Ambiguity
Just because we repeat something ad nauseam doesn’t mean it’s necessarily clear, and Pierre Poilievre has never clarified what exactly he means by abolishing the carbon tax. This name actually covers two systems: one which applies to consumers and the other which covers industry. “Pierre Poilievre said he was going to abolish the tax for consumers, but he always refused to say what he would do with the tax for the industry,” said Keith Stewart, senior strategist at Greenpeace. My own requests for explanations from the Conservative Party have been in vain. Remember that neither the federal tax for consumers nor that for industry applies to Quebec, which has its own joint carbon market with California.
A brick instead of a wall
But didn’t Justin Trudeau protect the carbon tax from a possible change of government? I have been under this impression since the 2023 federal budget. The federal government then created “contracts for difference for carbon”. The idea: to reassure companies who fear investing in vain in their decarbonization. With these instruments, the federal government guarantees that the carbon tax will reach $170 per tonne in 2030 as planned. On that date, if the tax is lower or is abolished, the federal government undertakes to pay the difference to those who have reduced their emissions. The objective is twofold: to create a predictable business environment conducive to decarbonization projects and to make the abolition of the carbon tax costly for a future government. My esteemed colleague Vincent Brousseau-Pouliot had well explained the workings of these tools1.
The federal government has allocated a budget of 7 billion to these agreements (which will not cost a cent if the carbon tax is maintained). The problem: for the moment, only one $200,000 contract has been signed (with the Alberta carbon capture company Entropy).
“We are convinced that the Canada Growth Fund (…) will conclude many other agreements of this type in the short term,” assures me Katherine Cuplinskas, press secretary to Finance Minister Chrystia Freeland.
You have to wish it. Because for the moment, the wall erected by the liberals to protect the carbon tax only has one brick. Let us also point out that this wall would only protect the industrial component of the tax.
A legal pitfall
It is on the legal side that Mr. Poilievre could hit a real wall. Sébastien Jodoin is a professor at the Faculty of Law at McGill University and holder of the Canada Research Chair in Human Rights, Health and the Environment. It is clear: the abolition of the carbon tax would be contested in court. Opponents could notably argue that such a step back harms the right to life, security or equality under the Canadian Charter of Rights and Freedoms.
The expert believes that the chances of success of such a challenge would be higher than the reverse.
What we see from lawsuits elsewhere in the world is that it is not always possible to force the government to do more for the climate, but it is often possible to prevent it from backing down.
Sébastien Jodoin, professor at the Faculty of Law at McGill University
“We call it the principle of non-retrogression,” explains Mr. Jodoin, citing decisions in the Netherlands, Germany, Belgium, France and Switzerland. A similar lawsuit against Doug Ford’s Ontario government is ongoing.
Professor Jodoin recalls that the Supreme Court allowed the federal government to impose a carbon tax across the country because it judged that the climate emergency was a “serious threat to the future of humanity.” Nothing is obviously won, but the expert would consider it surprising if the same court then authorized the withdrawal of this tax.
The price of tomatoes
Pierre Poilievre says the carbon tax “drives up the cost of gasoline, groceries and heating.” That’s right.
But true to form, the Conservative leader greatly exaggerates.
“We have 8,000 people who have joined a Facebook group to explore how they can get a meal from a bin after food prices have risen faster than ever in a generation, due to the carbon tax that Trudeau imposes on food,” he wrote last week in a press release.
I contacted Trevor Tombe, an economics professor at the University of Calgary. It estimates that the carbon tax contributes 0.2% to the annual increase in the consumer price index. For food specifically, the figure is 0.1%.
It should also be remembered that 90% of federal tax revenues are returned to citizens and that 80% of them receive more than they pay. Removing the tax would therefore have very little impact on the wallets of the vast majority of Canadians.
It must be recognized that those who consume a lot of petroleum products incur a hefty bill. This led the Trudeau government to make a dent in its own tax by exempting homes that heat with oil – the equivalent, in my opinion, of shooting at its own ends by providing arguments to the tax’s detractors. Instead, the government should do everything to offer alternatives to those affected.
And Quebec?
Would the abolition of the federal tax lead to the collapse of the carbon market in Quebec?
“It is certain that there would be internal pressure in Quebec to relax the rules of the cap and trade system,” said Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montréal. . The expert recalls, however, that the carbon market was adopted in Quebec in reaction to federal inaction and that all political parties represented in the National Assembly support it. “I don’t believe there’s any political capital to be gained by backing down on this front,” he said.
Finally, note that Europe is preparing to impose a carbon tax at its borders on products that are not already subject to such a tax. It’s far from being done, but American senators are thinking about the same thing2. This would make things difficult for Pierre Poilievre.
In short: the Conservative leader may well promise the abolition of the carbon tax, the reality could prove more complicated if he becomes Prime Minister.
1. Read the editorial “The carbon tax is here to stay”
2. Read “The Bipartisan Road To A US Carbon Border Tax” by Forbes (in English)
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reference: www.lapresse.ca