Pollution and your pocketbook

Hey there, time traveller!
This article was published 08/06/2019 (2698 days ago), so information in it may no longer be current.

Putting a price on carbon is meant to punch you in your pocketbook.

Well, the federal Greenhouse Gas Pollution Pricing Act that came into effect April 1 in provinces that didn’t come up with their own solution with similar or better targets — Manitoba among them — is more like a gentle jab to start.

Manitobans likely noticed an increase at the pumps — 4.4 cents per litre — or an extra levy on their utility bills.

It’s really an unremarkable rise in costs for a tax that is remarkable in a number of ways.

For one, it really is extraordinary for a government to raise taxes in our times. It’s typically poison for parties in power, even if it’s arguably prudent policy given our massive spending deficits paired with the public’s desire for services such as health care, infrastructure and education.

Indeed, the carbon tax may prove toxic to the federal Liberals’ re-election hopes. Certainly, adversaries on the right — provincially and federally — have taken great pains to point out the hurt the carbon tax is inflicting.

Yet a poll released last month revealed a surprise result. Most Canadians are in favour of the idea.

According to the Clean Energy Canada/Abacus Data nationwide poll, 34 per cent of respondents indicated a carbon tax must be part of any plan to fight climate change, while 44 per cent stated it should ideally be part of a plan.

“So, we’re closing in on 80 per cent saying it’s something that should ideally be in a climate plan,” says Dan Woynillowicz, policy director for Clean Energy Canada at Simon Fraser University.

“For most Canadians, it’s perhaps not as black-and-white, cut-and-dried an issue as it’s made out to be by our political leaders.”

Certainly, a number of provincial premiers have called out the feds, claiming the plan hurts average Canadians and kills jobs. Most recently, Alberta pulled the plug on its made-in-Alberta plan (by the former NDP government) under the leadership of newly elected Premier Jason Kenney and the United Conservative Party. Saskatchewan, Ontario, New Brunswick and Manitoba also oppose the carbon tax.

For what it’s worth, the Brian Pallister-led government came up with its Made-in-Manitoba Climate and Green Plan.

The feds, however, deemed it didn’t go far enough in pricing carbon dioxide emissions, and so we have the federal regime in its place. As a result, the province is taking the federal government to court, arguing the imposed plan is unconstitutional.

“The Manitoba plan is better for Manitoba’s economy, and better for our environment,” the provincial government stated in a recent email to the Free Press.

It further notes the feds’ plan “fails to recognize the significant investments made by Manitoba clean energy, and it imposes a tax beyond what was felt was fair to Manitobans and at a rate that will hurt key sectors of our economy.”

The two plans actually do not differ much, with one exception. The Manitoba plan put a $25 levy per tonne on carbon dioxide emissions right off the hop and remained at that level, whereas the federal plan starts at $20 this year and increases $10 every year before stopping at $50 a tonne in 2022. Per average household, the federal plan will cost about $232 this year, and $547 in 2022, according to provincial government figures.

The true cost, however, should be much lower, because most revenues are returned to consumers through the federal Climate Action Incentive payment. (Some revenues will go toward clean energy initiatives.)

No buts about it, of course, we’re going to be paying more for gasoline, utilities and, perhaps, slightly higher costs for many goods and services as a result of businesses passing higher energy costs on to consumers.

But most people will break even — or may even come out ahead — when they file their taxes next year, says Harvey Stevens, a former provincial government senior policy analyst in the Department of Family Services, who was part of the committee in charge of helping draft the Manitoba plan.

“Higher-income people may pay more on net terms, whereas lower-income families may come out slightly ahead,” he says.

Of course, families and individuals can lower the impact by making energy-efficient choices.

Then again, paying four cents per litre more today may not lead to a lot of behaviour change “in the big scheme of things,” says James Beddome, leader of the Green Party of Manitoba, which has campaigned in the past to increase the carbon tax to $50 a tonne… just to start.

“But maybe that $20 to $30 a week extra for gas incentivizes people the next time they purchase a vehicle to choose one that’s more fuel efficient if they know the price is going to go up.”

That’s why increasing tax every year is important, he adds. Knowing costs of pollution will increase, consumers feel growing pressure to make less costly, presumably more climate-friendly choices.

Yet critics argue carbon taxes don’t work — though evidence-based research backing these claims are scarce.

Woynillowicz, however, says plenty of peer-reviewed research on its effect in B.C., where a tax has been in place since 2008, suggests otherwise.

“So, when people say, ‘It’s bad for the economy; it will cause a recession; it is job-killing; it won’t reduce emissions,’” he says, “all of those statements, based on a decade of evidence in British Columbia, are categorically false.”

By no means is a carbon tax perfect. What’s more is it will likely hurt our finances in ways we don’t entirely realize yet, says Sylvain Charlebois, a professor at the Rowe School of Business at Dalhousie University.

For instance, the higher price of energy is likely to trickle down throughout the agri-food industry in Canada.

“The one thing that has to be recognized is sectors consuming a lot of energy will have to pay more,” says Charlebois, who has studied the issue.

“And restaurants (for example) tend to require a lot of energy.”

Additionally, food producers and processors — a big industry in Manitoba — could face more competition from imported goods in jurisdictions without a price on greenhouse gas pollution.

“There is consensus out there that over five years (food prices) could be three per cent higher if the carbon tax is at $50 per metric tonne.”

That said, Charlebois agrees a price on carbon is necessary.

“The carbon tax is the stick, but what needs to happen in order for consumers to be less hit hard by volatile or increased food prices is by making sure the agri-sector has access to some carrots — no pun intended.”

Indeed, the federal plan — as does the shelved Manitoba one — makes provisions for farmers and other businesses that consume a lot of energy.

Woynillowicz further notes a carbon tax is not a panacea for the climate-change crisis. But it’s an important tool to help Canada move toward a low-carbon economy — which is necessary to avert the worst outcomes of an overheating planet.

The problem is, making an argument for it requires a lot of explaining, he says.

“Whereas, opposing it, the lines fit nicely on a bumper sticker.”