While Conservative Leader Pierre Poilievre is calling for an “axe the tax” election this year, the Liberals’ carbon tax is merely the tip of the iceberg when it comes to the added costs imposed on Canadians by current federal climate change policies – many of which are inefficient, counterproductive and illogical.
In reality, Prime Minister Justin Trudeau’s carbon tax – meaning in this context the federal fuel charge on 22 different forms of fossil fuel energy, including gasoline and natural gas – is not a major contributor to reducing industrial greenhouse gas emissions.
The fuel charge will increase by 18.75% to $95 per tonne of emissions on April 1, up from $80 per tonne, on its way to $170 per tonne in 2030. That will raise the cost of gasoline alone by 20.91 cents per litre compared to 2019 when it was first imposed, on its way to 37.43 cents per litre in 2030.
But its impact on emissions is relatively small, with the Trudeau government itself acknowledging last year in response to Conservative questioning that it “does not measure the annual amount of emissions that are directly reduced by federal carbon pricing.”
The Canadian Climate Institute – an independent, federally-funded think tank – estimated in 2024 that the fuel charge will account for a mere 8% to 14% of reducing emissions to the federal target of at least 40% below 2005 levels by 2030.
While controversial in terms of whether its rebate system leaves most Canadians paying it better or worse off financially, the fuel charge is just one of 149 federal policies intended to address climate change.
The total cost of these federal programs to the Canadian public as of April 2023, according to the Trudeau government, was more than $200 billion, excluding the added costs of provincial and municipal government programs.
The CCI said the biggest single contributor to reducing emissions is industrial carbon pricing, an output-based pricing system for large emitters involving the buying and selling of carbon credits, accounting for 20% to 48% of emission reductions by 2030.
That’s in addition to the government’s oil and gas emissions cap (7% to 34%), methane regulations (1% to 21%), waste methane capture (7%), clean fuel regulations (0% to 4%), investment tax credits (2% to 3%) and electric vehicle standards (2% to 3%).
Along with many economists, Trudeau argues the federal carbon tax is the most efficient way to reduce emissions and only a minor contributor to inflation, which is why he preferred it to more expensive alternatives such as government subsidies and regulations.
But in reality, Trudeau imposed all three on Canadians – the carbon tax, plus subsidies and regulations – while the U.S., our largest trading partner, has never had a national carbon tax.
How successful has Canada’s approach been? Not very.
In 2022, the most recent federal data available, Canada’s emissions rose to 708 megatonnes, up from 698 megatonnes in 2021.
In terms of Trudeau’s goal of lowering emissions by at least 40% compared to 2005 levels by 2030, so far it has decreased them by a mere 7.1%.
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A report by federal environment commissioner Jerry DeMarco in November 2024, which audited the Liberals’ Canadian Net Zero Emissions Accountability Act, concluded Canada is unlikely to reach Trudeau’s 2030 target because of a wide range of policy failures related to flawed implementation.
The Liberals constantly tout the potential economic and environmental benefits of their climate policies.
But they underplay their costs and, as parliamentary budget officer Yves Giroux has reported, at 1.5% of the global total, even reducing Canada’s emissions to net zero will have no material impact on climate change without a global strategy to cut emissions, which has consistently failed to achieve emission targets set by the United Nations.
In reality, the Trudeau government’s climate change agenda is primarily an economic policy with enormous implications for Canadians as both energy consumers and taxpayers.
For example, Canada will have to dramatically increase its capacity to generate electricity to meet ever-growing demands placed on the national grid by our heavily subsidized electric vehicle industry.
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That’s driven by federal mandates that 60% of new passenger cars and light trucks sold in Canada must be electric by 2030, increasing to 100% in 2035, along with 35% of new medium and heavy-duty vehicle sales by 2030 and, where feasible, 100% by 2040.
But federal climate change policies are also designed to reduce and eventually eliminate the use of fossil fuels, including natural gas, to generate electricity, in favour of wind and solar power.
Unlike natural gas, intermittent wind and solar power cannot provide base load power to the electricity grid on demand, given current limitations on battery storage technology.
The premature elimination of natural gas in favour of wind and solar power to generate electricity could make Canada’s electricity grid, run by the provinces, increasingly unstable and vulnerable to brownouts and blackouts, with significant new costs imposed on the public.
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Creating domestic supply chains to provide the raw materials to manufacture EVs and EV batteries – currently dominated by China – will require the rapid expansion of Canadian mining operations, in the face of federal and provincial environment laws that take many years to comply with.
Increased demands on the electricity grid are also coming because of the need to power energy hungry artificial intelligence systems.
These are just some of the problems that must be addressed going forward, beyond scrapping the federal fuel charge.
They speak to broader concerns about whether it is even possible to fix the expensive design flaws and logical inconsistencies inherent in Trudeau’s Byzantine system of carbon taxes, subsidies and regulations his government has created during its decade in power since 2015.