One of the best op-eds you’ve printed since I became a subscriber. Really brilliant telling-it-like-it-is in a jargon-free way from beginning to end. This kind of essay is why I like this publication.
The Dark Green/Bright Green debate has been roiling in the energy/climate community (where I’ve been for my whole career) for decades but only recently entered mainstream political debate due to the carbon tax.
The terms themselves remain esoteric but basically Dark Green is: the only way to reduce carbon emissions is through constraining lifestyles or reducing population. And Bright Green (also sometimes called “decoupling” or “ecomodernism”) is the idea that carbon emissions can be reduced without constraining lifestyles, by pursuing new Green technologies that allow us a life of abundance without wrecking the climate.
One thing that’s been frustrating for me is how the mainstream debate has always assumed one of two falsehoods: either that climate change isn’t a serious problem, or that reducing carbon will be cost-free and won’t require any lifestyle constraints in the short term.
Pierre P right now is out there pointing out the costs of the tax (as is this essay) while ignoring that if we don’t get carbon emissions down, things are gonna get real bad for a stable world. We may not broil to death in Canada but a destabilized nuclear Pakistan can still sting us.
And too much of the renewables/green-tech industry/Guilbeault faction has pretended that this will all be easy and cost-free, we’ll just ride bikes and clean, efficient transit and live in comfortable apartments! Which — well, I don’t need to repeat the great essay here to prove how naive that is.
The problem is that both things are true: we need to address carbon, and doing so in the absence of low-carbon abundant energy (via lifestyle constraints) will be incredibly painful and probably politically impossible. Certainly global cooperation appears to be failing. That’s the vice we’re in. The only way out is abundant, low-cost, zero carbon energy. Which is the reason I’m in the nuclear industry… and why I see fission and fusion as inevitable.
This reply is already too long so I’ll just close by saying thanks again for publishing this article. You guys should interview Chris Keefer on On The Line, who deeply understands this debate and the role of nuclear in getting us out of the dilemma we’re in.
The other piece of the puzzle is that runaway fiscal deficits (in Canada, US, EU, etc.) will sooner or later lead to a cascade of sovereign debt crises that could be far more disruptive than climate change.
So if we're going to curtail the oil & gas sector for the sake of the climate, we'd better be prepared to gut social benefits (e.g. retirement, First Nations, etc.) to offset the lost revenues.
"...a cascade of sovereign debt crises that could be far more disruptive than climate change..."
This is implausible. Messing up our finances would be bad. But messing up the basis of life itself, as we are doing now, is fundamentally more foolish (and self-destructive).
Changing the climate will be a mixed bag of pleasant and unpleasant surprises (e.g. longer farming seasons due to shorter/milder winters is a plus). Debt crisis is all bad.
The rapid rise in mean global temperatures has already given rise to an exponential increase in extreme weather events. These have been contributing to the destruction of what wild lands remain on the planet (and plummeting numbers of wild plants and animals).
We share this Earth with all of them--and have greatly benefited from exploiting all that they have been able to give (everything from ecological balance, as offered by predators and scavengers, to medicines that we would not even have imagined ourselves).
Changing the climate in the thoughtless, short-termist way we've been doing is destroying the ecology of our planet faster than we are able to mitigate.
What we will end up bequeathing to our children could be little more than a burned out husk of what you and I were born into.
There are more trees today than 35 years ago, partly because trees are able to grow in newly warmer parts of the planet. Like I said, it's a mixed bag.
"Messing up our finances" could literally lead to mass famine; I actually wrote a piece on this not too long ago
Oh don’t be silly. Canada is not going to have a sovereign debt crisis. Canada has its own currency. Canada can’t run out of Canadian dollars. And there are no runaway fiscal deficits - if anything, the deficit is too low.
True, but those dollars can become worthless as more and more are printed. It's a little something called "inflation"
Canada had a close brush with a sovereign debt crisis back in the 1990s (it took years of austerity to avoid it), and all those same preconditions are coming back.
This is a particularly apt and colourful analysis. Mr. Ries can take some pride when the cage-match and banned-executive-jets memes turn up in other publications. I hope to read more from this writer.
If “pain is the point,” why did Trudeau himself recently state that it would be foolish for it to be scrapped, because the majority of Canadians are better off financially with it than they would be without it?! The problem with the Trudeau’s carbon tax is that it lets the said majority of Canadians get off scot-free (no actually make money without changing their behaviour) while making other Canadians pay much more just because of where they live and what and where they work, even if they reduce their “carbon footprint” as much as possible.
If the carbon tax was really a sin tax like alcohol excise taxes, we would not be getting any money back from the government. They would be using those funds to fund projects, both prevention and mitigation. As it is now, it is just a wealth redistribution scheme where those citizens who have to travel greater than average, or live in colder than average areas give money to their fellow citizens who are able to travel less, ….
I accept there is really only one “taxpayer.” By taxing industries, and using those funds effectively and efficiently, we the taxpayers would be better off and the market would decide which industries should succeed. And yes if industries were taxed there would be pain, but changing behaviour would reduce the pain and it would apply to all citizens equally.
Great reply. My thesis here is that while the pain is definitionally the point of a consumption tax, supporters of the carbon tax seem to have (i) an idealistic notion of which Canadians are going to experience the most acute pain and (ii) underestimated how much acute pain the carbon tax needs to inflict to do the job they built it to do.
They're now running into the business end of these misunderstandings.
One of the untold stories of the carbon tax wars is how the design of the "rebates" has escaped scrutiny.
Remember when Harper cut the GST, and economists were up in arms because income tax rate reductions are more economically efficient than consumption tax rate reductions? Well, even worse than a consumption tax cut is a lump sum handout (for the mirror image of the reason tax theory says a poll tax is the most efficient tax, however unfair it may be -- because it doesn't change incentives at all).
The "rebates" are lump sum handouts. Worse for economic efficiency than income tax cuts (which could be biased or even entirely limited to the lowest brackets). Worse than a GST cut. But Team Economist won't say this, because they simply accept that the "rebates" are bundled with the Pigouvian carbon tax, which they like.
Trudeau sells the heck out of people being better off for the blunt force redistribution of the "rebates". But there's nothing clever there. He could jack up the GST and hand out the proceeds equally per capita, and achieve the same redistributive effect. Most people would be better off! But he doesn't. I wonder why.
"The "rebates" are lump sum handouts. Worse for economic efficiency than income tax cuts"
This claim seems confusing. While economists have usually framed carbon taxes as a means to cut income taxes, the rebates are not supposed to create incentives of any particular kind. The rebates are designed to do three things: (1) bribe the populace into accepting a carbon tax, (2) ease the burden of the taxes for the lowest-income Canadians, and (3) prevent carbon tax revenue from factoring into government budgets, which would result in the government having a conflict-of-interest in setting the carbon tax rate to maximize finances rather than minimize the activity.
"He could jack up the GST and hand out the proceeds equally per capita, and achieve the same redistributive effect. Most people would be better off! But he doesn't. I wonder why."
Even though they are bundled together politically, the carbon tax and the "rebates" are really different designs. Even the name "rebate" is nonsense -- a professional grad student who never consumed anything energy-intensive in the first place gets a big juicy "rebate".
They are distributing billions. This could be done in a way that improves economic efficiency, like through a reduction to rates in the lowest income tax brackets. There is an opportunity cost of just handing out checks instead, for maximum redistribution and crass political benefit. They could have distributed the same money more wisely, in a way that improved incentives and productivity. Just as Harper could have gotten more economic benefit from income tax rate reductions instead of the politically beneficial GST cut.
"They are distributing billions. This could be done in a way that improves economic efficiency, like through a reduction to rates in the lowest income tax brackets."
An income tax cut would provide positive behavioural incentives, yes. But a rebate also gives money to poor people who already are exempt from income taxation and therefore the redistributed money is imminently recycled into the economy via consumer spending, rather than becoming a surplus for middle-class persons that is then used for investment. Both the rebates and income tax cuts have their own economic advantages and disadvantages.
Tax policy always trades off efficiency vs. equity. What balance to strike is an extremely important and difficult fiscal policy question.
My complaint is that Trudeau went 100% to the extreme redistribution/equity end of that spectrum, but instead of that prompting a big debate as a matter of tax policy (like Harper's GST cut did), the rebate design as compared to other possible alternatives was completely ignored. The carbon tax side of the scheme crowded out the entire debate. Meanwhile, in other conversations, very serious people acknowledge that Canada is in the middle of a productivity crisis.
