Conservative Party of Canada Leader Pierre Poilievre continues to evade questions about whether he would axe the carbon pricing system for industrial emitters if he forms the next government.
On April 9, NDP MP Laurel Collins asked Poilievre a yes or no question he has so far failed to answer: “Will he scrap the industrial carbon tax?”
Poilievre’s response was: “There is no industrial carbon tax on the oil and gas sector.”
This statement — and the Conservative Party’s broader rhetoric around carbon pricing — is deliberately misleading, according to Maya Papineau, an associate professor of economics at Carleton University.
There certainly is carbon pricing for the industrial sector, said Papineau. Like with the consumer carbon price, provinces and territories can use the federal output-based carbon pricing system for large industrial emitters or design their own equivalent system for industry. Under the federal output-based pricing system, facilities get an annual emissions limit and must pay the carbon levy on emissions over that or purchase offset credits from other companies that kept emissions below the limit.
This means there is variation between jurisdictions but “it's all carbon pricing, in one way or the other,” said Papineau.
Industrial carbon pricing is a heavy-hitter when it comes to reducing planet-warming emissions, according to a recent analysis done by the Canadian Climate Institute. By 2030, the pricing policy applied to big industrial polluters will deliver between 20 and 48 per cent of emissions reductions expected from Canada’s Emissions Reductions Plan, the analysis found.
Collins tweeted that the leader of the official Opposition is “either ignorant about the policy he says he wants to run an election on, or he's deliberately misleading Canadians.”
Poilievre’s communications team did not respond to a request for comment to clarify Poilievre’s comments. The federal Conservatives and seven premiers remain staunchly opposed to the consumer carbon levy and have continually pressured the federal government to stop increasing the price on pollution. A scheduled carbon price hike that went into effect on April 1 was a rallying point for more than a dozen protests across Canada.
However, these attacks on carbon pricing appear to only target the consumer fuel charge. To date, Poilievre has not given a clear answer as to what a Conservative government would do about the federal output-based pricing system.
Immediately after saying there is no industrial carbon tax on the oil and gas sector, Poilievre highlighted Alberta’s Technology Innovation and Emissions Reduction regulation (TIER). TIER was created as an equivalent alternative to the federal output-based pricing system and both these are “a hybrid between a carbon tax and an emissions trading scheme,” said Kathryn Harrison, a political science professor at the University of British Columbia. Alberta’s system is similar, with an option to buy and sell offsets or pay into the TIER fund at the same rate as the federal carbon price, which is currently set at $80 per tonne.
“It's intriguing that he points to Alberta's own system, rather than the federal output-based system,” said Harrison. “I'm not sure what to make of that. It may suggest an inclination to leave industrial carbon pricing to the provinces. It may be just that he doesn't want to give credit to the federal government for a good approach.”
Poilievre said Alberta’s TIER program allows big industrial players to invest in green initiatives and “is one of the reasons our oil and gas sector is the most advanced in the world.”
“What I propose is that we produce more of our clean Canadian oil and gas to displace the dirty dictators of the world,” he said on April 9.
Most of Canada’s oil production — 65 per cent as of 2023 — is from the Alberta oilsands, which has a higher emissions intensity than conventional oil.
- Natasha Bulowski
- Journalist
- @NBulowski
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Across Canada, large emitters
Across Canada, large emitters are subject to output-based pricing systems (OBPS), which price a fraction of total emissions, which effectively means a low carbon price on total emissions.
Federal and provincial-equivalent carbon pricing schemes for large industrial emitters shield them from carbon pricing. The purpose of the OBPS and its provincial counterparts is not to expose heavy emitters to the carbon price, but to shield them from it, so they can remain competitive in global markets.
Large industrial emitters, including in AB's oilsands, effectively pay a fraction of consumer rates. Under Alberta's Technology Innovation and Emissions Reduction Regulation (TIER) pricing regime, major O&G companies pay pennies on the dollar in carbon costs.
In Alberta, TIER dollars are effectively recycled back to industry to fund carbon capture technology and research. Projects industry should be paying for in the first place.
Federal and provincial carbon pricing systems do not impair large industrial emitters' profits — or reduce their emissions.
"Canada's biggest emitters are paying the lowest carbon tax rate" (Corporate Knights)
"Oil and gas producers pay among the lowest average carbon costs of any sector…
"There's a patchwork of OBPS policies across the country, and some provinces have implemented 'weak' or 'non-existent' systems that have let many big polluters off the hook."
"...Ottawa and most provincial governments grant heavy exemptions to a number of sectors, including O&G, chemicals, cement, steel and mining.
"But generous exemptions mean that how much of a firm's actual emissions are taxed varies widely by province, and, on average, companies end up paying for only 16% of the carbon actually produced.
"[In 2020, Suncor's] average carbon cost was roughly $2.10 per tonne, about one-14th of the full carbon price."
"The impact of a carbon price is greatly lessened by the relatively small proportion of emissions that are actually covered by the price.
"The federal OBPS and AB's TIER system levy the carbon price on roughly 10% of a large emitter's GHGs. At a $50 marginal price, producers pay less than $1 per tonne of CO2 equivalent on their total production." (Corporate Knights)
"Canada needs to make Big Oil pay their fair share" (Corporate Knights, March 7, 2022)
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