Last week, like millions of Canadians, I got my quarterly carbon tax rebate. And like at least a few thousand of them, I actually understood what it was for. To say the Trudeau Liberals haven’t aced the communications around the carbon tax rebate — sorry, the “climate action incentive” — would be like questioning Donald Trump’s commitment to the rule of law. Their failure to put physical cheques in people’s hands, or even get the banks to describe the deposits the same way, has made the already difficult job of selling Canadians on their signature climate policy nearly impossible.
If you want to know why recent polling has Pierre Poilievre’s Conservative Party of Canada projected to win more than 200 seats in the next election, this is as good a place to start as any.
The ongoing opposition to the carbon tax in places like Alberta and Saskatchewan is expected. But the numbers coming out of Atlantic Canada, where the federal tax and rebate officially took effect in July (after provincial climate plans were found to be insufficient), have to be much more concerning. A recent Postmedia-Leger poll actually had Atlantic Canada as the region most opposed to the carbon tax, with 48 per cent of people surveyed saying they favoured the total abolition of carbon pricing. The national numbers aren’t much more encouraging, with only 18 per cent of Canadians supporting the continued increase in the carbon tax and 68 per cent opposed to paying more for gasoline so Canada can reach its net-zero targets.
But while it might be tempting for some in the Liberal camp to consider scrapping the policy, that would be an admission of defeat — and a form of political suicide. Instead, they’d be better off doubling down on carbon pricing. First and foremost, they need to do a far, far better job of helping Canadians understand why they’re getting money in their bank accounts every quarter and who’s responsible for it. That means being as shameless as possible, whether it’s sending fake cheques to every taxpayer who gets a rebate or finding some other way of driving home the reality of the rebate and how big it’s poised to get.
Even more importantly, they need to shift the ballot question around the carbon tax. If it’s a choice between paying a tax (and getting a rebate that far too many people are still confused about) and paying nothing, the choice for many voters will be an easy one. But if the choice is between Canada’s highly profitable oil companies paying their fair share and regular Canadians paying it for them? Well, then, the political calculus might just start to shift in the Liberal government’s favour.
They could do that by proposing a freeze on the consumer portion of the carbon tax and pairing it with a higher carbon tax on oil and gas production. This was one of the two options the federal government considered before settling on the emissions cap Steven Guilbeault is still promising to deliver this fall. His preference for a cap-and-trade approach isn’t particularly surprising, given that Quebec has long had such a system in place for its own provincial greenhouse gas emissions. But modifying the existing carbon tax in a way that gives consumers and small businesses a break while more visibly putting the onus on the oil and gas industry, which accounted for 27 per cent of Canada’s emissions in 2020, has far more political upside for his Liberals.
That’s especially true given how little Canada’s major oil and gas companies are actually paying on their emissions. While ordinary Canadians pay the full weight of the carbon tax, large industries are only exposed to a fraction of it due to a system known as “output-based allocations.” These help discourage so-called “emissions-intensive, trade-exposed” companies from simply shifting their production to different parts of the world without a carbon price, which would be a lose-lose situation from Canada’s perspective. But it’s harder to make the case there for oil and gas companies, given they can’t exactly pick up their existing oil and gas wells and move them across the border.
In 2020, for example, Suncor paid a grand total of $0.12 per barrel — yes, that’s 12 whole cents — in carbon taxes and related compliance costs, while its 2023 Climate Report models an average cost over the next decade (2023-32) of $1.70 per barrel on its production and $0.48 per barrel on its highly profitable refining operations. They can, and should, pay more than that. If they had to face the fuller brunt of meaningfully higher carbon prices down the road, they might finally start spending some of their surplus cash flow on the decarbonization projects they love to talk up.
This approach would surely annoy Canada’s community of environmental economists, who have always preferred the intellectual cleanliness of an economy-wide price on carbon. But with all due respect to their wisdom, political durability is a more important consideration than economic efficiency right now — and it probably always should have been. Carbon pricing is simply too hard to explain, and too easy to lie about, especially in a federal system where provinces like British Columbia can opt out if they have their own carbon price (and rebate system) in place. Poilievre has been trading on this in B.C. for years now, pretending he can “axe the tax” when the federal government has no such power there, and the means-testing of rebates in B.C. only contributes to the confusion about them elsewhere.