And the more Trudeau sells the pure redistribution side ("most families are [financially] better off"), the more regrettable it is that there has been no debate at all on the "rebate" design itself, which is the whole basis for Trudeau's claim (it has nothing at all to do with the enviro benefits).
The purpose of the tax-rebate scheme is to impose **selective pain**. If you consume CO2-intensive goods much more than the average Canadian, then the rebate will not cover the costs of the tax for you, hence you are still being punished.
But even if you are receiving more rebate money than you are paying through the tax, shifting to less CO2-intensive goods will *still* be financially rewarded. Your personal consumption patterns will have no effect on the size of the rebate, but if you lower your personal consumption of CO2-intensive goods, you will be able to bring your tax burden closer to (but never quite reaching) $0, thereby increasing your personal benefit from the tax-rebate scheme.
"By taxing industries, and using those funds effectively and efficiently, we the taxpayers would be better off and the market would decide which industries should succeed."
I could be mistaken, but I do not believe that the tax is technically charged to consumers. The tax *is* charged to industries, but it is a foregone conclusion that most of that tax is passed onto consumers. There is no actual means of forcing industry to pay a price without consumers being affected.
True, but you’re ignoring delivery costs which have always been higher than the gas itself.
Excluding delivery costs makes the statement disingenuous.
A bit like but not identical to pointing out that taxes on clothes are higher than the price per ton of cotton. Yeah true, but you don’t pay for cotton. You pay for clothes.
Neither do you pay for a flammable gas that you pick up from fortis headquarters and carry home in a paper bag. You pay for it delivered to your house in an incredibly expensive pipe system.
I am in general agreement with the writers position on who is REALLY wearing the pain through carbon taxes, with some small exceptions:
- As a person involved in agriculture, I am alarmed with broad generalizations stating that agriculture will get along just fine with carbon taxes. Maybe. Depending upon what aspect of the food production chain you are talking about. Suppliers that provide things needed to grow food will adapt as will the manufacturing and exporting businesses. Where does the primary producer pass the costs to? In a price taking market place any carbon tax passed to the primary producer will be eaten as cost of production. Also remember that Ottawa is floating restrictions on fertilizer use and mulling over a tax regime that would tax fertilizer at the manufacturer or retail level. These are dangerous policies to business plans that are sketching out small profit margins and added risk of lower yields.
- And lastly, the main selling point of the carbon tax is to change behaviour, preferably by adapting new technologies ie. EV vehicles, solar panels or heat pumps. It’s a pretty nasty trick to charge carbon taxes but not offer realistic solutions to change to something better. In the current market environment, swapping out an F250 and its towing HP for an EV truck is a green fanatics daydream. It’s pretty great for Ontario and Quebec to corral all the EV battery manufacturing capacity via huge subsidies but the trickle down of practicality in rural and remote regions is a long way off. .
"And lastly, the main selling point of the carbon tax is to change behaviour, preferably by adapting new technologies ie. EV vehicles, solar panels or heat pumps. It’s a pretty nasty trick to charge carbon taxes but not offer realistic solutions to change to something better."
The carbon tax often works in much more subtle ways than that. Use of CO2-intensive goods is so ubiquitous that almost everyone is doing something that creates unnecessary emissions.
Take a food market, for example. Some fruits undergo greater shipping distances than others, and in the process more emissions are created. Insofar as those food chains are subject to a carbon tax, some fruits by some companies are going to become less competitive in price compared to other competing fruits. So some number of consumers *will* change their purchasing patterns accordingly by buying the now-cheaper fruits. Most of your behavioural changes in response to the tax will not even be conscious, because all you are doing is looking at the prices of the fruits and making decisions based upon that price.
You make excellent points here. My only quibble is to note that I said "most farmers and ranchers" will be fine. The agricultural economy – which you’re more familiar with than me – is vast, and I think it’s a fair characterization that large landowners sit somewhere near the top of it. Most farmers will be fine. I’m less sure about the fieldhands.
Clarke, I hesitate to respond about agricultural issues but I respectfully think that you are incorrect about agriculture.
If you look again at Darcy's post you will notice that he posits that farmers and ranchers (where I live in Alberta, many ranchers call themselves farmers, so I will use that term henceforth) are price takers. That means, of course, that they are not price makers. That condition applies whether to agriculture on the Prairies, apple growers in BC, market gardeners, etc., etc. In other words, all farmers are price takers.
That distinction means that they cannot pass along the additional cost of the carbon tax; it comes directly out of their hides. I am a retired city dweller but in my working life I was a CPA who dealt with many small businesses, including farmers; further, many, many of my relatives are active farmers. I can absolutely tell you that farming is a low margin business and while there certainly are wealthy farmers, they are often that way simply because they inherited a land base and you can be certain that not all farmers so intelligently chose their parents.
To summarize, I offer a restatement to your comment, as follows, "some farmers and ranchers will be fine but many are severely harmed by the carbon tax."
As someone who's been chosen to feel the pain (must drive in rural area at random hours to access employment), I'd feel better if the officials pushing this policy the hardest made even the slightest attempt to walk the talk. I'm not a fan of people making 6 figures from my taxable income - who own cottages and take two overseas vacations a year - telling me I have to suffer more. That's been my whole life.
I don't own a washer or dryer. I don't have - and have never had - air conditioning in my home. I've never flown overseas. Hot tub/pool/sauna? I've only heard of them. My 6-year-old car has a 1.4-liter engine. To the backers of this tax that disproportionately impacts the working class and rural population, I say this: Please, give up all the energy-consuming niceties I've just listed before telling me I've had it too good.
Maybe then I'll take your word that it's necessary. Because right now, most of you aren't living in a manner that screams "apocalypse imminent, desperate measures required."
It is because our elected politicians have six-figure salaries and have such high-travel work lives that we can expect that they are paying more in carbon taxes, at least in absolute terms, than are most Canadians. This tax is actually one of the rare instances of governing politicians voting against their short-term self-interest.
Pierre Poilievre has made about $2 million on the public dime and is the most vocal opponent of the carbon tax. He's certainly wealthier than are most of the economists who recommended that the tax become policy. Arguably a carbon tax would eat more of his bottom line than it would of most Canadians, since his rebates will not re-imburse most of the income he pays into the tax.
A single mom working as a PSW, driving a 2008 Corolla, has to accept a reduction in her income as a result of this increased, unavoidable expense - during a time when unaffordability is rapidly increasing.
A senior bureaucrat making over 200k a year, living in Rockcliffe Park, gets a $5,000 taxpayer-paid incentive on the purchase of a new electric BMW that he can already damn well afford.
And that's not to mention all the other cost-saving green perks the home-owning upper middle class gave available to them.
Please explain to the single mother PSW why she's wrong to think this is unfair, and not exactly equitable.
"A single mom working as a PSW, driving a 2008 Corolla, has to accept a reduction in her income as a result of this increased, unavoidable expense - during a time when unaffordability is rapidly increasing."
It is not actually clear that she is going to face a reduction in her overall income. She might be receiving more money through the rebates than she is paying through the tax.
"A senior bureaucrat making over 200k a year, living in Rockcliffe Park, gets a $5,000 taxpayer-paid incentive on the purchase of a new electric BMW that he can already damn well afford."
Well that is not good policy. It is cognitive dissonance on the part of the government to use carbon taxes and rebates when their ultimate logic is to replace almost all other climate programs.
So I’m actually in favor of the carbon tax, but the LPC’s failings on other files has likely condemned it to the ash heap of history in Canada. Had they actually made headway on housing (the #1 cost for most people) and made it easier to live in a city without a car (by getting our insane construction costs under control and building transit) they likely wouldn’t find themselves in such a situation. But they adopted the same mentality as the fanatics who push for traffic calming in a small downtown coupled with removing parking spaces without providing and alternative such as transit and wonder why people are pissed. It’s probably the misinformation! Nobody could EVER have a valid objection to our policies!
FW, I agree with what you said but this is Canada, a confederation of provinces (I am ignoring the territories because they are creatures of the federal government.
Where I am going with this is that the LPC has imposed the carbon tax and they have then trumpeted / asserted their virtuous behavior and have claimed their virtuosity in all thing governmental. I don't think anyone can deny those assertions. Neither can folks deny that the concept of LPC virtue and / or virtuosity taken a real hit over the life of this government.
