Trudeau’s uphill battle to save — and sell — carbon pricing

Since the carbon price carveout for home heating oil was announced in October, political pressure to further unravel the centrepiece of Prime Minister Justin Trudeau’s climate policy has grown.

Now the federal Liberals face tough choices over the future of this signature policy. Conservative Leader Pierre Poilievre is hammering Trudeau’s government day in and day out over the levy, and virtually every region of the country (aside from Quebec and British Columbia, which have their own provincial carbon price policies) is also calling for exemptions.

The premiers of Ontario, Alberta, Saskatchewan, Nova Scotia and New Brunswick have written letters to the federal government calling for the carbon price to be removed from all forms of home heating. Most recently, Manitoba Premier Wab Kinew said his province has a “strong case” for an exemption, and some First Nations leaders in Ontario, with support from the Assembly of First Nations, are demanding a judicial review of the policy.

Perhaps most striking is Saskatchewan Premier Scott Moe’s government saying its Crown utility SaskEnergy will stop collecting the carbon levy. That move is a conscious decision by Moe to break federal law that risks fines and jail time for executives but crucially sets the stage for an unprecedented fight between the provincial and federal governments.

“This is an extraordinary moment in Canadian democracy that a government, a provincial government, would choose to break a constitutional federal law,” University of British Columbia political science professor Kathryn Harrison told Canada’s National Observer. “It’s horrifying to me.”

SaskEnergy has until the last day of February to pay the levy to the federal government. It’s unclear who will blink first, but if the due date comes and no payment has been made, tough choices are inevitable.

Trudeau’s government is sinking in the polls. A poll published by Abacus Data on Thursday found higher disapproval ratings than the polling firm has measured since the Liberals were elected in 2015. Under Poilievre, the Conservatives now enjoy a 17-point lead over the Liberals with cost of living issues at the forefront of people’s minds. For Trudeau, restoring public confidence in his government is a top priority before any potential election.

“Our first poll of 2024 finds one of, if not the worst, opinion environments the Liberal government has found itself in,” said Abacus Data CEO David Coletto in a statement. “The prime minister’s personal numbers are as negative as they have ever been, and the desire for change has never been as high. The result is a big Conservative lead nationally.”

Experts interviewed by Canada’s National Observer say the Liberals have options to try to change the narrative that their government is out of touch with everyday affordability concerns but after nearly a decade in power, their political capital has all but evaporated, making it harder to manoeuvre when being attacked left and right.

Opening the floodgates

The floodgates for this conflict were opened in October when Trudeau, surrounded by the Liberals’ Atlantic caucus, announced home heating oil would be exempt from the carbon price in a move that disproportionately benefited Atlantic Canadians who, on average, pay more in heating costs than other parts of the country.

Though the Liberals tried to dodge appearances of playing regional favourites by saying the pause applied to home heating oil across Canada, not just in Atlantic Canada, the optics of announcing the decision surrounded by the Atlantic caucus didn’t help sell that argument. The message was further undermined when Rural Economic Development Minister Gudie Hutchings said if Western and Prairie provinces wanted exemptions to the carbon price, they should elect more Liberals.

University of Prince Edward Island political science professor Don Desserud said the announcement was “clearly” a way the federal Liberals were trying to help Atlantic MPs hold onto their seats, but the benefit of that move didn't last long.

Regardless of the fact the carbon price rebates put more money in most Canadians’ pockets than they pay, the perception among many is they’re being punished during an affordability crisis by being made to pay more for heating their homes and filling up their tanks. So when relief is offered, people may be grateful but they’re not enthusiastic about it.

“You don't say, ‘Wow, I really like you now because you stopped hurting me.’ You say, ‘Thank you for stopping that, but jeez, you shouldn't have done it in the first place,’” he said.

“At the time, [I remember] thinking that's a really dangerous thing to do politically because when one region is seen as getting something other regions are not getting, you do expect the other regions and other provinces to say, ‘Wait a second. What's going on here?’”

Greenpeace Canada senior energy strategist Keith Stewart said the Liberals have never had good communication on the carbon price, but the fallout from the carveout will go down in history as a case study on how to mismanage an issue.

“There's no good outcome right now,” he said. “Whoever came up with the bright idea of the Atlantic carveout is probably now getting their fingers rapped because it hasn't won them many friends and has now opened up the floodgates for everybody else.”

Liberal options

Desserud said he was “mystified” by the “lack of political savvy” and questioned where the advice is coming from in the Prime Minister’s Office.

The carbon price is “not a vote-getter, in fact, it’s huge vote-loser … but it speaks to a much bigger issue of a government that doesn't seem to get the point that asking everyday ordinary Canadians to pay a price for something they don't feel responsible for … is just going to lose them votes,” he said.

Desserud emphasized that the actual impact of the carbon price on planet-warming greenhouse gas emissions is a separate issue politically. One can accept the argument it’s an important tool for reducing emissions, but nevertheless, it’s not a vote-getter. And if the Liberals lose to the Conservatives and Poilievre forms government, there’s little doubt the carbon price will survive.

He said his advice would be to ditch the carbon price, take the hit for flip-flopping and replace the program with ones that clearly reward people and help reduce emissions.

But this is also a government that has defended its carbon price in the past two elections, and internationally uses the policy to signal its climate credentials, making the reputational hit of backing down even higher.

Despite the mounting political challenges for Trudeau’s government, Harrison said she doesn’t think it’s a given the Liberals will walk the policy back further.

For her, the question in the minds of voters waffling between the Conservatives and Liberals may not be as straightforward as whether they like or dislike the carbon price, but rather how important Canada having an overall credible climate strategy is.

“The irony is people are opposed to a policy that is in most cases putting money in their pockets,” she said. “So the question on my mind is whether we will see not just an effort to deflect by saying we have a credible plan, the Conservatives don't … but also a more transparent campaign to help Canadians understand what they're really paying and what they're getting back.”

But it promises to be an uphill battle.

“There's just this natural challenge of explaining [the policy], and then on top of that, it creates a really ripe ground for a populist campaign to amplify voter misunderstanding,” she said. “We have seen that time and again from the Conservatives, and really ramped up under Pierre Poilievre.

The Prime Minister’s Office routed questions about the future of the carbon price to Finance Minister Chrystia Freeland’s office, who told Canada’s National Observer the government is committed to no further exemptions.

“The price on pollution puts more money back into the pockets of the majority of Canadians and fights climate change,” said Freeland’s press secretary Katherine Cuplinskas. “In 2023-24, a family of four on the Prairies is receiving up to $1,544 back through pollution pricing rebates. And starting this spring, families living in rural communities will see a 20 per cent top-up.

“This direct support to families is contingent on a province having the federal price on pollution.”

Therein lies a clue about one way the Liberals may be able to flip the script. If the public can develop a better understanding that rebates put more money back into their pocket, then the implication of axing the tax is to eliminate those rebates.

Emphasizing rebates from the carbon price, and the subsidies being made available for electric vehicles and heat pumps, is one way Harrison thinks the Liberals could defend their climate record ahead of an election.

But changing minds is likely to be difficult because support and understanding of the carbon price follow partisan lines, she said.

“The research I've done with colleagues finds that almost everyone underestimated how much money they're getting back, Conservatives much more than Liberals, and people don't have a very good understanding of how much they're paying,” she said.

“So a question on my mind is whether the Liberals themselves or independent think tanks want to decide before the next election to help voters better understand how much they're paying and how much they're getting back because it's a pretty simple thing.”