Is the carbon tax over?

In a country that produces massive amounts of fossil fuels, and whose best-selling vehicle is still the F-150 pickup truck, Canada’s carbon policy won’t work. With the partial suspension of tax announced by the Prime Minister last week, we can speak openly.

Carbon pricing is simple and effective if applied with rigor and commitment, which has been sorely lacking in Canada for decades.

First, it’s important to remember that from 2006 to 2015, the country lagged behind Stephen Harper’s government in its strategy to reduce greenhouse gas emissions. The Conservatives’ anti-tax rhetoric is alive and well in 2023 and has a clear impact on Canadians’ views on carbon pricing.

Also, Justin Trudeau’s government, in power since 2015, took time to sort out its carbon pricing plan. Negotiations with provinces have been complicated, some of them have taken legal action, and a gradual increase in the price of carbon has limited its effects on greenhouse gas emissions.

The effect will be catastrophic: from 1990 to 2021, the government says greenhouse gas emissions in Canada will increase by 13.9%; According to site data, 19% Our world in data. The government program was undoubtedly slow in yielding results.

The randomness of Justin Trudeau

A carbon tax is an effective economic tool based on a fundamental concept: price is everything. If it costs more, you will find other solutions to avoid paying the tax in question. Ecotaxation is based on this logic. The goal of consumers, ultimately, is not to pay this tax, but to avoid it and change their behavior to avoid such an additional cost.

By suspending the fuel oil tax for three years, Justin Trudeau is shooting himself in the foot and screwing up his environmental agenda.

Carbon pricing is a pillar of the government’s climate plan. By choosing to suspend its application, the premier is agreeing with his detractors and provoking the ire of provinces, who will demand a broader and more comprehensive moratorium, similar to Saskatchewan Natural Gas.

This gesture could have dangerous consequences for the carbon tax. We might even wonder if this is the end of carbon pricing in Canada.

A former Liberal strategist, David Herle, told CTV on Sunday that the Liberals may drop the idea of ​​a price on carbon at the next election. According to him, the suspension of fuel oil tax is only the beginning of future measures on carbon pricing.

Prime Minister Trudeau told the House of Commons on Tuesday that fuel oil costs more than natural gas, but it emits more greenhouse gases. So he says he’s withholding taxes on fuel oil to help low-income families, but he’s actually penalizing people who heat with natural gas, an energy source that produces fewer emissions than fuel oil.

This policy is equivalent to a subsidy to fuel oil producers. Does the Prime Minister realize the total contradiction of his rationale?

However, a carbon tax works…

It is important to say that the carbon tax is a reliable tool that can work well. Here are some examples.

In Canada, British Columbia in 2008 imposed a tax on each metric ton of carbon dioxide produced by fossil fuels. Starting at $10 per ton in 2008, it reached $30 in 2015.

During this period, greenhouse gas emissions decreased by 16.1% in this province in the west of the country. Is the carbon tax the only reason for this? No, of course not. But this tool was added to others to create a coherent and effective policy.

Elsewhere in the world, carbon tax champions can be found in Scandinavia. Sweden introduced a carbon tax in 1991, rising from CA$35 per ton to CA$180 today. The Swedish government is proud that the population and businesses have adapted to this reality quickly and gradually.

Today, Swedish ecotax is part of the country’s climate arsenal. Greenhouse gas emissions are reduced by 37.7% in 2021 compared to 1990. GDP Sweden is up 92%.

Denmark also has a carbon tax since 1992. Part of the money is used to subsidize environmental projects, while another part goes back into the industries. Denmark has reduced its emissions by 44.8% from 1990 to 2021.

Many effects

Carbon pricing is not popular. It requires political courage to implement it. Without presenting a credible plan to reduce greenhouse gas emissions, conservatives have not stopped attacking the tax. The Liberals are self-destructing their own environmental agenda after buying a pipeline and approving an oil project in Newfoundland.

This means three things. First, Canada may not meet its greenhouse gas targets. Second, government policy creates confusion and uncertainty for businesses. Third, Canada lags behind in terms of innovation, which is already a real problem in the country.