The problem is that the federal government simply is not ALLOWED under the Constitution to do a lot of things; those responsibilities lie with the provinces and the feds simply have been incredibly ham handed in trying to get those particular "things" done in any sort of efficient way because they do not have the power to implement their "wizard" ideas. Things like housing, transit and transportation and the like all lie within provincial responsibility and the federal government simply has proven incompetent in so many ways in trying impose / "assist" solutions in these many areas.
The result is that nasty old politics gets in the way, whether it is politics at the federal level, politics at the federal / provincial level, politics of sincere, well-meaning idealists or whatever.
In other words, IT'S COMPLICATED and the idea that the LPC can simply impose the carbon tax without consideration of so many other variables and discussion / negotiation with other groups is absurd.
You can disagree about the constitution, but it's the judiciary's job to determine what to does and doesn't say - and the SCC has upheld it. The feds can and do work with the provinces (eg healthcare) through the usual route - do X and we will give you $. The whole "we need ever more consultation" is the same mindset that keeps things from being built here.
FW, I agree with you fully but, as always in these conversations, the devil is in the details. Please allow me to deal in details for a moment or two.
You offer the example of healthcare as a shared federal provincial program. That is, on the surface a good example but, really, it is a tremendously cautionary example. The original deal on medicare was that it was a 50:50 cost sharing. That was (I think) 1965. Since that time medicare has taken on immensely expensive new procedures forced (let's just say) by circumstance on provinces and the feds have reduced their share to (I think) 27% of all healthcare costs covered by governments. Further, the feds try to enforce "national standards" but don't enforce those standards in some provinces (e.g. private hospitals in Quebec as just one example)
All provinces are terrifically wary of getting into a program that is constitutionally their area but that they can't afford on their own but which they are being bribed to enter; they are worried that the feds will leave them high and dry in the future.
Further, you note that the SCC upholds the Constitution. Well, not really. Sometimes, yes and sometimes, no. First off, it takes a long time and a fair bit of intervening uncertainty before getting a decision out of the SCC. Secondly, sometimes the Constitution is clear but then the SCC trots out the POGG (Peace Order and Good Government) doctrine which is really nothing more than an excuse for the feds to do whatever the Hell they want and to violate the separation of powers. Third, the SCC is not always impartial. A good recent example is with the 2022 Truckers' Convoy; it may well be that one or more of those cases will end up at the SCC. Find, you say? I say not. The Chief Justice of the SCC has already opined publicly about the convoy. Commenting about a public event that would likely end up before him; that just confirms to many of us that the SCC is really a political creature of the LPC.
As for your final point, "The whole 'we need ever more consultation' is the same mindset that keeps things from being built here" I agree but that doesn't mean do not consult. It means consult and then where a province agrees go forward with that province. Don't treat the provinces as enemies and, very likely, the provinces will return that approach.
Great article, but I have noticed that in recent posts by guest writers, there was no biographical information on the writers. Mr. Ries confirms my opinions of the carbon tax, but what is his background on the subject? Not to pick on Mr. Ries (who wrote a great column) but I have noticed other recent guest writers had no biographical information so I could assess their backgrounds. Do they have policy or other subject matter experience? Do/did they work in politicians offices?
Again, not to pick on Mr. Ries, just something I have noticed with recent guest posts by writers I am not familiar with. Thanks for listening!
We provide biographical information where relevant -- ie; if someone is connected to a political party, or might conceivably have a vested interest in a subject. JG
Your request is perfectly reasonable, but as a matter of principle I'd rather you assign my argument a persuasive value of zero than attempt to persuade you on the basis of credentialism.
My promise to you, Ray, and you can take it to the bank, is that even on subjects where my credentials would decisively carry the point, you're never going to hear about them.
I think what Ray means is that if you are on the radical, loony left of the eco movement then we take your sensible commentary with a grain of salt whereas if you are on the incredibly fascist denier side of things we use a pepper corn when considering your essay. In other words, perspective is important.
Food production is energy intensive. The carbon tax affects most of the inputs used in farming and ranching, especially fuel and fertilizer. The author ignores the impact on the rising cost of food production due to the carbon tax that will be passed on to consumers. The Canadians most likely to be impacted by this rising cost of food will also be the working class. While the PBO determined the indirect costs of the carbon tax was minimal, will the carbon tax rebates really cover the cumulative cost of living increases resulting from the rising carbon tax levies?
On the contrary, my dear sir, I don't ignore the carbon tax's impact on the cost of food production at all. It's mentioned implicitly - along with all other essential carbon-intensive goods and services - when I noted that one of the ways in which Canadians are intended to adapt to the carbon tax is via the repricing of their goods and services.
The more valuable the good or service, the more able its supplier will be to pass the higher tax burden along down the chain. "Somebody must lose" was my thesis, and the losers will be the suppliers whose services aren't valuable enough to successfully negotiate price increases with the buyers of their services. We are in complete agreement that those losers will be predominantly found among Canada's working class.
A patronizing comment like "my dear sir" do little to increase the validity of your point of view or credibility.
Is it realistic to think that repricing of goods and services can occur in isolation to demand for those services. Producers can only reprice their goods and services to pass along the carbon tax if there is still the same volume of consumer demand for those services at the elevated price. It is not solely a matter of whether a service is valuable, the service also needs to be affordable. As prices continue to rise, consumers may not be the only ones to feel the pain. Restaurants are seeing declines in the numbers of and frequency of Canadians who are dining out. Higher prices are seen to be a major factor in the decline and carbon taxes add to those higher prices. If restaurants goes out of business for being unprofitable, former patrons are not the only ones affected. The business owner, the former staff, potential a building owner, food and beverages wholesalers, and ultimately the primary producers are all negatively affected. There would also be a reduction in Government revenues in terms of income taxes and sales taxes. It seems to me the "losers" from the increasing carbon taxes could be much broader than those suppliers whose services aren't valuable enough to successfully negotiate price increases with the buyers of their services and the Canada's working class.
My dear sir, you have encountered me at my most courteous and obliging. I infinitely regret that this comparatively lofty standard of conduct has met with such objurgation.
The elephant in the room on housing is that the condos being pushed are not even more energy efficient, they are just smaller. Small detached homes are no less efficient and cheaper to build than condos when they are not effectively rationed by land-use policy. Condos might support more transit access, but the tradeoff between housing costs and commuting costs is individual. Someone who works from home or nearby doesn't need to be forced into housing that would make sense if they were commuting downtown.
Instead of letting the tax do it's job, governments are putting their thumb on the scale in ways that are much worse for new buyers than existing owners, who get benefits from more people nearby like transit access or amenties (that make expensive travel less painful) without paying more for less space.
Nicely put, indeed amusingly, BUT it totally disregards the key element in the policy: the rebate. Yup, somebody has to feel the pain, or at least act in a way — changing their wicked ways to reduce their emissions — that says they feel it. But those actions cost them quantifiable dollars, WHICH ARE RETURNED TO THEM.
So until we come up with a better, fairer idea, let’s all STFU and let ourselves be nudged into making things better. Might not work, but if we don’t try , it’s a sure thing that nothing gets better.
There are 2 problems with this argument. The first is that the rebates are a 1-size-fits-all measure that doesn't necessarily reflect the impact of the carbon tax on individuals. As this piece points out, rural low income people may have no choice other than driving a less-efficient vehicle over long distances. They'll still be more out of pocket due to the carbon tax despite the rebates vs. a city dweller who has less of a footprint and more options to change it.
The second problem is political: rebate cheques come out 4 times per year. People feel the pinch of the carbon tax *every day.* The Mulroney government introduced GST rebate cheques for low income earners when they introduced the GST. It didn't spare them the wrath of voters. The rebate cheques are a minor cash bonus for recipients when they get them, but don't substantially change their finances.
All in all, the carbon tax is a rational economic policy that fails politically. Diffuse benefit, concentrated harm, a constant reminder of the cost that the government tries to offset with infrequent and relatively small cash handouts.
I'm not sure I understand - can you clarify? If somebody is charged dollars that are then returned to them, have their wicked ways actually cost them anything? What is their incentive to reform?
Clarke, I think that George's point was that we feel the burden of the carbon tax every day but that we get "free" [oh, what a stupid idea, but that is how it is considered] government cash four times a year. So, pain 365 days and pleasure four days. That math works out to 361 days of rage at the government. Sensible or not, that is the way that people typically think.
