One thing on which admirers and critics of the Liberals’ new climate plan seem to agree is its boldness. Particular attention has focused on the proposal to increase the carbon tax by $15 a tonne each year, from $50 in 2022 to $170 in 2030.
Bold? Maybe. Certainly it is refreshing, not to say unprecedented, for any Canadian government, this one included, to put forward a plan on climate change that has even a theoretical chance of achieving its stated objective: a 30-per-cent reduction in Canada’s greenhouse gas emissions from 2005 levels by 2030. Governments in this country have been setting targets and missing them for the better part of 30 years, through plan after meaningless plan, all lacking the one indispensable ingredient of success: a serious national price on carbon, such as more than 40 other countries have in place already. So the boldness bar has been set pretty low.
But never mind: $170! Isn’t that a bold number? Again, maybe; $170 is, to be sure, a great deal more than $30, but is that the appropriate benchmark? Sweden already charges as much today, never mind 10 years from now. In terms of the price at the pumps, $170 a tonne works out to another 33 cents a litre. Added to the current average price of about $1 a litre, that would take the price of gas to levels not seen since … the spring of 2019. Proportionately, that’s an increase of 33 per cent over 10 years. It has increased by nearly that much since April.
That might still have been a bold thing to propose – had the Liberals done so before the last election. Instead, you will recall, then-environment minister Catherine McKenna announced – was it only 18 months ago? – that the “plan” was not to increase the tax beyond the $50 scheduled for 2022. Raising taxes after an election that you had promised not to raise before the election can be described in many ways. “Bold” might not be the first one to spring to mind.
The boldness of the plan dwindles a little further when you consider that the increase in the tax will be wholly offset – or rather, more than offset – by increases in federal climate “incentive” rebates. The typical family of four, in provinces where the federal “backstop” applies, will receive as much as $3,200 a year by 2030, and not in an annual tax credit as is now the case, but in quarterly cheques.
The rebates, as the Parliamentary Budget Office has confirmed, work out to more than the cost of the tax – not only for the poor, as would be appropriate, but for just about everyone. All of the money for this is borrowed, meaning it will be paid for by future generations, who have yet to emit a gram of carbon but also aren’t around to vote. That, too, seems a little less than bold.
But perhaps the least bold thing about the plan is that the Liberals do not follow through on the logic of their own position. The case for pricing carbon is that it is by far the most efficient means of reducing emissions of carbon. Regulations only encourage reductions up to the point of compliance. Subsidies often pay for reductions that would have been made anyway. Both apply only to the things it occurs to the planners to regulate or subsidize.
On the other hand, prices impart a permanent, omnipresent incentive to reduce emissions, so long as the cost of doing so is less than the price, by whatever means that millions of minds can devise. Alas, carbon taxes are also visible to consumers; they may cost less than subsidies and regulations, but the cost is in their face, rather than hidden. The very thing that makes them more effective, economically, also makes them more intimidating, politically.
A truly bold plan, then, would have relied almost exclusively on carbon pricing to get us to our targets, even at a higher price than the $170 envisaged. Instead, the new Liberal plan, like its predecessors, is stuffed with subsidies and regulations – more than 60 of them, at a cost of $15-billion, on top of the $60-billion the Liberals have already spent on similar programs.
There’s no necessity for any of it, you understand. Almost $3-billion for home retrofits? Charge a stiff enough carbon tax, and I promise you, people will look for ways to make their homes more energy-efficient on their own. One-and-a-half billion dollars to encourage the use of zero-emissions fuels? A carbon tax is all the incentive you need.
The meat of the plan is the carbon tax. The rest is the same old same old, in the service of the Liberals’ eternal pretensions as industrial planners – and, more prosaically, as an excuse to spray money at favoured client groups. That doesn’t take a whole lot of boldness, though it does take brass.
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