The carbon tax must die so climate policies survive
![](/sites/default/files/styles/scale_width_lg_1x/public/img/2025/01/23/decarbonzed_economy_shutterstock_2429886271.jpg?itok=-DBNh88t)
A decarbonized economy will require lots of people — some of whom will need extensive training. Photo by Shutterstock
The race for Liberal party leadership is on. Former finance minister Chrystia Freeland has announced that if elected Prime Minister, she will get rid of the consumer carbon tax. Former Bank of Canada and Bank of England governor Mark Carney has been cagier about the issue, but may also do the same.
In a moment where Canada is facing multiple overlapping crises — cost of living, climate, housing and health care — axing the tax is smart politics. But it won’t be enough to slow Conservative Leader Pierre Poilievre’s momentum. To do that, the candidates must focus on a people-centered approach that can help Canadians and the climate.
The consumer carbon tax — has been a political albatross from the start. Roughly half of Canadians oppose the tax, according to a recent poll. No one likes taxes, and Canadians have struggled to understand the rebates (the latest Climate Action Incentive Payments were distributed on January 15th, with an average payout of $280).
More importantly, research shows that carbon pricing has a limited effect on emissions. Wasting precious political capital on a middling policy isn’t good politics or policy, and Freeland is smart to recognize this.
Following Freeland’s lead, the Liberals (and yes, this applies to the Green Party and the NDP) could use axing the tax as an opportunity to shift away from a technocratic approach centered on emissions to one that focuses on people. The top three issues for Canadians are the cost of living, housing and health care. Tackling these can help the climate too.
First, a people-centered climate policy should expand the “care economy” — teachers, doctors, nurses, and child and elder care. These low-carbon activities are desperately needed. And they are a major part of our economy: paid care in health and education generates at least 12 per cent of GDP and one-fifth of Canadian jobs. By contrast, the energy sector employs around 3.5 per cent of the workforce. The phrase “green jobs” often conjures images of people in factories, but care work is green work too.
Second, Canada desperately needs more affordable housing. The average home price in Canada has risen almost $300,000 in the last decade. In Toronto, the average home price is over $1 million. It’s no surprise then that almost 100,000 people are on the waiting list for affordable housing.
Though affordable units are regularly available, the numbers pale in comparison to demand. Buildings and their construction generate roughly one-third of national emissions, making it the third most carbon-emitting sector, after energy and transport. Building affordable green housing will cut emissions and address the housing crisis.
Greenhouse gas emissions per economic sector
Source: Environment and Climate Change Canada (2024) National Inventory Report 1990-2022: Greenhouse Gas Sources and Sinks in Canada.
Third, the government must invest in training for the green economy. We will need roofers, electricians, and construction workers to transform our housing stock, electrify everything as quickly as possible, and rebuild when climate disaster strikes — which will happen with increasing frequency.
This people-centered approach will require the federal government to steer investments to staff these positions — a real industrial policy for good jobs and services. Most of the debate about greening the economy has so far been about which technologies and goods we should manufacture. But a decarbonized economy will require lots of people — some of whom will need extensive training. The Sustainable Jobs plan is a start, but implementation will be critical.
These investments in people will yield short- and long-term gains. In the short-term, it provides immediate benefits to Canadians in the form of better jobs, health care and housing. For politicians, investing in the care economy, housing and training will appeal to voters and address their biggest concerns. These investments will help restructure our economy away from a reliance on extracting and exporting fossil fuels.
Critics will say a people-centered approach to climate change is too expensive. But not if the bill is compared to unchecked climate change, or the growing social instability that results from shrinking investments in the social safety net. Climate change has cost Canada $25 billion in lost GDP in the last decade — half a year of Canadian GDP. By 2055, that number will grow from $80 to $103 billion. A report released earlier this month by the Institute and Faculty of Actuaries estimates climate change could result in a 50 per cent loss in global GDP between 2070 and 2090. Anyone who thinks that people-centered climate policy is too expensive hasn’t considered the alternative.
And, there are ways to pay for these investments. In 2023, Canada spent $18 billion on fossil fuel subsidies. Subsidies are nothing less than pure madness: paying industry to destroy the planet (while simultaneously taxing them for emissions, which makes no sense). Canada is also pouring money into tax credits for carbon capture utilization and storage — a technology which has yet to be functional at scale, and will not solve the climate crisis. It is estimated that these credits will cost the government $6 billion through 2028.
There are more ways to raise revenue for people-centered climate initiatives. The Canada Revenue Agency (CRA) estimates Canadians have as much as $240 billion hidden in tax havens (a loss of up to $3 billion in tax revenue every year). At the same time, the federal government predicts a $48 billion deficit in 2024-25. Ensuring the wealthiest individuals and firms pay their fair share is a first step toward plugging this hole. This includes keeping the capital gains tax hike in place — a policy Freeland has reportedly reversed course on.
Freeland’s instinct to axe the tax is bang on — but it will only work for the climate if it works for people, too.
Jessica F. Green is Professor of Political Science and the School of Environment at the University of Toronto. She is the author of Rethinking Private Authority and the forthcoming book Existential Politics: Why Global Climate Institutions are failing and how to fix them. Bluesky: @greenprofgreen.bsky.social.