Um, don't look now, but we've been trying for several years now and it has yet to cause a single measurable ACTUAL reduction in Canada's GHG emissions.
Oh sure, the government has some stats to show you which say that theoretically the carbon tax has reduced our theoretical emissions from a theoretical higher number which we "might have" otherwise emitted - but if you don't see the self-serving loopholes in that, I have a lovely bridge to sell you....
In real terms, Canada has continued to GROW its GHG emissions since the creation of this program.
Not only is 4 years a short timeline to expect to see results, the carbon tax rate has been low to date, and the tax has been heavily politicized for most of its existence. No rational business would invest money in innovations to reduce emissions, when it currently looks like the tax will be repealed by a new government at the start of 2026.
Take away at least 1 of these factors, and you would likely see a better result from Canada's carbon tax.
Great analysis! By waving the flag of global warming the current Ottawa occupying forces have managed to implement an energy tax in a cold and miserable country (most of the year) where the majority needs to stay warm and survive by burning fuel - without having an insurrection. Compare this feat to the salt tax in 1930s (?) India which led to the British being kicked out of India. The arrogance of the British colonialists in 1930s India appears to be alive and well in the Liberal Laurentian elite running things in Ottawa. I await with bated breath the emergence of a Canadian Gandhi.
I particularly liked the mention that people affected by the tax will adjust the price of the goods and services they produce. The Liberal claim that the tax is neutral because of rebates ignores the fact that you have more money (rebates) chasing fewer or the same goods (energy). This is the Economics 101 definition of inflation. And a side benefit is more Ottawa bilingually bonused civil service jobs both at the worker bee and policy analyst level which translates into Liberal votes in the Laurentian area of Canada. And inflation due to higher energy costs leads to higher interest rates which leads to inflation in housing costs etc…
There are those who work for a living and those who vote for a living. The latter outnumber the former (so I’m told, FWIW) . The Liberals with their latest free (AKA deficit financed)pre budget spending announcements are blatantly catering to the latter group in anticipation of the next election. With all the deficits I wonder how long it will take for Canada to join Argentina in the financial club of resource rich countries brought down by government deficit triggered inflation…
One other point missing is that climate change is a global phenomena. What we do in Canada will have little effect on the change in climate. What we should be doing is helping the big emitters like China and India reduce their emissions, instead of arguing about the carbon tax and mandating EV’s.
China and India will not reduce their emissions without their own carbon tax. If Canada rejects the carbon tax due to misinformation about the economic impact, then why would China and India adopt one?
They'll reduce their emissions if we sell them natural gas so they don't have to burn coal. The coal to natural gas switch cuts emissions in half after all.
No, they won't. Even when you give people access to fuels that have lower emissions per unit of use, their emissions will still increase long-term if they have no incentive to conserve or not expand their general energy consumption. And when Indian and Chinese incomes rise, they will have every interest in using their new income to expand their energy consumption.
The only solution is for countries to decouple emissions increases from economic growth through policies of coerced conservation, which is exactly what a carbon tax achieves. And we might as well lead the way here.
If they can halve their emissions with lower carbon-density fuel, then their energy consumption would have to DOUBLE just to get back to emitting as much as they were before.
China's consumption is not going to double; they already have a declining population.
If Canada really wanted to lower global emissions, selling China cheap LNG would lower global emissions far more than a domestic carbon tax.
We are talking about decades-long policy planning here. If China and India sustain prolonged growth such that their incomes come close to anything near ours, their emissions will more than double. If China's population is currently declining, India's population is not doing so yet.
Your argument is also setting aside much of the rest of the world. Other countries will also grow and also be having their energy consumption increase. Whatever emissions reductions are to be achieved by shifts to LNG will be of one-time effect. Sustained and continuous reductions are needed to meet global emissions-reduction goals.
"If Canada really wanted to lower global emissions, selling China cheap LNG would lower global emissions far more than a domestic carbon tax."
That would be the case if Canada could single-handedly replace China's energy supply with LNG, which it cannot. Whatever its policy choices, Canada's actions are more symbolically influential than substantially consequential.
China built enough solar panels last year to power all of France. India is going big on nuclear. The USA just put a trillion dollars into green energy and green tech. That’s what is going to move the needle on climate change. They are moving forward regardless of what Canada does. Our carbon tax is irrelevant.
Your argument seems confused. You seem to be implying that India, China, and the U.S. are all moving in a positive direction already, but you do not claim that any of these countries are yet on a downward emissions trajectory.
If those 3 countries were together doing enough to combat climate change, then the dire warnings from the international climate science community would have likely ended a while ago. But those 3 countries still need leadership to go all the way on the needed policies, and our country is in a capacity to lead.
They are building the capacity to build a clean future. Chinese solar panels are now cheaper per square foot than fence boards. What is the carbon tax building other than resentment?
China has a carbon "tax", of a sort. It has an emissions-trading system that imposes financial disincentive to emissions similarly to a tax. (Cap-and-trade is more economically harmful than a straightforward tax.)
Surely China and India will adopt a carbon tax for the reason we do: to save the world from anthropogenic climate change? No that can’t be right, they’ll do it because Canada showed the way!
Every country around the world pays at least some attention to the policies of its friends. If China and India would not be inspired by Canada's example, they would be plausibly inspired by the example of other countries that themselves follow Canada's example.
Collective action problems require individual leadership. Individual leadership has to start somewhere.
Stefan, you start of by saying, "Every country around the world pays at least some attention to the policies of its friends."
Given the actions / inactions / provocations of the LPC government it is to me dubious that either China or India would consider Canada a friend so you have right there answered the question as to why those countries do not take Canada's carbon tax as an appropriate policy mechanism.
Canada's carbon tax has been in force for only 4 years, has been at a low rate to date, and has been heavily politicized from the beginning to the point where businesses would not want to invest in innovation in response to what seems like a soon-to-be-gone tax. Of course almost no one is going to take inspiration from Canada's example at this time.
If Canada implemented the tax for a longer period and at a higher rate, with its political survival being more obvious, then Canada would start to see results that other countries would then take interest in replicating within their own jurisdictions.
I enjoyed this rather irreverent article. Indeed, the working class is the most affected by the imposition of the carbon tax. My issue is the models in which economists assume that most taxpayers will be better off. What assumptions make up these models? For example, what average distance do they assume people commute? What products do economists assume these taxpayers consume and will they substitute some of these items for less carbon intensive alternatives? Heating a home has very few substitutes and changing heating methods to heat pumps is capital intensive. Further, for people who live paycheque to paycheque, a rebate every quarter will not help you if you need to pay your increased monthly heating bill. Ultimately, the carbon tax reeks of hubris from the elite class dictating what is best for the working class and how the working class should modify their lifestyle to “fight climate change,” while the working class is struggling to make ends meet.
When we get serious as a country and start building nuclear facilities at home and abroad we can reduce the price of electricity to where it is more affordable than gas/oil/fuel oil and propane. Then watch people move from gas/oil furnaces to heat pumps or hybrids when their old ones die. Or we can just make everything unaffordable to signal our virtuousness.
Lets help the world get off of coal by using our NG and use the revenue generated by the royalties to help spur nuclear buildup here and in say Africa, and Asia.
Or we can just make our poor poorer but brag about methane at the next COP we have our ECO leaders jet of to attend.
One of the best op-eds you’ve printed since I became a subscriber. Really brilliant telling-it-like-it-is in a jargon-free way from beginning to end. This kind of essay is why I like this publication.
The Dark Green/Bright Green debate has been roiling in the energy/climate community (where I’ve been for my whole career) for decades but only recently entered mainstream political debate due to the carbon tax.
The terms themselves remain esoteric but basically Dark Green is: the only way to reduce carbon emissions is through constraining lifestyles or reducing population. And Bright Green (also sometimes called “decoupling” or “ecomodernism”) is the idea that carbon emissions can be reduced without constraining lifestyles, by pursuing new Green technologies that allow us a life of abundance without wrecking the climate.
One thing that’s been frustrating for me is how the mainstream debate has always assumed one of two falsehoods: either that climate change isn’t a serious problem, or that reducing carbon will be cost-free and won’t require any lifestyle constraints in the short term.
