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Canada’s Carbon Tax Has Survived a Legal Challenge — But It’s Still No Help In the Fight Against Climate Change

A challenge to Canada’s carbon tax has failed, clearing the way for Justin Trudeau to press ahead with the policy. But carbon pricing is the brainchild of the fossil fuel industry — a green fig leaf put forward as an alternative to the ecological transformation we need.

Canada continues to be a laggard in addressing its greenhouse gas emissions, with per capita emissions roughly on par with those of the United States. (@etaplus / Unsplash)

Canada’s Supreme Court has ruled that the federal Liberal government’s carbon pricing scheme is constitutional. Justin Trudeau’s government introduced the price on carbon emissions in the fall of 2018, against opposition from several conservative-led provinces. Now it’s survived the challenge in the courts.

The scheme may be legal, but that doesn’t mean that it’s effective. While advocates of the policy celebrate and its detractors spin the loss, a vital question still remains: Is Canada’s carbon pricing scheme actually a climate victory?

Canada continues to be a laggard in addressing its greenhouse gas emissions, with per capita emissions roughly on par with those of the United States. For all its rhetorical commitment to the Paris Agreement, the country is not on track to meet its own climate targets, and has shown little substantial change in its emissions over the last twenty years.

Evaluating Canada’s countrywide average measure on a per capita basis obscures the regional imbalance of greenhouse gas emissions, as fossil fuel producing regions contribute an outsized share of the country’s total. Oil and gas production, alongside transportation, make up the overwhelming majority of Canada’s emissions. Canadian oil output, a growing share of which involves energy-intensive oil sands production, has increased steadily over the last decades.

Canada’s greenhouse gas emissions have always centrally been a question of what to do about Canada’s fossil fuel production. As Donald Gutstein outlines in The Big Stall, Canada’s fossil fuel industry has moved from initially denying the realities of climate change and delaying action, to adapting to new conditions in the framework of a market transition. Carbon pricing emerged as one of industry’s principal demands.

Carbon’s New Clothes

Early efforts at curbing emissions failed: after Canada ratified the Kyoto Protocol in 2002, aiming to bring emissions 6 percent below their 1990 levels, there was a 30 percent increase instead. But industry came around to the idea of carbon pricing as a viable strategy for the future of their sector. In a strange irony, from 2006 to 2015, they found themselves in a protracted battle with Conservative prime minister Stephen Harper.

Harper, having come to power using the rhetoric of a populist tax revolt, opposed anything resembling a tax. The carbon-price program, designed by the Canadian Association of Petroleum Producers and the Canadian Council of Chief Executives, had to be shelved until there was a government more amenable to the industry’s preferred policy.

The industry finally got what it wanted: on a provincial level, oil-producing Alberta announced a price on carbon in November 2016, and the federal Canadian government followed in October 2018. (Alberta’s carbon price was repealed after a change of government in 2019.)

What could possibly be wrong with an industry-led climate policy? Many things, as it turns out. The problems are complicated, but critics have mapped them out in great detail. Here is a summary of the key points:

  • Carbon pricing is not sufficient to the task of meeting carbon targets. Canada’s carbon tax is $40 per ton. But to meet 2030 Paris targets, a price of $210 per ton is likely to be necessary, assuming carbon pricing remains the primary climate policy mechanism.
  • Rather than focussing on phasing out industries most responsible — like fossil fuel companies — carbon pricing spreads the costs of carbon across the economy at large. It is not the fault of individuals that we live in automobile-dependent cities, heated and powered by fossil fuels. These policy decisions secured tremendous profits for the fossil fuel industry and so it is the industry that should be made to pay for the costs of transition.
  • Carbon pricing requires enormous political capital, often to the detriment of other, more effective climate policies. If consumers see a “carbon tax” on every gasoline receipt or heating bill, that can easily be seized on by anti-tax crusaders. Governments that implement a price on carbon are then faced with a tax revolt.

The Albertan and Canadian versions of the carbon tax introduced a modicum of fair-mindedness by including rebate systems that refund the expected cost of the carbon price to the lowest income brackets. This measure permits lower income brackets to experience a little less pain during tax filing season. However, it ignores the fact that roughly 12 percent of the population don’t file their taxes. That percentage is even higher for individuals on income supports or who are unhoused.

Paying the Price

Carbon pricing is industry’s preferred policy because it largely allows business to carry on as usual, offloading the problem of climate change and greenhouse gas emissions from those chiefly responsible — fossil fuel companies — and redistributing it throughout society. With responsibility for the damage done and the cost of cleaning it up diffused, no particular actors have to face accountability.

As Matt Huber has argued, a public crisis requires public solutions. Addressing the climate crisis is not simply a matter of curbing emissions through individual consumer choices. It requires radical interventions in public transportation; renewable power; electrification; housing construction and retrofits; and new infrastructure. Without actions like these being taken on a major scale, fossil fuel displacement will remain a pipe dream. And they in turn won’t be feasible until the fossil fuel industry is wound down.

We would do well to heed the advice of Jessica Green, who argues for a much broader vision of climate policy. We must be ready to assert state authority and use tax policy to repatriate dollars from multinational corporations (fossil fuel or otherwise) for the build-out of new energy systems. The climate crisis will not be won by fighting about the price of a ton of carbon, but by envisioning and fighting for a world in which we actually want to live.