It looked for a moment as if the Conservatives would be lumbered with thousands of redundant “Axe the Tax” signs, billboards and placards after new Liberal leader Mark Carney promised to kill the consumer carbon tax.
But some quick thinking by the Conservative party braintrust means we can still have a carbon tax election and they can recycle all the campaign paraphernalia.
Pierre Poilievre, standing proudly behind an Axe the Tax lectern sign, announced on Monday that he will not only kill the consumer carbon tax but remove the federal backstop to the industrial carbon tax that is doing the heavy lifting when it comes to reducing Canada’s emissions.
Carney wants to expand the “shadow carbon tax”, Poilievre said. Combined with President Donald Trump’s tariffs, the industrial tax is a “disaster for workers” that will see money and jobs leave Canada, he added.
The Liberals see things differently. Carney was relatively relaxed about killing the consumer carbon tax because it contributes less than 10 per cent of emissions reductions, compared to three times that impact for the industrial schemes.
Carney argues “large polluters” like steel companies have a choice: reduce emissions or pay Canadians to emit.
He told CTV that we are “leapfrogging” the Americans, who have no carbon pricing system in place. Last May, he told the Senate banking committee that countries that don’t take measures to reduce carbon will see their trade access cut off through measures such as the border-adjustment mechanism (a carbon tariff) that has been adopted by the European Union and Carney wants here. If he stays as prime minister, Carney will move in the opposite direction to Poilievre on industrial carbon pricing.
But there is less to the Conservative leader’s announcement than meets the eye, even if he wins the upcoming election.
Industrial carbon pricing is run by the provinces, most of which have their own regimes. Alberta’s Technology Innovation and Emissions Reduction (TIER) scheme has been around since 2007, surviving governments of all stripes, despite former premier Jason Kenney and current premier Danielle Smith running on “Axe the Tax” platforms against the consumer tax.
Poilievre will rely almost exclusively on the “technology not taxes” mantra
Unlike the consumer tax, there is no groundswell of opinion to kill output-based pricing and Poilievre has no authority to completely get rid of it. He said provinces will have the freedom to address the issue as they like and there will be no federal obligation to have an industrial carbon tax.
Yet, there are likely to be implications, should the Conservatives win the election.
One source suggested that Smith is likely to pause its future industrial carbon-tax increases — Alberta is scheduled to hit $170 per tonne of CO2 by 2030 — and may even cancel the whole system. “It’s on the table, for sure,” he said.
TIER is a cap-and-trade system, and there are already concerns that there are too many carbon credits, which reduces the incentive to invest in decarbonization. Credits trade for somewhere close to $40 a tonne, far below the headline price of $80 per tonne.
Ending TIER and its counterparts in other provinces would leave Canada without a carbon reduction plan.
The Canadian Climate Institute’s assessment of the federal government’s emissions-reduction plan said that Canada is on course to hit 440 megatonnes of emissions by 2030, compared to 775 megatonnes if there is no climate policy.
The Conservatives appear to be set to go into the election campaign without any concrete proposals to reduce greenhouse gases.
By killing the consumer tax, the industrial emitter backstop, the oil and gas cap and the clean fuel charge, Poilievre will rely almost exclusively on the “technology not taxes” mantra: the use of investment tax credits to incentivize technology adoption.
That may prove to be enough — to win an election, at least, if not fight climate change. It remains a top-tier concern for many Canadians, according to opinion polls, but it has been relegated down the list by Trump’s tariffs and cost-of-living worries.
There may be no public pressure to do anything much about climate change if the economy is shrinking.
At the same time, Alberta has just updated its proven gas reserves to nearly six times the level from the last assessment. Oil reserves have been boosted by seven billion barrels, at a time when the era of shale growth in the U.S. is coming to an end, regardless of Trump’s cries of “drill, baby, drill.”
This industry is not going away and, as Canada looks to diversify its customer base, the pressures to decarbonize its resources will grow.
The industrial carbon pricing system is “a strategic asset” for growing and strengthening Canadian industry, said Michael Bernstein, president and CEO of the Clean Prosperity climate advocacy group.
He argues that a stringent industrial carbon price is the most cost-effective way to lure investment.
It also acts as an antidote to arguments made by former environment minister Steven Guilbeault and others about the need for an oil and gas emissions cap, since it allows for more production without necessarily increasing pollution.
Carney’s hopes of success in the election probably rest on talking about Trump often and about climate change never. But it seems unlikely he will be able to resist weighing in on this move.
Poilievre may well get his carbon tax election after all.
National Post
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