Pierre P right now is out there pointing out the costs of the tax (as is this essay) while ignoring that if we don’t get carbon emissions down, things are gonna get real bad for a stable world. We may not broil to death in Canada but a destabilized nuclear Pakistan can still sting us.
And too much of the renewables/green-tech industry/Guilbeault faction has pretended that this will all be easy and cost-free, we’ll just ride bikes and clean, efficient transit and live in comfortable apartments! Which — well, I don’t need to repeat the great essay here to prove how naive that is.
The problem is that both things are true: we need to address carbon, and doing so in the absence of low-carbon abundant energy (via lifestyle constraints) will be incredibly painful and probably politically impossible. Certainly global cooperation appears to be failing. That’s the vice we’re in. The only way out is abundant, low-cost, zero carbon energy. Which is the reason I’m in the nuclear industry… and why I see fission and fusion as inevitable.
This reply is already too long so I’ll just close by saying thanks again for publishing this article. You guys should interview Chris Keefer on On The Line, who deeply understands this debate and the role of nuclear in getting us out of the dilemma we’re in.
The other piece of the puzzle is that runaway fiscal deficits (in Canada, US, EU, etc.) will sooner or later lead to a cascade of sovereign debt crises that could be far more disruptive than climate change.
So if we're going to curtail the oil & gas sector for the sake of the climate, we'd better be prepared to gut social benefits (e.g. retirement, First Nations, etc.) to offset the lost revenues.
"...a cascade of sovereign debt crises that could be far more disruptive than climate change..."
This is implausible. Messing up our finances would be bad. But messing up the basis of life itself, as we are doing now, is fundamentally more foolish (and self-destructive).
Changing the climate will be a mixed bag of pleasant and unpleasant surprises (e.g. longer farming seasons due to shorter/milder winters is a plus). Debt crisis is all bad.
The rapid rise in mean global temperatures has already given rise to an exponential increase in extreme weather events. These have been contributing to the destruction of what wild lands remain on the planet (and plummeting numbers of wild plants and animals).
We share this Earth with all of them--and have greatly benefited from exploiting all that they have been able to give (everything from ecological balance, as offered by predators and scavengers, to medicines that we would not even have imagined ourselves).
Changing the climate in the thoughtless, short-termist way we've been doing is destroying the ecology of our planet faster than we are able to mitigate.
What we will end up bequeathing to our children could be little more than a burned out husk of what you and I were born into.
https://www.weforum.org/agenda/2018/08/planet-earth-has-more-trees-than-it-did-35-years-ago/
There are more trees today than 35 years ago, partly because trees are able to grow in newly warmer parts of the planet. Like I said, it's a mixed bag.
"Messing up our finances" could literally lead to mass famine; I actually wrote a piece on this not too long ago
https://milesmcstylez.substack.com/p/what-would-a-canadian-debt-crisis
Oh don’t be silly. Canada is not going to have a sovereign debt crisis. Canada has its own currency. Canada can’t run out of Canadian dollars. And there are no runaway fiscal deficits - if anything, the deficit is too low.
"Canada can’t run out of Canadian dollars."
True, but those dollars can become worthless as more and more are printed. It's a little something called "inflation"
Canada had a close brush with a sovereign debt crisis back in the 1990s (it took years of austerity to avoid it), and all those same preconditions are coming back.
No it didn’t.
https://www.reuters.com/article/idUSTRE7AK183/
https://www.bennettjones.com/Publications-Section/In-the-News/America-Is-Headed-For-A-Debt-Crisis-Like-Canadas-In-The-90s
Yes, it did.
Good luck shorting the USA, you’re going to need it.
I really enjoyed Clarke's writing style. More pieces from him, please!
This is a particularly apt and colourful analysis. Mr. Ries can take some pride when the cage-match and banned-executive-jets memes turn up in other publications. I hope to read more from this writer.
If “pain is the point,” why did Trudeau himself recently state that it would be foolish for it to be scrapped, because the majority of Canadians are better off financially with it than they would be without it?! The problem with the Trudeau’s carbon tax is that it lets the said majority of Canadians get off scot-free (no actually make money without changing their behaviour) while making other Canadians pay much more just because of where they live and what and where they work, even if they reduce their “carbon footprint” as much as possible.
If the carbon tax was really a sin tax like alcohol excise taxes, we would not be getting any money back from the government. They would be using those funds to fund projects, both prevention and mitigation. As it is now, it is just a wealth redistribution scheme where those citizens who have to travel greater than average, or live in colder than average areas give money to their fellow citizens who are able to travel less, ….
I accept there is really only one “taxpayer.” By taxing industries, and using those funds effectively and efficiently, we the taxpayers would be better off and the market would decide which industries should succeed. And yes if industries were taxed there would be pain, but changing behaviour would reduce the pain and it would apply to all citizens equally.
Great reply. My thesis here is that while the pain is definitionally the point of a consumption tax, supporters of the carbon tax seem to have (i) an idealistic notion of which Canadians are going to experience the most acute pain and (ii) underestimated how much acute pain the carbon tax needs to inflict to do the job they built it to do.
They're now running into the business end of these misunderstandings.
Hold that thought....JG
One of the untold stories of the carbon tax wars is how the design of the "rebates" has escaped scrutiny.
Remember when Harper cut the GST, and economists were up in arms because income tax rate reductions are more economically efficient than consumption tax rate reductions? Well, even worse than a consumption tax cut is a lump sum handout (for the mirror image of the reason tax theory says a poll tax is the most efficient tax, however unfair it may be -- because it doesn't change incentives at all).
The "rebates" are lump sum handouts. Worse for economic efficiency than income tax cuts (which could be biased or even entirely limited to the lowest brackets). Worse than a GST cut. But Team Economist won't say this, because they simply accept that the "rebates" are bundled with the Pigouvian carbon tax, which they like.
Trudeau sells the heck out of people being better off for the blunt force redistribution of the "rebates". But there's nothing clever there. He could jack up the GST and hand out the proceeds equally per capita, and achieve the same redistributive effect. Most people would be better off! But he doesn't. I wonder why.
HOLD THAT THOUGHT. JG
Here in BC, most of us (all but the very poor) are going, "rebates? what rebates?"
"The "rebates" are lump sum handouts. Worse for economic efficiency than income tax cuts"
This claim seems confusing. While economists have usually framed carbon taxes as a means to cut income taxes, the rebates are not supposed to create incentives of any particular kind. The rebates are designed to do three things: (1) bribe the populace into accepting a carbon tax, (2) ease the burden of the taxes for the lowest-income Canadians, and (3) prevent carbon tax revenue from factoring into government budgets, which would result in the government having a conflict-of-interest in setting the carbon tax rate to maximize finances rather than minimize the activity.
"He could jack up the GST and hand out the proceeds equally per capita, and achieve the same redistributive effect. Most people would be better off! But he doesn't. I wonder why."
Probably cognitive dissonance is the reason.
Even though they are bundled together politically, the carbon tax and the "rebates" are really different designs. Even the name "rebate" is nonsense -- a professional grad student who never consumed anything energy-intensive in the first place gets a big juicy "rebate".
They are distributing billions. This could be done in a way that improves economic efficiency, like through a reduction to rates in the lowest income tax brackets. There is an opportunity cost of just handing out checks instead, for maximum redistribution and crass political benefit. They could have distributed the same money more wisely, in a way that improved incentives and productivity. Just as Harper could have gotten more economic benefit from income tax rate reductions instead of the politically beneficial GST cut.
"They are distributing billions. This could be done in a way that improves economic efficiency, like through a reduction to rates in the lowest income tax brackets."
An income tax cut would provide positive behavioural incentives, yes. But a rebate also gives money to poor people who already are exempt from income taxation and therefore the redistributed money is imminently recycled into the economy via consumer spending, rather than becoming a surplus for middle-class persons that is then used for investment. Both the rebates and income tax cuts have their own economic advantages and disadvantages.
Tax policy always trades off efficiency vs. equity. What balance to strike is an extremely important and difficult fiscal policy question.
My complaint is that Trudeau went 100% to the extreme redistribution/equity end of that spectrum, but instead of that prompting a big debate as a matter of tax policy (like Harper's GST cut did), the rebate design as compared to other possible alternatives was completely ignored. The carbon tax side of the scheme crowded out the entire debate. Meanwhile, in other conversations, very serious people acknowledge that Canada is in the middle of a productivity crisis.
