A national carbon tax can take a big bite out of Canada’s greenhouse gas emissions, but it can’t do it alone.
That’s one of the messages carbon tax experts are relaying after the Trudeau government announced its sweeping plan to put a price on carbon earlier this month.
The Liberals aim to bring in a price floor of $10 per tonne of emissions starting in 2018, ramping up to $50 per tonne by 2022. Provinces that already have carbon taxes will be able to adjust their pricing schemes to meet federal requirements, while provinces that do not can either implement a carbon price or allow Ottawa to take over administration.
Prime Minister Justin Trudeau stressed that the tax will be revenue neutral—meaning it will be offset by tax decreases in other areas—while revenues from the tax will be returned to the provinces.
The plan has encountered pushback from Saskatchewan Premier Brad Wall, who says the carbon tax will kill Canadian jobs and investment, while others say $50 per tonne won’t be enough to meet Canada’s Paris climate commitments.
Already, Environment Minister Catherine McKenna is signalling that more regulations are on the way as part of Canada’s climate change strategy.
“Some people say just have a price on carbon,” McKenna said. “If you were to do that, the price would be so high it wouldn’t make any sense. So that’s why you have to have a variety of different measures.”
Dr. Sumeet Gulati, a UBC professor of food and resource economics who studies carbon pricing, said it’s not likely a carbon tax alone will reduce emissions below levels agreed to in Paris.
“It’s sort of unrealistic to believe carbon taxes will do it all,” he said. “I think it will be [a price on carbon], and we’ll do some regulations. Like in B.C., when we imposed the carbon tax in 2008, we also did a clean energy mandate.”
“I don’t know if this will help us meet the climate goals we set in Paris, but clearly we’re going to take some steps other than moral suasion and expecting the provinces to do something,” he added. “So I like what happened here.”
B.C was the first Canadian province to bring in a tax on carbon, which currently sits at $30 per tonne of emissions. This summer, Premier Christy Clark broke with her Climate Leadership Team by refusing to raise the carbon tax past that level, but has signaled that B.C. will get on board after Ottawa granted approval to the controversial Pacific NorthWest LNG terminal near Prince Rupert.
Gulati said that when it comes to carbon taxes, the world’s eyes are now on Canada.
“I think Canada is really sort of leading at this point,” he said.
By Jonny Wakefield, 13 October 2016