Carney’s carbon-tax move an indication he’s serious about climate change

Opinion

If you filled up your tank or paid your home heating bill prior to April 1, chances are you felt the sting of the federal carbon tax.

Ottawa’s plan, which was rolled out in 2019 in the name of fighting climate change, was supposed to make us think twice before driving, turning up the thermostat or otherwise burning fossil fuels.

But after several years of this tax hitting everyday consumers, it’s become painfully clear that it’s not working the way government promised.

Meanwhile, the quieter side of Canada’s climate policy — the industrial carbon pricing system — is making a difference. According to research from the Canadian Climate Institute, it’s industrial carbon pricing, not the fuel levy at the pumps, that’s doing the heavy lifting when it comes to cutting greenhouse-gas emissions across the country.

It wasn’t a surprise then — nor was it simply a matter of political expediency — that Prime Minister Mark Carney eliminated the consumer carbon tax (effective April 1), yet left the industrial levy in place.

Canada’s Output-Based Pricing System, which applies to large industrial polluters, is expected to contribute up to 48 per cent of all emissions reductions by 2030, according to the Canadian Climate Institute. That’s between 53 and 90 megatonnes of greenhouse gases avoided — massive numbers, especially when you consider how little attention this policy gets in the national conversation.

The system works by setting emissions limits for industrial sectors and charging companies for going over those limits. It doesn’t just force them to pay, it creates an incentive to reduce energy use, invest in things such as carbon capture and modernize production. The result? Big industry has started to make real changes and emissions have declined.

Unlike the consumer tax, this doesn’t hit you and me directly. The price signal stays inside boardrooms and energy strategies, not our household budgets.

In Manitoba, where we don’t have a huge oil-and-gas sector, as Alberta and Saskatchewan do, most industrial emitters fall under manufacturing, agriculture processing and utilities. These operations now face pressure to reduce their emissions or pay up.

Many have responded with efficiency upgrades and clean-tech investments. For example, Manitoba Hydro has incorporated more aggressive decarbonization targets, spurred on, in part, by federal industrial pricing and climate funding programs.

Now compare that to the carbon tax we had been paying at the pump or on our natural gas bills. According to a range of analyses, including research from the Parliamentary Budget Officer and independent economic studies, the consumer carbon tax has barely nudged overall emissions.

Why? Because for most people, there’s no viable alternative, especially in Manitoba where public transit is limited, particularly outside of Winnipeg. Electric vehicles are expensive and less practical in rural areas. And natural gas remains the most accessible and affordable way to heat homes.

In Manitoba, emissions from transportation and residential heating have remained stubbornly high, despite rising carbon taxes. That tells you something important: people don’t change behaviour when the tax is applied to things they can’t reasonably avoid. They just pay more.

According to the Canadian Climate Institute, industrial carbon pricing is projected to contribute between 23 and 39 per cent (or 53 to 90 megatonnes) of avoided emissions from all current climate change policies. By contrast, the consumer carbon price accounts for between eight and nine per cent (or 19 to 22 megatonnes) of projected emissions reductions.

The latter isn’t nothing. But you can see why the Liberals eliminated it — partly for political reasons, but also for legitimate policy ones.

If we’re serious about cutting emissions — and we should be — then the evidence is clear: we need to double down on industrial carbon pricing, not consumer taxes.

Large-emitter pricing works because it hits the source of the problem — heavy pollution from industrial processes — and gives companies a reason to clean up. It doesn’t ask average folks to bear the cost of problems they have limited ability to individually solve.

We also need smarter investments in infrastructure, including electric vehicle charging networks, rural transit options, home energy efficiency programs, all of which give people real alternatives, not just another tax to pay.

Climate change is real. It’s a serious threat. But if we’re going to tackle it effectively, we need policies that actually work.

The industrial carbon tax is doing its job. The consumer carbon tax, not so much. And the two often get conflated when debating how best to reduce our carbon footprint.

That’s especially true when the conversation gets polluted with political slogans such as “axe the tax” shouted by politicians such as Conservative Leader Pierre Poilievre. He is proposing to cancel the industrial carbon tax. That would be a huge mistake.

It would eliminate one of the few concrete policies that are having a demonstrable impact on reducing greenhouse-gas emissions in this country. It would create uncertainty for businesses and investors who have been successfully using the incentives to clean up their operations.

This should be getting far more attention in the federal election. Unfortunately U.S. President Donald Trump’s economic and sovereignty warfare against Canada is taking up most of the oxygen in the room right now.

tom.brodbeck@freepress.mb.ca

Tom Brodbeck
Columnist

Tom Brodbeck is an award-winning author and columnist with over 30 years experience in print media. He joined the Free Press in 2019. Born and raised in Montreal, Tom graduated from the University of Manitoba in 1993 with a Bachelor of Arts degree in economics and commerce. Read more about Tom.

Tom provides commentary and analysis on political and related issues at the municipal, provincial and federal level. His columns are built on research and coverage of local events. The Free Press’s editing team reviews Tom’s columns before they are posted online or published in print – part of the Free Press’s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.