And the more Trudeau sells the pure redistribution side ("most families are [financially] better off"), the more regrettable it is that there has been no debate at all on the "rebate" design itself, which is the whole basis for Trudeau's claim (it has nothing at all to do with the enviro benefits).
The purpose of the tax-rebate scheme is to impose **selective pain**. If you consume CO2-intensive goods much more than the average Canadian, then the rebate will not cover the costs of the tax for you, hence you are still being punished.
But even if you are receiving more rebate money than you are paying through the tax, shifting to less CO2-intensive goods will *still* be financially rewarded. Your personal consumption patterns will have no effect on the size of the rebate, but if you lower your personal consumption of CO2-intensive goods, you will be able to bring your tax burden closer to (but never quite reaching) $0, thereby increasing your personal benefit from the tax-rebate scheme.
"By taxing industries, and using those funds effectively and efficiently, we the taxpayers would be better off and the market would decide which industries should succeed."
I could be mistaken, but I do not believe that the tax is technically charged to consumers. The tax *is* charged to industries, but it is a foregone conclusion that most of that tax is passed onto consumers. There is no actual means of forcing industry to pay a price without consumers being affected.
Have you seen your gas bill lately? It is shown there quite clearly, and now it is higher than the gas itself.
True, but you’re ignoring delivery costs which have always been higher than the gas itself.
Excluding delivery costs makes the statement disingenuous.
A bit like but not identical to pointing out that taxes on clothes are higher than the price per ton of cotton. Yeah true, but you don’t pay for cotton. You pay for clothes.
Neither do you pay for a flammable gas that you pick up from fortis headquarters and carry home in a paper bag. You pay for it delivered to your house in an incredibly expensive pipe system.
What a fun, smart read.
I am in general agreement with the writers position on who is REALLY wearing the pain through carbon taxes, with some small exceptions:
- As a person involved in agriculture, I am alarmed with broad generalizations stating that agriculture will get along just fine with carbon taxes. Maybe. Depending upon what aspect of the food production chain you are talking about. Suppliers that provide things needed to grow food will adapt as will the manufacturing and exporting businesses. Where does the primary producer pass the costs to? In a price taking market place any carbon tax passed to the primary producer will be eaten as cost of production. Also remember that Ottawa is floating restrictions on fertilizer use and mulling over a tax regime that would tax fertilizer at the manufacturer or retail level. These are dangerous policies to business plans that are sketching out small profit margins and added risk of lower yields.
- And lastly, the main selling point of the carbon tax is to change behaviour, preferably by adapting new technologies ie. EV vehicles, solar panels or heat pumps. It’s a pretty nasty trick to charge carbon taxes but not offer realistic solutions to change to something better. In the current market environment, swapping out an F250 and its towing HP for an EV truck is a green fanatics daydream. It’s pretty great for Ontario and Quebec to corral all the EV battery manufacturing capacity via huge subsidies but the trickle down of practicality in rural and remote regions is a long way off. .
"And lastly, the main selling point of the carbon tax is to change behaviour, preferably by adapting new technologies ie. EV vehicles, solar panels or heat pumps. It’s a pretty nasty trick to charge carbon taxes but not offer realistic solutions to change to something better."
The carbon tax often works in much more subtle ways than that. Use of CO2-intensive goods is so ubiquitous that almost everyone is doing something that creates unnecessary emissions.
Take a food market, for example. Some fruits undergo greater shipping distances than others, and in the process more emissions are created. Insofar as those food chains are subject to a carbon tax, some fruits by some companies are going to become less competitive in price compared to other competing fruits. So some number of consumers *will* change their purchasing patterns accordingly by buying the now-cheaper fruits. Most of your behavioural changes in response to the tax will not even be conscious, because all you are doing is looking at the prices of the fruits and making decisions based upon that price.
You make excellent points here. My only quibble is to note that I said "most farmers and ranchers" will be fine. The agricultural economy – which you’re more familiar with than me – is vast, and I think it’s a fair characterization that large landowners sit somewhere near the top of it. Most farmers will be fine. I’m less sure about the fieldhands.
Clarke, I hesitate to respond about agricultural issues but I respectfully think that you are incorrect about agriculture.
If you look again at Darcy's post you will notice that he posits that farmers and ranchers (where I live in Alberta, many ranchers call themselves farmers, so I will use that term henceforth) are price takers. That means, of course, that they are not price makers. That condition applies whether to agriculture on the Prairies, apple growers in BC, market gardeners, etc., etc. In other words, all farmers are price takers.
That distinction means that they cannot pass along the additional cost of the carbon tax; it comes directly out of their hides. I am a retired city dweller but in my working life I was a CPA who dealt with many small businesses, including farmers; further, many, many of my relatives are active farmers. I can absolutely tell you that farming is a low margin business and while there certainly are wealthy farmers, they are often that way simply because they inherited a land base and you can be certain that not all farmers so intelligently chose their parents.
To summarize, I offer a restatement to your comment, as follows, "some farmers and ranchers will be fine but many are severely harmed by the carbon tax."
That's an excellent restatement of my original comment, and I fully endorse it.
As someone who's been chosen to feel the pain (must drive in rural area at random hours to access employment), I'd feel better if the officials pushing this policy the hardest made even the slightest attempt to walk the talk. I'm not a fan of people making 6 figures from my taxable income - who own cottages and take two overseas vacations a year - telling me I have to suffer more. That's been my whole life.
I don't own a washer or dryer. I don't have - and have never had - air conditioning in my home. I've never flown overseas. Hot tub/pool/sauna? I've only heard of them. My 6-year-old car has a 1.4-liter engine. To the backers of this tax that disproportionately impacts the working class and rural population, I say this: Please, give up all the energy-consuming niceties I've just listed before telling me I've had it too good.
Maybe then I'll take your word that it's necessary. Because right now, most of you aren't living in a manner that screams "apocalypse imminent, desperate measures required."
It is because our elected politicians have six-figure salaries and have such high-travel work lives that we can expect that they are paying more in carbon taxes, at least in absolute terms, than are most Canadians. This tax is actually one of the rare instances of governing politicians voting against their short-term self-interest.
Pierre Poilievre has made about $2 million on the public dime and is the most vocal opponent of the carbon tax. He's certainly wealthier than are most of the economists who recommended that the tax become policy. Arguably a carbon tax would eat more of his bottom line than it would of most Canadians, since his rebates will not re-imburse most of the income he pays into the tax.
How about this:
A single mom working as a PSW, driving a 2008 Corolla, has to accept a reduction in her income as a result of this increased, unavoidable expense - during a time when unaffordability is rapidly increasing.
A senior bureaucrat making over 200k a year, living in Rockcliffe Park, gets a $5,000 taxpayer-paid incentive on the purchase of a new electric BMW that he can already damn well afford.
And that's not to mention all the other cost-saving green perks the home-owning upper middle class gave available to them.
Please explain to the single mother PSW why she's wrong to think this is unfair, and not exactly equitable.
"A single mom working as a PSW, driving a 2008 Corolla, has to accept a reduction in her income as a result of this increased, unavoidable expense - during a time when unaffordability is rapidly increasing."
It is not actually clear that she is going to face a reduction in her overall income. She might be receiving more money through the rebates than she is paying through the tax.
"A senior bureaucrat making over 200k a year, living in Rockcliffe Park, gets a $5,000 taxpayer-paid incentive on the purchase of a new electric BMW that he can already damn well afford."
Well that is not good policy. It is cognitive dissonance on the part of the government to use carbon taxes and rebates when their ultimate logic is to replace almost all other climate programs.
So I’m actually in favor of the carbon tax, but the LPC’s failings on other files has likely condemned it to the ash heap of history in Canada. Had they actually made headway on housing (the #1 cost for most people) and made it easier to live in a city without a car (by getting our insane construction costs under control and building transit) they likely wouldn’t find themselves in such a situation. But they adopted the same mentality as the fanatics who push for traffic calming in a small downtown coupled with removing parking spaces without providing and alternative such as transit and wonder why people are pissed. It’s probably the misinformation! Nobody could EVER have a valid objection to our policies!
FW, I agree with what you said but this is Canada, a confederation of provinces (I am ignoring the territories because they are creatures of the federal government.
