Why people love to hate the carbon tax

Any hope the Liberal Party had that their signature climate policy would cease to be an albatross has been dashed, as allies of the carbon price drop like flies and opponents ramp up attacks. For Liberal strategists, there’s little room left to manoeuvre. 

Conservative Leader Pierre Poilievre has successfully soured the public on the price on pollution with a misinformation campaign paired with a steady drumbeat of “axe the tax,” calls for a “carbon tax election,” and efforts to tar high-profile Liberal insider Mark Carney with the moniker “Carbon Tax Carney.” Poilievre’s message discipline has ensured the false claim that the carbon price is driving the affordability crisis is at the forefront of the public’s mind. 

While it’s true that the point of the carbon price is to make it steadily more expensive to use fossil fuels to encourage people to invest in cleaner ways to heat their homes and move around, it’s simply not true that the carbon price is a major inflation driver.

Last year, the Bank of Canada estimated the carbon price was responsible for 0.15 per cent of annual inflation. (Last year’s inflation was pegged around three to four per cent, and the year before it was about eight per cent, suggesting the carbon price was responsible for one-twentieth and one-54th of price increases respectively.) The major driver of inflation in recent years has been driven by corporate price gouging, climate change, and geopolitical instability. In fact, some research suggests carbon pricing has had a deflationary effect on food prices in Canada. 

Regardless of the evidence, a narrative has taken hold that the carbon price is hurting Canadians, despite most people getting more money back through the Canada Carbon Rebate than they pay. Even in an affordability crisis, a significant number of Canadians now support ditching a policy that leaves them with more money in their pockets. 

Carbon pricing is the federal government’s emissions reduction workhorse. The goal is to slash emissions 40 per cent by 2030, and the consumer-facing carbon price is estimated to drive just under 10 per cent of that target, while the industrial carbon price is expected to be responsible for 23 to 39 per cent of emission reductions by 2030, according to the Canadian Climate Institute. Together, carbon pricing is expected to drive one-third to one-half of the emission reductions the federal government has committed itself to under the Paris Agreement.

In an interview with Canada’s National Observer, Environment and Climate Change Minister Steven Guilbeault said he and his fellow Liberals are not giving up on the carbon price. He said “our numbers are showing us” more Canadians are paying attention to, and discussing the rebates, suggesting more now understand the policy. 

“I still think we can shift the narrative and the public debate on this,” he said. 

“Fighting climate change is difficult, and sometimes unpopular, but it's the right thing to do,” he said. “And I am finding it very disappointing to see progressive governments or parties give up on it because it's politically difficult.”

If the consumer-facing carbon price falls, the federal government would have to find another way to cut 19 to 22 million tonnes of CO2 from the country’s total emissions to meet its 2030 climate goals.

To do that the federal government could:

• Strengthen the forthcoming oil and gas emissions cap to require steeper emission cuts on a more rapid timeframe;
• Regulate the financial sector, using Independent Senator Rosa Galvez’s Climate Aligned Finance Act, to require Bay Street to aid the country’s energy transition;
• Introduce a more aggressive building retrofit campaign, offering higher rebates for heat pump conversions and retrofits, and a strong national net-zero building code;
• Close loopholes on fossil fuel subsidies, and redirect the money to renewable energy;
• Invest more money in public transit operations, rather than focusing on capital spending.

More aggressive climate action won’t necessarily be easier politically, given how many climate policies face provincial backlash and court challenges. 

Guilbeault cited the forthcoming emissions cap as an example. If it mandated steep emission cuts that led to production cuts, “we would likely lose court challenges.” Even though the climate science is clear fossil fuel production will have to drop to avert catastrophic warming, “the cap has to show that what we're proposing companies do in terms of emission reductions is technically feasible, without affecting production,” he said.

“Climate is something the federal government can intervene [on], but it's not a magic wand, and we can't wave it as we wish. We have to tread lightly,” he said. 

Realistically, this government is out of runway to revamp its climate strategy. It takes time to develop policy, and even more time for the policy to begin to have impact. 

The 2030 goal is already slipping out of reach, which is why it’s alarming to see public attention so focused on tearing down existing climate policy, instead of strengthening existing policies or introducing new ones, experts tell Canada’s National Observer. Nonetheless, there are important lessons to learn that could inform future governments, or help the Liberals course correct. 

Getting the order right

In an interview with Canada’s National Observer, Brendan Haley, an adjunct professor of sustainable energy policy at Carleton University, says Trudeau’s problems began at the very outset. The Liberals failed to properly consider the political dynamics of their climate strategy, he said. 

“When they got elected in 2015, they spent the majority of their first mandate and their early term of government implementing the carbon price,” he said. It would have been better to lead off with major investments in public transit, decarbonizing heavy industry, or retrofitting homes to be more energy efficient –– initiatives with positive benefits that would be coming to fruition now. 

Liberal climate initiatives include new public transit investments, tax credits for clean tech, and forthcoming clean electricity regulations, but those benefits are not yet widely felt. While those policies roll out, the price on pollution continues to climb and is felt by everybody who pays a heat bill or fills a vehicle with gas. 

UBC political science professor Kathryn Harrison said it's important to get the order right and offer complementary policies.

“You provide transit first before you make it really difficult for people to afford to drive. Make heat pump subsidies widely available before driving up the cost of gas heating,” she said. “We have had subsidies for electric vehicles, [and] subsidies for heat pumps, but those could be done on a larger scale.”

Politics is always easier in hindsight, said Guilbeault. The Liberals won two elections since the carbon price was put in place, so he doesn’t believe the timing of the policy is what turned so many people against it.

“It is really when Poilievre was elected that he decided to use this as a political wedge,” he said. 

Feedback loops

Haley says carbon pricing does not lend itself well to building supportive political coalitions, because the costs are clear to the individual, while the benefits are widely spread out. Policies aimed at making building retrofits more affordable, or attracting investments in battery plants that create jobs, have “much clearer benefits,” and are more likely to mobilize political support, he said.

“We really need policies that build political coalitions to re-enforce them,” he added. 

To last over the long haul, there must be a positive feedback loop that supports climate action, experts say. 

Adam Scott, executive director of Shift: Action for Pension Wealth and Planet Health, told Canada’s National Observer there are a wide range of climate policies that directly improve peoples’ lives. 

“A lot of climate policy seems punitive and negative, and… most people don't feel like these policies do anything for them,” he said. But “if you can link climate policy into other areas that make people's lives measurably better and more affordable, you're going to have more effective policy.”

A clear example is tackling energy poverty, Scott said. If a government policy can make homes more efficient, it can significantly reduce emissions, make peoples’ homes more comfortable, and protect them from high power rates. “But we don't have any well-designed federal programs that have done that,” he said.

To sustain public support, avoiding hypocrisy also helps, he said. The most notable example during the Trudeau era was declaring a climate emergency in 2019, and the very next day approving the Trans Mountain expansion project to aid the growth of the oilsands and the fossil fuel industry, now the country’s largest source of emissions. 

“Trans Mountain was a generational betrayal for a lot of people,” Scott said. “You see the government bragging about its fairly small carbon price… at the same time as approving massive new long-lived [fossil fuel] infrastructure.”

“It just increases the cynicism across the board, and we've seen a number of [times] of just failing to get it,” he said.