It’s time for Ottawa to make things simpler. By putting the onus more squarely and transparently on Canada’s highest-emitting industry, the Trudeau Liberals can help clarify the political stakes for voters in the next election. Rather than asking them whether they want to pay a tax that someone else is promising to eliminate, they can vote on whether Canada’s oil companies should have to practise what they preach.
That’s not necessarily a fight they’re going to win, but it’s one they won’t lose as badly as the current one.
Comments
Tinkering with overcompicated tax structures is not the same as actually building projects and supplying simple grants that have a direct impact on lowering emissions.
Public transit, more generous rebates for upgrading building energy systems for electricity and ridding them of gas, larger grants for solar, wind and geothermal projects and offering partnerships with First Nations on renewables, building a national smart grid, partnering with companies that would bring green steel and low emission cement industries to Canada, and so on and so forth, are all direct action initiatives that create jobs.
Knocking a tax is too easy and the Libs should have seen that narratuve coming. But how on Earth can Poilievre criticize new industry and expanded job opportunities without getting slapped in the face and booed by the workers and investors?
If Canadians want a preview of a future non-Trudeau government, they should pay close attention to what has happened and continues to happen in Alberta. Poilievre’s buddies, Danielle Smith and the United Conservative Party, openly cater to the concerns of the most profitable companies in the world and to extreme right-wing groups aligned with MAGA Americans. This trickle-down approach to economics is classic conservativism in action. Note: 75 % of all oil sands profits leave Canada. But the oil patch mess is Canada's to clean. Yes, all of Canada.
Smith and the UCP gleefully facilitate the thief of our resources with no regard for the consequences of the destruction of our environment. To clean up the Alberta oil patch mess will cost anywhere from 100 billion to 260 billion. These official estimates do not include any C02 mitigation.
Albertan's reward is the multi-million dollar misinformation pro-fossil fuel campaigns orchestrated by secretive corporations financed with public money.
Besides the territories, Alberta has Canada's highest base utility rates. A buddy on a poverty level low income who lives in a small one-room apartment had his power bill quadrupled. (re: energyhub.com) Now, that's inflation.
The Alberta government has also suspended the approval of alternative energy projects. Now that's madness.
Why would Alberta conservative politicians sell out the citizens they swear to serve? I don't know. Perhaps they can ask Jason Kenney. The former Premier (booted out by MAGA Albertans) is now a board member of ATCO, one of the largest utility corporations in Alberta.
Any fair assessment of Alberta would classify the province as a petro-state. So sure, Canada, Vote for a Conservative party controlled by Poilievre, and you too can bite the magic apple after Pierre, the oil companies, and American corporate shareholders take their bite first. Make Trudeau pay for not being able to control world events. That'll show him.
Simple ideas:
1. Always refer to it as the Carbon Rebate / Tax.
All monies are rebated so it is far more truthful than P.P. (and all of us lazily following his lead) and only referring to it as a tax.
2. Always educate that the CAI what the bank "calls it" (Carbon Action Incentive) is a quarterly tax-free direct deposit and that 80% of us according to the PBO benefit financially.
3. Point out that if P.P. and the Cons "ax the tax" the big beneficiaries will be first and foremost the fossil fuel industry, and then the 20% ie. highest emitters who tend to be the most well off heating larger homes and driving bigger vehicles. The rest of us are left with higher GHG emissions, more pollution and less money.
Excellent ideas.
Fawcett: "by proposing a freeze on the consumer portion of the carbon tax"
Not increasing the rate on schedule spells policy defeat. An admission that the carbon levy causes hardship to consumers, which is the Conservatives' false talking point. A gross failure to communicate about rebates.
With rebates, the carbon levy represents no real hardship to consumers. 100% of carbon revenues are returned to the province of origin, with 90% flowing to households. Households whose rebate exceed its direct and indirect fuel charges get back more than they pay — and vice-versa.
Businesses and institutions (e.g., municipalities, schools, hospitals, non-profits) also pay direct fuel charges but do not receive rebates. Businesses are expected to pass on their carbon costs to customers. Consumer and business fuel charges are pooled and rebated back to households only.