Where I am going with this is that the LPC has imposed the carbon tax and they have then trumpeted / asserted their virtuous behavior and have claimed their virtuosity in all thing governmental. I don't think anyone can deny those assertions. Neither can folks deny that the concept of LPC virtue and / or virtuosity taken a real hit over the life of this government.
The problem is that the federal government simply is not ALLOWED under the Constitution to do a lot of things; those responsibilities lie with the provinces and the feds simply have been incredibly ham handed in trying to get those particular "things" done in any sort of efficient way because they do not have the power to implement their "wizard" ideas. Things like housing, transit and transportation and the like all lie within provincial responsibility and the federal government simply has proven incompetent in so many ways in trying impose / "assist" solutions in these many areas.
The result is that nasty old politics gets in the way, whether it is politics at the federal level, politics at the federal / provincial level, politics of sincere, well-meaning idealists or whatever.
In other words, IT'S COMPLICATED and the idea that the LPC can simply impose the carbon tax without consideration of so many other variables and discussion / negotiation with other groups is absurd.
You can disagree about the constitution, but it's the judiciary's job to determine what to does and doesn't say - and the SCC has upheld it. The feds can and do work with the provinces (eg healthcare) through the usual route - do X and we will give you $. The whole "we need ever more consultation" is the same mindset that keeps things from being built here.
FW, I agree with you fully but, as always in these conversations, the devil is in the details. Please allow me to deal in details for a moment or two.
You offer the example of healthcare as a shared federal provincial program. That is, on the surface a good example but, really, it is a tremendously cautionary example. The original deal on medicare was that it was a 50:50 cost sharing. That was (I think) 1965. Since that time medicare has taken on immensely expensive new procedures forced (let's just say) by circumstance on provinces and the feds have reduced their share to (I think) 27% of all healthcare costs covered by governments. Further, the feds try to enforce "national standards" but don't enforce those standards in some provinces (e.g. private hospitals in Quebec as just one example)
All provinces are terrifically wary of getting into a program that is constitutionally their area but that they can't afford on their own but which they are being bribed to enter; they are worried that the feds will leave them high and dry in the future.
Further, you note that the SCC upholds the Constitution. Well, not really. Sometimes, yes and sometimes, no. First off, it takes a long time and a fair bit of intervening uncertainty before getting a decision out of the SCC. Secondly, sometimes the Constitution is clear but then the SCC trots out the POGG (Peace Order and Good Government) doctrine which is really nothing more than an excuse for the feds to do whatever the Hell they want and to violate the separation of powers. Third, the SCC is not always impartial. A good recent example is with the 2022 Truckers' Convoy; it may well be that one or more of those cases will end up at the SCC. Find, you say? I say not. The Chief Justice of the SCC has already opined publicly about the convoy. Commenting about a public event that would likely end up before him; that just confirms to many of us that the SCC is really a political creature of the LPC.
As for your final point, "The whole 'we need ever more consultation' is the same mindset that keeps things from being built here" I agree but that doesn't mean do not consult. It means consult and then where a province agrees go forward with that province. Don't treat the provinces as enemies and, very likely, the provinces will return that approach.
Great article, but I have noticed that in recent posts by guest writers, there was no biographical information on the writers. Mr. Ries confirms my opinions of the carbon tax, but what is his background on the subject? Not to pick on Mr. Ries (who wrote a great column) but I have noticed other recent guest writers had no biographical information so I could assess their backgrounds. Do they have policy or other subject matter experience? Do/did they work in politicians offices?
Again, not to pick on Mr. Ries, just something I have noticed with recent guest posts by writers I am not familiar with. Thanks for listening!
We provide biographical information where relevant -- ie; if someone is connected to a political party, or might conceivably have a vested interest in a subject. JG
Your request is perfectly reasonable, but as a matter of principle I'd rather you assign my argument a persuasive value of zero than attempt to persuade you on the basis of credentialism.
My promise to you, Ray, and you can take it to the bank, is that even on subjects where my credentials would decisively carry the point, you're never going to hear about them.
Welllll...... maybe.
I think what Ray means is that if you are on the radical, loony left of the eco movement then we take your sensible commentary with a grain of salt whereas if you are on the incredibly fascist denier side of things we use a pepper corn when considering your essay. In other words, perspective is important.
From my perspective, the best evidence of whether I'm a radical, a fascist, or some third, even more ominous thing - like sensible - is what I wrote.
Accept the evidence of your eyes and ears. This is my final, most essential advice.
Fair enough. I just like to know who is confirming or challenging my biases. :)
Food production is energy intensive. The carbon tax affects most of the inputs used in farming and ranching, especially fuel and fertilizer. The author ignores the impact on the rising cost of food production due to the carbon tax that will be passed on to consumers. The Canadians most likely to be impacted by this rising cost of food will also be the working class. While the PBO determined the indirect costs of the carbon tax was minimal, will the carbon tax rebates really cover the cumulative cost of living increases resulting from the rising carbon tax levies?
On the contrary, my dear sir, I don't ignore the carbon tax's impact on the cost of food production at all. It's mentioned implicitly - along with all other essential carbon-intensive goods and services - when I noted that one of the ways in which Canadians are intended to adapt to the carbon tax is via the repricing of their goods and services.
The more valuable the good or service, the more able its supplier will be to pass the higher tax burden along down the chain. "Somebody must lose" was my thesis, and the losers will be the suppliers whose services aren't valuable enough to successfully negotiate price increases with the buyers of their services. We are in complete agreement that those losers will be predominantly found among Canada's working class.
A patronizing comment like "my dear sir" do little to increase the validity of your point of view or credibility.
Is it realistic to think that repricing of goods and services can occur in isolation to demand for those services. Producers can only reprice their goods and services to pass along the carbon tax if there is still the same volume of consumer demand for those services at the elevated price. It is not solely a matter of whether a service is valuable, the service also needs to be affordable. As prices continue to rise, consumers may not be the only ones to feel the pain. Restaurants are seeing declines in the numbers of and frequency of Canadians who are dining out. Higher prices are seen to be a major factor in the decline and carbon taxes add to those higher prices. If restaurants goes out of business for being unprofitable, former patrons are not the only ones affected. The business owner, the former staff, potential a building owner, food and beverages wholesalers, and ultimately the primary producers are all negatively affected. There would also be a reduction in Government revenues in terms of income taxes and sales taxes. It seems to me the "losers" from the increasing carbon taxes could be much broader than those suppliers whose services aren't valuable enough to successfully negotiate price increases with the buyers of their services and the Canada's working class.
My dear sir, you have encountered me at my most courteous and obliging. I infinitely regret that this comparatively lofty standard of conduct has met with such objurgation.
The elephant in the room on housing is that the condos being pushed are not even more energy efficient, they are just smaller. Small detached homes are no less efficient and cheaper to build than condos when they are not effectively rationed by land-use policy. Condos might support more transit access, but the tradeoff between housing costs and commuting costs is individual. Someone who works from home or nearby doesn't need to be forced into housing that would make sense if they were commuting downtown.
Instead of letting the tax do it's job, governments are putting their thumb on the scale in ways that are much worse for new buyers than existing owners, who get benefits from more people nearby like transit access or amenties (that make expensive travel less painful) without paying more for less space.
Hold on a minute.
Nicely put, indeed amusingly, BUT it totally disregards the key element in the policy: the rebate. Yup, somebody has to feel the pain, or at least act in a way — changing their wicked ways to reduce their emissions — that says they feel it. But those actions cost them quantifiable dollars, WHICH ARE RETURNED TO THEM.
So until we come up with a better, fairer idea, let’s all STFU and let ourselves be nudged into making things better. Might not work, but if we don’t try , it’s a sure thing that nothing gets better.
There are 2 problems with this argument. The first is that the rebates are a 1-size-fits-all measure that doesn't necessarily reflect the impact of the carbon tax on individuals. As this piece points out, rural low income people may have no choice other than driving a less-efficient vehicle over long distances. They'll still be more out of pocket due to the carbon tax despite the rebates vs. a city dweller who has less of a footprint and more options to change it.
The second problem is political: rebate cheques come out 4 times per year. People feel the pinch of the carbon tax *every day.* The Mulroney government introduced GST rebate cheques for low income earners when they introduced the GST. It didn't spare them the wrath of voters. The rebate cheques are a minor cash bonus for recipients when they get them, but don't substantially change their finances.
All in all, the carbon tax is a rational economic policy that fails politically. Diffuse benefit, concentrated harm, a constant reminder of the cost that the government tries to offset with infrequent and relatively small cash handouts.
