Trudeau’s national carbon price plan fills vacuum, not coffers: Hebert

Prime Minister’s introduction of a national floor price for carbon marks the belated end of a federal lethargy when it comes to Canada’s climate-change commitments.

TheStar.com
Oct. 4, 2016
By Chantal Hebert

In an ideal world - at least from the federal perspective - the carbon tax Prime Minister Justin Trudeau announced on Monday is one that he would be happy enough to never have to collect anywhere in the country.

For this is not about replenishing the coffers of an impoverished federal government.

Trudeau’s planned introduction of a national floor price for carbon in 2018 marks the belated end of a federal vacuum that has seen successive prime ministers - from Jean Chretien onward - make climate-change commitments on the international scene and then do little to ensure Canada meets them.

The result has been a patchwork of provincial schemes that lack a connection to an overall plan and the clarity and impetus that could have attended it.

The upside of those decades of federal lethargy is that the vast majority of Canadians will not - at least initially - feel the impact of Trudeau’s incoming carbon price or even see it. Nor will most provinces, starting with the four largest ones, have to rush to tweak their existing climate change strategies to meet the federal benchmark.

That’s because they already have schemes in place that meet or exceed the initial $10 a tonne floor price the federal government intends to put on carbon in 2018.

For example, B.C. started off with a carbon tax at the $10 level … almost a decade ago. That provincial tax now stands at $30. Under the plan announced by Trudeau on Monday, the federal floor would be raised by $10 a year for five years to reach $50 a tonne by 2022.

(As an aside, by the time Ontario, Quebec, Alberta and B.C. have to up their game to keep up with the national escalator clause, the 2019 federal election will be over.)

Provided they meet or exceed the federal floor price on carbon emissions, the provinces will also continue to be free to pursue climate-change mitigation schemes of their own choosing.

At some point, though, the onus will be on them to demonstrate that they are meeting or exceeding the federal floor price. Quebec and Ontario, for instance, have opted for a cap-and-trade system. Over the summer, the provinces and the federal government failed to reach a consensus on equivalencies between carbon taxes and cap-and-trade pricing. The two will eventually have to be reconciled.

As for Saskatchewan, Nova Scotia, Newfoundland and Labrador and the three northern territories that have resisted putting a price on carbon, they could still avoid the federal tax by introducing one of their own. But if the federal government does tax emissions in their place, it will return the proceeds to the provincial treasuries, presumably leaving them free to use the revenues to offset the cost of carbon pricing with tax breaks.

Given all that, imminent sticker shock is not the first probability that comes to mind on the heels of Monday’s announcement.

News of the federal intentions came as Environment Minister Catherine McKenna was meeting with her provincial counterparts to try to come up with a consensus on the very issue of carbon pricing. That prompted some provinces to cry foul.

But in the end, the announcement couldn’t have come as a total surprise to the premiers.

It will be a year later this month since the Liberals were elected to power and 10 months since Trudeau attended the Paris conference on climate change where he proclaimed that Canada would play a more proactive role on the global environmental scene.

China and the United States jointly ratified the Paris agreement to curb climate-warming emissions last month, prompting Trudeau to signal that Canada would soon follow suit.

But last month also saw the Liberal government confirm it would stick with the greenhouse gas emissions targets set under Stephen Harper and give the green light to a massive liquefied natural gas project in B.C that will, should it see the light of day, rank as one of the country’s biggest emitters.

On Monday, Alberta premier Rachel Notley made it clear her support for Ottawa’s carbon pricing plan was contingent on the approval of a pipeline at the earliest opportunity.

Absent at least one proactive measure on climate change, Trudeau would have been hard pressed to ratify the Paris protocol with a straight face.