The consumer carbon tax is dead.
The federal Liberals are poised to get rid of it, and the two strongest candidates in their current leadership race are confirming this.
For years, these same people insisted the consumer carbon tax was essential. Now, they admit there are many other policy tools that could be used instead to arrive at the same place — reducing emissions in line with our climate goals.
The industrial carbon tax — the charge levied on large emitters — has been three times as effective as the consumer carbon tax. Also effective are current proposals for methane regulations, and an emissions cap for the oil and gas sector, but many fear the Liberals will abandon these ideas, too.
I’ve always believed in a climate policy that helps Canadians afford necessities, protects communities from the ravages of climate disasters, like floods and wildfires, and holds big corporations accountable for polluting the air we breathe and the water we drink.
Mark Carney, the widely reported front-runner in the Liberal leadership race, supports subsidies toward the purchase of environmentally friendly products to replace the consumer carbon tax.
But if you actually read the fine print, the incentives he is talking about (like the Greener Homes Grant, or the EV rebate) are programs which already exist but, in some cases, have just temporarily run out of money. A fine idea, but not very ambitious for the scale and speed of the climate challenge we face.
To fill the hole created by cancelling the consumer carbon tax in Canada’s climate plan, we must be bolder, especially in sectors where it was working, like transportation.
Scientists are demanding climate policy leaps, not steps. That’s why I believe that Canada should aim to double public transit ridership by 2035.
A bold move like this, with a mission-oriented target for public transit like we’ve seen for other sectors, like electricity and zero-emission vehicles, could cut emissions by 65 million tonnes, according to one estimate.
I can already hear the objections.
Why double public transit use in a country as geographically dispersed as Canada? Because 73.7 per cent of Canadians live in cities of more than 100,000 people, many with transit systems.
We already have the population density to support higher transit use — what we’re missing is public investment. And as we build more housing to tackle the housing crisis, we’ll need that investment more than ever to support sustainable, transit-oriented communities rather than more sprawl.
This is something the federal Liberals have explicitly ruled out. Former Minister of Infrastructure Sean Fraser said funding transit systems to stop service cuts and grow frequent and reliable service would be “a bailout for ineffective and inefficient transit systems.”
Pierre Poilievre’s Conservatives, on the other hand, are no friends of public transit either. He’s already on record calling for the cancellation of federal funding for the Tramway project in Quebec City — calling it “a waste of money.”
In Canada, our transit systems are languishing from government cuts. That creates local pressures: we hike fares and reduce transit service. This creates a transit death spiral, a vicious cycle where cuts reduce ridership, depressing revenues further, leading to even more cuts.
Meanwhile, our politicians prefer to cut ribbons for the transit plans of tomorrow that are past deadline and over-budget. Ontario has the distinction of having the highest number of transit projects under construction in the world (at huge cost) with little to show for it.
In Ottawa (where I live), we know all about transit projects that fall short. Why? Because Liberals and Conservatives have embraced the secretive (and expensive) public-private-partnership (P3) model for transit infrastructure. Transit executives make out like bandits, nothing gets built, and people are stuck waiting for buses that don’t show up on time.
There is a better way.
Last fall, municipal and transit-sector leaders issued a joint declaration calling on the federal government to fix our broken public transit funding model. So far, they’ve been ignored.
It's long past time that federal and provincial governments get back into the business of properly funding transit operations budgets. Because that means more service, at a lower price, and transit you can rely on to show up on time and get you where you need to go.
Canadians want affordable public transit that simply works. To deliver more transit projects on time and at reasonable costs, we need to put an end to the P3 racket and get back in the business of building transit publicly again.
Public transit is a climate solution we need. Let’s fund it!
Joel Harden is the federal NDP Candidate for Ottawa Centre. From 2018-2025, he was an NDP Member of Provincial Parliament for Ottawa Centre, and the official opposition critic for public transit and active transportation (2022-2025).
Comments
Absolutely - and with phenomenal active transit alongside. The world could be better for all of us.
Hear, hear!
I am all for massive public investment in public transit. Far more efficient than subsidies for the private automobile, including EV subsidies. EV subsidies mainly target affluent households, leaving the masses to wait at the stop for a bus that never comes. Subsidizing cars means more cars on the road, more congestion, and more sprawl, all of which defeat efficient public transit.
However, the author is too quick to abandon consumer carbon pricing plus rebate -- progressive climate policy that puts more money in most families' pockets.
Global warming represents the greatest market failure in history. Fossil fuel producers and consumers use the sky as a free dump.
What's the solution? Carbon pricing.
The fossil-fuel industry remains viable and hugely profitable precisely because producers and consumers are permitted to externalize most of the climate, environmental, and health costs.
Carbon pricing upholds the polluter-pay principle. No more free ride.
If you oppose fossil-fuel subsidies, you should support carbon pricing.
