The federal government is vowing to freeze its carbon tax at $50 a tonne after 2022, as it moves to impose the federal levy starting in January on Alberta consumers following Premier Jason Kenney’s decision to kill the provincial one.
Environment and Climate Change Minister Catherine McKenna sent a letter Thursday to Alberta Environment Minister Jason Nixon, informing him of her plan to impose the federal carbon tax on consumers in the province. The Liberals are waiting to see what Premier Kenney does with the separate system for taxing large industrial emitters before determining whether they need to impose the federal industry levy, as well.
Premier Kenney denounced the federal plan, vowing to launch a court challenge immediately: “We will stand up to this federal effort to punish Albertans for heating their homes & driving to work,” he said on Twitter.
Meanwhile, the federal minister told reporters Thursday the Liberal government would not increase either carbon tax above $50 a tonne – roughly 11.5 cents a litre on gasoline – after 2022 if re-elected next fall. The pledge comes after the Parliamentary Budget Officer issued a report concluding the tax would have to rise to $102 a tonne by 2030 to meet the country’s international climate-change commitment, if governments in Canada rely on carbon pricing alone.
“The plan is not to increase the price post-2022,” she said outside the House of Commons. Conservative MPs seized on the PBO report during Question Period to argue that the Liberals will raise the tax five times higher than its current $20 rate.
Ms. McKenna insisted Canada is on track to meet its commitment – made at the 2015 Paris climate summit – to reduce greenhouse gases (GHGs) by 30 per cent below 2005 levels by 2030. While the PBO highlights a significant gap between projected emissions and the target, Ms. McKenna said the report did not account for host of current measures other than carbon taxing that will further reduce GHGs.
The federal minister defended the tax in the letter to Mr. Nixon. “Pricing carbon pollution has a proven record across Canada and abroad of being the most efficient way to reduce emissions while encouraging innovation and the transition to a low-carbon future,” she wrote.
The federal carbon tax is a key issue in the coming election campaign. Conservative Party Leader Andrew Scheer and right-of-centre premiers are attacking the Liberals’ levy as ineffective and an undue burden on households, while many economists and business leaders endorse the use of a carbon tax as the lowest-cost, most-effective option to combat climate change.
The federal tax currently applies in four provinces – Ontario, Saskatchewan, Manitoba and New Brunswick. Ontario’s Progressive Conservative government is challenging the federal levy in court; the Saskatchewan government lost its challenge in a provincial court ruling released last month and is appealing.
Mr. Scheer is due to release his climate plan next week, and has vowed to scrap the federal tax should he win office in the fall. He has not committed to meeting Canada’s Paris target, but said this week that a Conservative government would focus on helping to reduce global emissions.
“Justin Trudeau pretends he has a plan for climate change but its clear that his carbon tax will not even come close to achieving Canada’s emissions reductions targets,“ Mr. Scheer said. “The Parliamentary Budget Officer confirmed today that his plan is not as advertised.”
In Alberta, as in the other four provinces, Ottawa is obligated by its own legislation to return all revenue from the tax back to the province. Some 90 per cent of the fuel tax revenue will be going to households. The average family of four in Alberta would receive a $888 rebate next April when they file their taxes, taking into account the first three months of 2020 and the full 2020-21 fiscal year.
"We clearly need Alberta to be part of our national climate plan as Alberta has the highest emissions in the country,” Ms. McKenna said, noting the province is witnessing the devastating impacts of climate change with the more intense, current forest fires.
While the federal government will impose the consumer portion of the carbon tax in Alberta, it will wait and see whether the province maintains a levy on large industrial emitters that meets Ottawa’s standards. Mr. Kenney has said he will replace the former NDP government’s industrial levy with one that is less onerous, with a rate rolled back to $20 a tonne from $30.
Ms. McKenna has insisted any provincial tax must rise to $50 a tonne by 2022 to avoid a federal intervention, both on the consumer fuel levy and the tax on large industrial emitters.
While Premier Kenney promises court action, Mr. Nixon shrugged off Ms. McKenna’s letter, saying the Liberals have to get re-elected to make good on their plan.
“I think this a good day for Alberta right now; the fact is that we’re going to remain having the lowest gas prices in the entire country, at least until January 1,” the provincial environment minister told reporters in Edmonton. He added that with a federal election looming, Ms. McKenna’s decision could be reversed by a different government.
“Right now there’s no carbon tax within our province so we’ll stick with that,” Mr. Nixon said.
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Justin Giovannetti