I'm not sure I understand - can you clarify? If somebody is charged dollars that are then returned to them, have their wicked ways actually cost them anything? What is their incentive to reform?
Clarke, I think that George's point was that we feel the burden of the carbon tax every day but that we get "free" [oh, what a stupid idea, but that is how it is considered] government cash four times a year. So, pain 365 days and pleasure four days. That math works out to 361 days of rage at the government. Sensible or not, that is the way that people typically think.
Oh, my reply was to Fred, not George. I agree with George's point, and I think you summed it up perfectly.
"...might not work, but if we don't try"
Um, don't look now, but we've been trying for several years now and it has yet to cause a single measurable ACTUAL reduction in Canada's GHG emissions.
Oh sure, the government has some stats to show you which say that theoretically the carbon tax has reduced our theoretical emissions from a theoretical higher number which we "might have" otherwise emitted - but if you don't see the self-serving loopholes in that, I have a lovely bridge to sell you....
In real terms, Canada has continued to GROW its GHG emissions since the creation of this program.
Not only is 4 years a short timeline to expect to see results, the carbon tax rate has been low to date, and the tax has been heavily politicized for most of its existence. No rational business would invest money in innovations to reduce emissions, when it currently looks like the tax will be repealed by a new government at the start of 2026.
Take away at least 1 of these factors, and you would likely see a better result from Canada's carbon tax.
Very necessary comment Fred. Thanks for making it. This thread demonstrates some far fetched notions of what’s going on here.
Great analysis! By waving the flag of global warming the current Ottawa occupying forces have managed to implement an energy tax in a cold and miserable country (most of the year) where the majority needs to stay warm and survive by burning fuel - without having an insurrection. Compare this feat to the salt tax in 1930s (?) India which led to the British being kicked out of India. The arrogance of the British colonialists in 1930s India appears to be alive and well in the Liberal Laurentian elite running things in Ottawa. I await with bated breath the emergence of a Canadian Gandhi.
I particularly liked the mention that people affected by the tax will adjust the price of the goods and services they produce. The Liberal claim that the tax is neutral because of rebates ignores the fact that you have more money (rebates) chasing fewer or the same goods (energy). This is the Economics 101 definition of inflation. And a side benefit is more Ottawa bilingually bonused civil service jobs both at the worker bee and policy analyst level which translates into Liberal votes in the Laurentian area of Canada. And inflation due to higher energy costs leads to higher interest rates which leads to inflation in housing costs etc…
There are those who work for a living and those who vote for a living. The latter outnumber the former (so I’m told, FWIW) . The Liberals with their latest free (AKA deficit financed)pre budget spending announcements are blatantly catering to the latter group in anticipation of the next election. With all the deficits I wonder how long it will take for Canada to join Argentina in the financial club of resource rich countries brought down by government deficit triggered inflation…
One other point missing is that climate change is a global phenomena. What we do in Canada will have little effect on the change in climate. What we should be doing is helping the big emitters like China and India reduce their emissions, instead of arguing about the carbon tax and mandating EV’s.
China and India will not reduce their emissions without their own carbon tax. If Canada rejects the carbon tax due to misinformation about the economic impact, then why would China and India adopt one?
They'll reduce their emissions if we sell them natural gas so they don't have to burn coal. The coal to natural gas switch cuts emissions in half after all.
No, they won't. Even when you give people access to fuels that have lower emissions per unit of use, their emissions will still increase long-term if they have no incentive to conserve or not expand their general energy consumption. And when Indian and Chinese incomes rise, they will have every interest in using their new income to expand their energy consumption.
The only solution is for countries to decouple emissions increases from economic growth through policies of coerced conservation, which is exactly what a carbon tax achieves. And we might as well lead the way here.
Yeah no, your math doesn't check out there.
If they can halve their emissions with lower carbon-density fuel, then their energy consumption would have to DOUBLE just to get back to emitting as much as they were before.
China's consumption is not going to double; they already have a declining population.
If Canada really wanted to lower global emissions, selling China cheap LNG would lower global emissions far more than a domestic carbon tax.
We are talking about decades-long policy planning here. If China and India sustain prolonged growth such that their incomes come close to anything near ours, their emissions will more than double. If China's population is currently declining, India's population is not doing so yet.
Your argument is also setting aside much of the rest of the world. Other countries will also grow and also be having their energy consumption increase. Whatever emissions reductions are to be achieved by shifts to LNG will be of one-time effect. Sustained and continuous reductions are needed to meet global emissions-reduction goals.
"If Canada really wanted to lower global emissions, selling China cheap LNG would lower global emissions far more than a domestic carbon tax."
That would be the case if Canada could single-handedly replace China's energy supply with LNG, which it cannot. Whatever its policy choices, Canada's actions are more symbolically influential than substantially consequential.
One-time and substantial is still better than continuously trivial.
Would you rather get a million dollars once, or ten dollars a year for the next 50 years?
China built enough solar panels last year to power all of France. India is going big on nuclear. The USA just put a trillion dollars into green energy and green tech. That’s what is going to move the needle on climate change. They are moving forward regardless of what Canada does. Our carbon tax is irrelevant.
Your argument seems confused. You seem to be implying that India, China, and the U.S. are all moving in a positive direction already, but you do not claim that any of these countries are yet on a downward emissions trajectory.
If those 3 countries were together doing enough to combat climate change, then the dire warnings from the international climate science community would have likely ended a while ago. But those 3 countries still need leadership to go all the way on the needed policies, and our country is in a capacity to lead.
They are building the capacity to build a clean future. Chinese solar panels are now cheaper per square foot than fence boards. What is the carbon tax building other than resentment?
China has a carbon "tax", of a sort. It has an emissions-trading system that imposes financial disincentive to emissions similarly to a tax. (Cap-and-trade is more economically harmful than a straightforward tax.)
Well, China is cranking out solar panels and electric cars faster than they can sell them. Where’s the economic harm? Canada’s economy is stagnant.
It’s important to check your theories against reality.
Surely China and India will adopt a carbon tax for the reason we do: to save the world from anthropogenic climate change? No that can’t be right, they’ll do it because Canada showed the way!
Every country around the world pays at least some attention to the policies of its friends. If China and India would not be inspired by Canada's example, they would be plausibly inspired by the example of other countries that themselves follow Canada's example.
Collective action problems require individual leadership. Individual leadership has to start somewhere.
Stefan, you start of by saying, "Every country around the world pays at least some attention to the policies of its friends."
Given the actions / inactions / provocations of the LPC government it is to me dubious that either China or India would consider Canada a friend so you have right there answered the question as to why those countries do not take Canada's carbon tax as an appropriate policy mechanism.
Canada's carbon tax has been in force for only 4 years, has been at a low rate to date, and has been heavily politicized from the beginning to the point where businesses would not want to invest in innovation in response to what seems like a soon-to-be-gone tax. Of course almost no one is going to take inspiration from Canada's example at this time.
If Canada implemented the tax for a longer period and at a higher rate, with its political survival being more obvious, then Canada would start to see results that other countries would then take interest in replicating within their own jurisdictions.
I enjoyed this rather irreverent article. Indeed, the working class is the most affected by the imposition of the carbon tax. My issue is the models in which economists assume that most taxpayers will be better off. What assumptions make up these models? For example, what average distance do they assume people commute? What products do economists assume these taxpayers consume and will they substitute some of these items for less carbon intensive alternatives? Heating a home has very few substitutes and changing heating methods to heat pumps is capital intensive. Further, for people who live paycheque to paycheque, a rebate every quarter will not help you if you need to pay your increased monthly heating bill. Ultimately, the carbon tax reeks of hubris from the elite class dictating what is best for the working class and how the working class should modify their lifestyle to “fight climate change,” while the working class is struggling to make ends meet.
When we get serious as a country and start building nuclear facilities at home and abroad we can reduce the price of electricity to where it is more affordable than gas/oil/fuel oil and propane. Then watch people move from gas/oil furnaces to heat pumps or hybrids when their old ones die. Or we can just make everything unaffordable to signal our virtuousness.
Lets help the world get off of coal by using our NG and use the revenue generated by the royalties to help spur nuclear buildup here and in say Africa, and Asia.
Or we can just make our poor poorer but brag about methane at the next COP we have our ECO leaders jet of to attend.