The carbon “tax” is here to stay

Introducing a price on pollution was one of Justin Trudeau’s most important decisions since 2015.


Admittedly, Canada is still an environmental dunce, far behind Europe. But with a price on pollution that will increase significantly over the years, we at least give ourselves the chance to limit our CO emissions.2and save (a little) the planet.

There is, however, a big problem: the federal carbon tax is threatened in the long term. The only party that can aspire to replace the Trudeau government, the Conservative Party of Canada, wants to abolish the carbon tax. This would undoubtedly be one of the first decisions of a government led by Pierre Poilievre. All this uncertainty does not encourage our companies to plan long-term decarbonization projects. Neither the investors to support these projects.

In Quebec, it is (fortunately) the opposite: there is a consensus around the carbon market, which takes the place of a carbon tax. The CAQ, the PLQ, QS and the PQ agree on this (only the PCQ is dissenting). Companies and investors can therefore plan their decarbonization investments knowing that the price of pollution will increase over the years. It doesn’t matter who wins the next election.

This is not the case in English Canada.

We would like the Conservatives to understand the full importance of the fight against climate change. In the meantime, Justin Trudeau wants to make it harder – more expensive, in fact – to scrap the carbon tax. In last Tuesday’s federal budget, the Liberals introduced carbon tax insurance contracts.

The principle is relatively simple: the federal government will guarantee the planned price of the carbon tax for the future (of $65 per ton of CO2 in 2023 to $170 in 2030) to large companies investing now to decarbonize their operations. These can thus include the effect of the future carbon tax in their financial arrangements for their decarbonization projects. It costs taxpayers nothing. And it provides a stable, predictable business environment that promotes long-term decarbonization.

If a future federal government reduces the carbon tax or abolishes it, Ottawa will then have to pay the difference to the companies on the major projects that have benefited from this insurance. Removing the carbon tax would cost at least hundreds of millions of dollars, if not billions.

The objective of these insurance contracts – nicknamed “Poilievre insurance” internally among the Liberals – is to establish a business climate conducive to the decarbonization of the economy. If that could make the Conservatives change their minds about the carbon tax, that would be a bonus and a nice surprise.

Canada, Japan and the European Union countries all have carbon pricing. The United States and Australia do not. There was one in Australia from 2012 to 2014, but the Conservative government abolished it (there were no financial consequences). This is the scenario we are trying to avoid in Canada with insurance contracts.

Carbon pricing alone cannot save the planet, but it is one of the main solutions to the climate crisis.

It has been in force in Europe since 2005, and Europeans have further reduced their CO emissions2 (compared to 1990) than Canada and the United States.


In Canada, the carbon tax was established late, in 2019. We say “carbon tax”, but we often forget that… it is not a tax. Ottawa puts a price on pollution, takes that revenue, and redistributes it to citizens (90%) and cities (10%). Citizens with a low carbon footprint receive more net money than they pay. The opposite for citizens with a high carbon footprint. (This does not apply in Quebec, where the Quebec carbon market takes the place of carbon pricing.)

We cannot meet the challenge of climate change without carbon pricing. This is why “Poilievre insurance” is justified and necessary.

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  • 84 billion US
    Revenue generated by carbon pricing globally in 2021. This is a 60% increase in one year.

    Source: World Bank

  • – 43%
    Global CO emissions2 will need to be reduced by 43% by 2030 (compared to 2019 levels) to limit the temperature increase to 1.5˚C.

    Source: Intergovernmental Panel on Climate Change

  • 6
    Number of G7 countries that have nationwide carbon pricing. Only the United States does not have a national carbon price. Some US states, including California, have carbon pricing.

    Source: OUR WORLD IN DATA/UNIVERSITY OF OXFORD


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