Comments
I cannot believe that the National Observer published this opinion piece. Coming from other quarters, it could only be described as classic disinformation. Nowhere does Jessica Green offer any explanation of how the “people-centered approach to climate change” will significantly reduce the emission of greenhouse gases. Her suggestions might or might not be a good electoral platform for the Liberals, NDP or Greens, but they are not a serious program for addressing climate change or its consequences.
It's tough when a policy that "should" work, doesn't - and this one is failing because of propaganda, after it had already been accepted. But just because the enemy pulls a rotten sneak-attack doesn't mean you hold to a lost position. The author is just thinking tactically rather than emotionally.
I'd consider the 80/20 rule: you'll get 80% of the results of a carbon tax with 20% of the opposition, if you just add a gasoline tax (everybody's familiar with those) the exact size of the eV subsidy program. And a gas-heating tax the exact size of the heat-pump subsidy program. "We'll pay YOU to never pay US again!"
"More importantly, research shows that carbon pricing has a limited effect on emissions."
In support of her claim, op-ed writer Jessica Green cites a 2021 paper by none other than ... guess who?
Jessica Green: "Does carbon pricing reduce emissions? A review of ex-post analyses".
Nice touch.
The effectiveness of carbon pricing depends upon the carbon price, naturally.
A carbon price set too low will be ineffective.
Carbon prices start out low and increase incrementally to give the economy time to adjust.
So of course carbon pricing is ineffective to start with.
Which means, in a climate emergency, carbon pricing is too slow.
But it does not follow that we should reject carbon pricing. Carbon pricing needs to be used in combination with other tools in the climate toolbox.
To be truly effective, the price on carbon pollution would need to rise to several hundred dollars per tonne:
"Secret briefing says up to $300-per-tonne federal carbon tax by 2050 required to meet climate targets" (National Post, 2017)
Since the carbon price must increase gradually, not overnight, it takes time for carbon pricing to realize its full effect.
The main drawback of carbon pricing is that it is too slow.
As we have seen, carbon pricing plus rebate is also vulnerable to misrepresentation by bad actors. Undefended, it will fail politically.
Prof. Green's other suggestions are sound, but there is no need to kibosh carbon pricing. There is a need to defend and explain it to Canadians. By failing to defend it, the Liberals defeated their own climate policy.
Global warming represents the greatest market failure in history.
Fossil fuel producers and consumers use the sky as a free dump.
What's the solution? Carbon pricing.
The price drivers pay at the pump excludes most of the climate, environmental, and health costs of production and consumption.
Producers and consumers externalize or download the environmental and health costs to the public purse, the environment, and future generations. Massive invisible subsidy.
This practice violates free-market economics.
Fossil-fuel subsidies, visible and invisible, far outweigh government support for renewables — and undermine carbon pricing. Further reducing the price at the pump, and tilting the playing field toward fossil fuels.
To solve global warming, and prevent environmental problems in general, we need to end the market failure. Hence, carbon pricing.
In a rational market, consumers must pay the full, true, actual costs of the goods and services we produce and consume, including energy.
We need to pay the full price of the full, true, actual costs of the goods and services we produce and consume. That goes for all goods and services, not just fossil fuels. Anything else is voodoo economics.
The fossil-fuel industry remains viable and hugely profitable precisely because producers and consumers are permitted to externalize most of the climate, environmental, and health costs.
We need true pricing, regardless of climate change.
Renewables and sustainable alternatives need a level playing field. They cannot compete as long as fossil fuels enjoy an artificial price advantage.
The market is rigged in favor of fossil fuels. We need to unrig it.
All climate measures cost money.
Carbon pricing is the most cost-efficient and transparent mechanism to reduce emissions. Allowing consumers and energy producers to make marketplace decisions that make the best sense to them.
Most households come out ahead after rebate.
Carbon pricing is progressive policy.
When Poilievre axes the tax, he also axes the rebate.
Low-income households stand to lose the most.
That is a good point in the fact low-income households lose the most. But notice that Pierre fails to mention that to his followers and has them believing it is the cause of rising prices than the impact that climate change is having on the rising cost. Pierre also forgets to tell his followers that half the worlds farm land is drying up and driving up prices, not the carbon measures.
Coffee prices for example, due to lower yields because of climate change, has increased the cost of coffee beans, not the carbon measures. The same can be said for other produce impacted by climate change. Out west, wheat yields have declined due to climate change and that has impacted all products prices that contain wheat of some sort.
Too bad Pierre isn't focused on the true reasons things cost more than his disinformation axe the tax nonsense. But I guess his followers are not smart enough to figure that out themselves and can't fact check his disinformation. But I guess with Mark Carney most likely to lead the party going forward, Pierre's axe the tax campaign has become lame and ineffective as a winning strategy.
The Liberals have done a terrible job explain the Carbon Measures and the how the rebate offsets that. Too many believe they are paying more than they get from the rebate and primarily due to bad math on their part.
The big mistake most make, is the rebate is only meant to cover the carbon portion of each litre of gas, not all the other taxes (provincial, federal). At the current rate of $0.1761 per litre, one would have to buy a lot of gasoline to eat up the rebate received.
Everything Pirerre Polivere spews is disinformation with his axe the tax nonsense, and should be focused on affordable housing, cost of living, more uniform healthcare and things that actually impact Canadians pocketbook. To this point, a lot of talk and zero substance by Pierre.