On the fiscal side, most households come out ahead. With economic costs (wages, investments) factored in, most modest-income households come out even or ahead even. The net cost, if any, to the bottom 40% of households is negligible. The federal fuel charge is "broadly progressive" (Parliamentary Budget Officer report 2023). Under the federal backstop carbon pricing program for consumers, there is a small wealth transfer from high-volume fossil-fuel consumers to low.
High-volume fossil-fuel consumers (mostly the affluent) will feel a pinch, but isn't that precisely the point of carbon pricing? To discourage fossil fuel use and make the alternatives more attractive.
Fawcett: "pairing it with a higher carbon tax on oil and gas production"
"… That’s especially true given how little Canada’s major oil and gas companies are actually paying on their emissions. While ordinary Canadians pay the full weight of the carbon tax, large industries are only exposed to a fraction of it due to a system known as “output-based allocations.”
Strictly speaking, the federal backstop Output-Based Pricing System (OBPS) for large industrial emitters does NOT apply to major oil and gas companies. Alberta major oil and gas companies fall under the provincial system instead.
Under Alberta's Technology Innovation and Emissions Reduction Regulation (TIER) pricing regime, O&G companies pay pennies on the dollar in carbon costs. The current scheme is ineffective.
The purpose of the OBPS and its provincial counterparts is not to expose heavy emitters to the carbon price, but to shield them from it, so they can remain competitive in global markets. [Federal and provincial carbon pricing systems do not impair large industrial emitters' profits — or reduce their emissions. Oilsands emissions do nothing but climb year after year.
The federal OBPS is a joke, but AB's system is even worse. TIER dollars are effectively recycled back to industry to fund carbon capture technology and research. Projects industry should be paying for in the first place.
Failure by design.
Excellent points. The thing is, oil sands are expensive to exploit for oil, so the cost of extracting and processing bitumen is higher than what the Suadis et al pay to pump their easier oil to the surface. Anything that puts a lid on costs (lower CT rates, massive public subsidies, etc) is therefore most welcome.
Peak oil supply theories did uncover some interesting facts, one being that the Saudi's have been pumping seawater into their massive conventional oil deposits because the drawdown has lowered pressure. They never publish accurate extraction and supply data to complement their harder to hide production and export data, essentially thinly covering up the fact that depletion is a fact of life there.
Peak oil supply theory gave in to peak oil demand. The supply kept flowing due to the extraordinary measures taken to keep it that way. But with climate now a Number One Issue, demand for oil is the inverse of the levels of investment in renewables, and the world investment especially in solar and wind recently hit parity with the money invested in oil -- even with subsidies.
Something has to give, and that will be the demand for fossil fuels. The central question today is, Will renewables displace fossil fuels quickly enough, and if not how can that be ramped up?
At a certain point, though, a government that's been in power for eight years but that increasingly has difficulty managing clear and basic communications with the media or the public is responsible for its own fate. This is a key task of a modern government and it's hard to understand why the federal Liberals are so bad at it.
You'd expect a former drama teacher to be good at least at communications.
And you'd expect a former Harper attack dog ie. P.P. to shout louder and longer and use a silly slogan.
Still, I hear your point.
The Liberals must do a much better job (and they have lately it seems) on communicating all policy benefits, but the Carbon Rebate program should be priority one.
“…with a higher carbon tax on oil and gas production”. Good idea! Even more so if the tax would override the very unfair carbon tax cap of $30/tonne the BC NDP have given LNG Canada. We are paying $65/tonne now and the LNG fo$$holes are capped at $30! Thanks to the No Damn Principles government here in BC!
Here's an example of why there's just no helping some people.
Even though we all know that the entire political right wing has lost the credibility to govern at this existential time because they refuse to accept the science of climate change, period, bothsidesism still persists in our media, and not just in evil "social" media, also in some progressive media, on TV, even CBC and regularly in mainstream media like the Globe and Mail.
This fellow knows what's going on obviously because he's talking about the undermining of our institutions being a central contributor to our general "unhappiness" but not once does he name the "underminers in chief," i.e. the conservatives.
https://www.theglobeandmail.com/business/article-canada-economy-mental-…
WTF?
Don't Trust Trudeau, he is.lying to Canadians.