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Trudeau fires back at premiers over carbon price

Prime Minister Justin Trudeau speaks during a press conference about wildfires on June 5, 2023. Photo by Natasha Bulowski/Canada's National Observer

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Prime Minister Justin Trudeau is holding firm on the federal carbon price, telling premiers the carbon price and associated rebates will increase as planned despite months of relentless attacks from the Conservative Party of Canada and many provinces.

In a letter sent Tuesday afternoon to premiers seen by Canada’s National Observer, Trudeau said his government knows Canadians want to fight climate change and stood by the policy.

“The devastating effects of floods, wildfires, and droughts are escalating costs annually, destroying homes, ravaging communities, and inflating the prices of food and consumer goods,” the letter reads. “Putting a price on pollution is the foundation of any serious plan to fight climate change. It is the most efficient way to reduce emissions across the economy — from industry to transportation to buildings and businesses.”

The letter says it “is critical to dispel the misconception” that the carbon price is driving affordability concerns, and that according to the Bank of Canada, the carbon price accounts for approximately 0.1 per cent of annual inflation.

“Since Canada’s carbon pricing system was first introduced in 2019, we have made it clear that we are open to working with any and all provinces and territories that want to establish their own pricing systems (as long as they meet or exceed the national benchmark),” the letter adds. “When we last engaged with provinces and territories on this in 2022, all of your governments either did not propose alternative systems or (with the exception of New Brunswick) proposed systems that did not meet the minimum standard for emissions reductions.

Prime Minister Justin Trudeau is holding firm on the federal carbon price, telling premiers the carbon price and associated rebates will increase as planned despite months of relentless attacks from the Conservatives and many provinces. #cdnpoli

“However, we continue to remain open to proposals for credible systems that price pollution that reflect the unique realities of your regions and meet the national benchmark.”

Provinces that have demanded the carbon price increase be paused include Alberta, Saskatchewan, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

The letter is the federal government’s most forceful response to date to some provinces' calls for a pause on the planned April 1 carbon price increase from $65 to $80 per tonne of CO2.

Since the carbon price was put in place in 2019, the tax on each tonne of carbon pollution has increased every year. It started at $20 per tonne and if the planned trajectory holds, it will climb to $170 per tonne by 2030. The purpose of the policy is to make planet-warming greenhouse gas emissions steadily more expensive to incentivize investments in clean alternatives.

At the same time a carbon tax is levied, a rebate is provided to Canadians that returns more money than is taxed to 80 per cent of households. Typically, only the most wealthy Canadians find themselves out of pocket due to their disproportionate fossil fuel consumption.

The carbon price is significantly lower than federal estimates of the “social cost” of carbon — a metric used in cost-benefit analyses that helps capture the impact of planet-warming greenhouse gas emissions. It includes things like the damage to human health, agricultural productivity, property damage from natural disasters, energy system disruptions and the climate benefits of ecosystems.

This year, the federal government estimates the social cost of one tonne of carbon dioxide pollution at $266 and one tonne of methane at $2,494.

Trudeau’s response to premiers demanding a price freeze comes as the government’s central climate policy finds itself on life support after months of blistering attacks from Conservative Leader Pierre Poilievre.

Poilievre’s anti-carbon price politics reached a fever pitch last week when his party tabled a motion calling on the federal government to cancel the planned increase and days later, filed a non-confidence motion that if successful would have toppled the government. It failed, but experts told Canada’s National Observer it didn’t need to succeed in order to serve its purpose of helping to frame the next election as a referendum on the carbon tax.

As Trudeau tells the premiers the carbon price will continue as planned, all eyes are on how Ottawa will respond to Saskatchewan after Premier Scott Moe instructed Crown utility SaskEnergy not to apply the carbon tax on consumers — a choice to break federal law. Tuesday’s letter did not reference Saskatchewan specifically.

In late February, Dustin Duncan, the minister responsible for SaskEnergy, confirmed the province would not pay the federal carbon price levy it owed Ottawa. He said the decision to stop collecting the carbon tax from customers was a way to offer relief to families following the federal government’s carbon price exemption on home heating oil, predominantly used in Atlantic Canada.

When Duncan made the comments, Natural Resources and Energy Minister Jonathan Wilkinson said by choosing not to collect the carbon tax, Saskatchewan residents would lose out on the rebates that are provided. The carbon price rebate would provide $1,500 on average to a family of four in Saskatchewan — a notably higher amount than the $400 saved by ditching the carbon tax that Duncan said would be achieved.

The Saskatchewan government’s decision set the stage for one of the tensest political battles over climate policy this country has seen. When Moe first announced his government would buck federal law, University of British Columbia political science professor Kathryn Harrison told Canada’s National Observer she was horrified by the prospect.

“This is an extraordinary moment in Canadian democracy that a government, a provincial government, would choose to break a constitutional federal law,” she said at the time.

In an interview with Canada’s National Observer last week — when the federal government was fending off attacks from Poilievre and seven premiers calling on the federal government to pause the carbon price at its current level or scrap it entirely — Wilkinson said responding to Saskatchewan was an “active conversation.”

“This isn't about throwing the premier in jail, but there have to be consequences for the province of Saskatchewan, the government of Saskatchewan, if they're going to simply break the law,” he said.

“I find it utterly appalling that a provincial premier would knowingly flout the law, and I just do not understand how Premier Moe can get his head around the idea that somehow he can pick and choose which laws he abides by and yet he expects citizens of Saskatchewan to abide by the laws that are passed through the provincial legislature.”

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