In a rational market, participants need to pay the full price of the full, true, actual costs of the goods and services we produce and consume. That goes for all goods and services, not just fossil fuels. Anything else is voodoo economics.
The market is rigged in favor of fossil fuels. Time to unrig it.
Joel Harden: "The industrial carbon tax — the charge levied on large emitters — has been three times as effective as the consumer carbon tax."
Inaccurate.
The Canadian Climate Institute's 2024 "440 Megatonnes" report refers to future emissions reductions by 2030 based on modelled scenarios. The figures in the report are hypothetical and speculative, not historical or factual.
The study by the Canadian Climate Institute (CCI) was widely reported, but not widely reviewed or fact-checked. No one questioned its assumptions. Climate journalists reported CCI's results at face value.
One paper based on modelling does not a fact make.
The future effectiveness of federal and provincial industrial carbon pricing schemes depends on the carbon market: the stringency of emissions-intensity thresholds, the value of carbon credits, and companies' demand for those credits. If there is a glut of carbon credits, their value will fall, reducing industry's incentive to cut emissions.
CCI: "These interactions, along with relatively weak emissions-intensity thresholds, risk creating a surplus of carbon credits in large-emitter trading markets, thereby reducing their price and making it cheaper to buy credits. The impact is weaker incentives to cut emissions and weaker effectiveness of LETS."
The effectiveness of consumer carbon pricing also depends on stringency. A low carbon price is ineffective.
To be effective, the price on carbon pollution needs to rise far higher:
"Secret briefing says up to $300-per-tonne federal carbon tax by 2050 required to meet climate targets" (National Post, 2017)
So it is not true that consumer carbon pricing is inherently less effective than industrial carbon pricing. The effectiveness of both programs depends on their design, coverage, and stringency. An incrementally increasing consumer carbon price will be more effective as time goes on.
Meanwhile, the stringency of federal and provincial industrial carbon pricing leaves a lot to be desired.
In reality, Canada's industrial carbon pricing systems are the Swiss cheese of carbon policy.
Large emitters are subject to output-based pricing systems (OBPS), which price a fraction of total emissions, which effectively means a low carbon price on total emissions. Under Alberta's Technology Innovation and Emissions Reduction Regulation (TIER) pricing regime, major O&G companies pay pennies on the dollar in carbon costs.
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. Large industrial emitters, including in Alberta's oilsands, effectively pay a fraction of consumer rates. Under Alberta's Technology Innovation and Emissions Reduction Regulation (TIER) pricing regime, major O&G companies pay pennies on the dollar in carbon costs.
In Alberta, 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.
Federal and provincial industrial carbon pricing systems do not impair large industrial emitters' profits — or reduce their emissions.
Oilsands emissions do nothing but climb year after year.
The CCI seems not to have noticed.
"Canada's biggest emitters are paying the lowest carbon tax rate" (Corporate Knights)
"Oil and gas producers pay among the lowest average carbon costs of any sector…
"There's a patchwork of OBPS policies across the country, and some provinces have implemented 'weak' or 'non-existent' systems that have let many big polluters off the hook."
"...Ottawa and most provincial governments grant heavy exemptions to a number of sectors, including O&G, chemicals, cement, steel and mining.
"But generous exemptions mean that how much of a firm's actual emissions are taxed varies widely by province, and, on average, companies end up paying for only 16% of the carbon actually produced.
"[In 2020, Suncor's] average carbon cost was roughly $2.10 per tonne, about one-14th of the full carbon price."
"The impact of a carbon price is greatly lessened by the relatively small proportion of emissions that are actually covered by the price.
"The federal OBPS and AB's TIER system levy the carbon price on roughly 10% of a large emitter's GHGs. At a $50 marginal price, producers pay less than $1 per tonne of CO2 equivalent on their total production." (Corporate Knights)
"Canada needs to make Big Oil pay their fair share" (Corporate Knights, 2022)
As the PBO pointed out (2024), the industrial carbon price applies only to 20% of emissions maximum. 80% of emissions are exempt. For some industries, only 5-10% of emissions are exposed to the carbon price. (90-95% exempt.).
"Revisions to PBO's carbon tax analysis will 'vindicate' government, minister predicts" (CBC, 2024)
"Most big emitters pay the carbon price on anything they emit above 80% of what the average emissions are in their industry. … Industries that face more foreign competition, such as cement, lime and some fertilizers, have an even higher limit, 90 or 95% of the average.
"… In Manitoba, Saskatchewan, Ontario, and New Brunswick, big emitters accounted for about 25% of total emissions in 2019, but paid less than 10% of the carbon levies collected. Consumers and small businesses paid the rest.
"… 'The current large emitter programs provide a perverse long-term incentive,' the [2021 Canadian Climate Institute] report said.
"'They are explicitly rewarding the most emissions-intensive facilities in the country to not make the major investments needed to be prepared to compete in a carbon-constrained market.'"
"Biggest industrial emitters don't pay fair share for pollution, critics say" (CP, 2022)