taught us anything, it is that Canadian leaders can work together, and Canadians can handle the truth about the difficulty of the challenges they face.”
Tim Powers, is the Vice-Chairman of Summa Strategies Canada and the managing director of Abacus Data, both headquarters are in Ottawa. Mr. Powers appears regularly on CBC’s Power and Politics program as well as on VOCM in his home province of Newfoundland and Labrador.
The Trudeau government’s new climate plan seeks to achieve ambitious greenhouse gas emissions reduction targets via two main pillars: investing billions into building the clean economy and raising the price on pollution to a total of $170 per tonne by 2030. The carbon pricing plan will remain revenue neutral; as the price on pollution rises by $15 a year, the amount that Canadians get back in rebates will also rise, and be paid out quarterly instead of annually. The price on carbon was always going to increase, but the amount by which it will increase — a 467% hike from today’s price by 2030 — raised concerns around affordability for Canadians.
Rebates for consumers have always been a fundamental part of the Trudeau government’s approach to carbon pricing, recognizing that the carbon tax raises the cost of living for Canadians. This is the purpose of the carbon tax — to incentivize consumers to make choices that are less carbon-intensive, on a mass scale.
To ensure that effective climate policy is also fair social policy, the government needs to strike the right balance between providing both carrot and stick to promote environment-friendly choices, while also giving Canadians the support they need to manage the rise in costs as they change their behaviours. While the rebate scheme is a good start, it’s not enough on its own, especially for the lower- and middle-income Canadians that are more acutely impacted by the increased cost of living.
To complement carbon pricing, the government needs to invest in measures that make decarbonization accessible and affordable to everyday Canadians to enable them to make climate-conscious choices, and the enhanced climate plan makes significant strides in the right direction. The new carbon plan includes initiatives that directly help consumers to make cleaner choices, such as $2.6 billion for energy retrofits for homeowners and $287 million to provide rebates for zero-emission vehicles.
More importantly, the plan invests billions in large-scale, transformative changes to build a country where low-carbon consumer choices are the standard and readily available to Canadians — such as $15 billion in public transit infrastructure ($2.75 billion of which is dedicated to electrifying public transit) and $1.5 billion to increase the production and use of low-carbon fuels. These investments are complemented by regulatory changes and measures to enable and facilitate the low-carbon transition. It’s more than just carrot and stick, it’s the whole garden (and then some).
A clean transition requires not only significant dollars, but widespread buy-in, and policies that punish Canadian consumers won’t hit the mark. Climate policy must give Canadians the support they need to fully participate in a clean economy by making climate-friendly choices accessible and affordable. Investing in systems-wide transformation to empower and include Canadians in decarbonization is critical to making meaningful progress towards a cleaner economy and a cleaner society.
“A clean transition requires not only significant dollars, but widespread buy-in, and policies that punish Canadian consumers won’t hit the mark.”
Patricia Sibal is a consultant at Crestview Strategy, based in Ottawa. She has practiced government relations in Toronto and Ottawa and sits on the Board of Directors of the Government Relations Institute of Canada.
Climate change poses an existential threat to Canada and the world. Too many governments, especially in wealthier countries, have dragged their heels on taking action to fight climate change.
We see climate change affecting global weather patterns. Texans found themselves this past winter in a deep freeze and after years of energy deregulation their power grid failed its citizens.
We see growing health effects from air and water pollution.
Canadian industries have fallen behind when it comes to preparing for the coming low-carbon economy, a failure from years of government under-investing in green innovation and energy efficiency.
Today, we are simply not winning this struggle.
In this context, Canada’s enhanced carbon plan is welcome. The plan talks about cutting energy waste and not only links climate action to carbon pricing, but also to our actions as individuals and organizations. There are new investments for energy upgrades to community buildings and promises of a residential loan program and programs to help low-income Canadians.
These are positive steps, but Canada’s carbon plan must be about action, not more promises.
We need urgent measures to be implemented now to help Canadians cut energy waste, retrofit their homes and businesses, and electrify their heating and cooling.
We need transit and infrastructure to flow, now. And new policies implemented to build new supply chains and make sure more green products are being manufactured here in Canada.
With world markets more sensitive than ever about the climate implications of their investments, the future of Canada’s natural resource industries will depend on Canada taking serious action to tackle climate change. Inaction will cost our governments, businesses, and everyday Canadians billions more down the road.
We must also remember that fighting climate change is not a separate struggle from the fight for greater equality and economic justice. We cannot keep asking low-income Canadians to pay such a disproportionately high price for their energy.
The simple truth is, demonizing the idea of a carbon tax to score political points doesn’t help Canadians pay their energy bills. Practical solutions must become a more urgent priority at all levels of government. Things like low-income retrofit programs and new energy efficient building standards can help lower families’ energy bills.
Making transit more affordable and convenient will help people get to work. For those who do need cars, helping get more Canadians into electric and low-carbon vehicles can make their travel cheaper.
Green supply chains will keep more consumer spending here in Canada, which helps create jobs and grow our economy.
We cannot pretend that there are no costs associated with fighting climate change, but we can ensure that these costs are shared fairly. Political leadership means designing an economy where low-carbon choices become easier and more affordable for lower- and middle-income Canadians. We all witnessed the cost of inaction seeing the deadly winter storms hit Texas. Let’s not wait for the next disaster to act.
“Political leadership means designing an economy where low-carbon choices become easier and more affordable for lower- and middle-income Canadians.”
Kathleen Monk is a Principal at Earnscliffe, where she is trusted by Canadian leaders to navigate complex public strategy issues, design strategy and bring together diverse stakeholders to tell authentic stories that deliver results. She appears regularly on CBC The National’s pre-eminent political panel, The Insiders, and provides analysis for CBC News Network’s Power and Politics