Cutting the Carbon Tax Will Cost Canada in the Long Run
In 2019, Canada implemented the Greenhouse Gas Pollution Pricing Act as part of our pledge to the 2015 Paris Agreement—an ambitious global effort to curb Earth’s warming to 1.5 degrees Celsius above pre-industrial levels and reach net zero by 2050. The act applies a federal carbon tax on fossil fuels—it started at $20 per tonne and will rise to $170 per tonne by 2030, unless provinces adopt their own equivalent policies. For consumers, it increases the cost of filling up at the pump and heating homes. But the point is not to punish people. The tax is meant to motivate Canadians to save money by conserving energy and using renewable sources instead. In fact, the government returns 90 per cent of the funds collected from the levy back to taxpayers through rebates. (The rest goes to small businesses, schools and farmers.) Industrial emitters, like oil companies and manufacturers, are also taxed. With this and other federal climate policies in place—including zero-emission vehicle standards and methane regulations—we’re on track to drive down emissions year after year, including a 226-million-tonne drop in carbon dioxide by 2030.
Even before he became leader of the federal Conservative party, Pierre Poilievre criticized the carbon tax, especially its impact on households’ fuel bills. His vow to “axe the tax” is now central to his election campaign. In a recent speech, he called the tax “an existential threat to our economy and our way of life” and claimed that it will push millions into poverty. If today’s polls are to be believed, then the Conservatives will likely form a majority government by late 2025. So, it’s worth considering what will happen to Canada’s environmental ambitions—and our climate—without the carbon tax.
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Poilievre has been most vocal about cutting parts of the tax that directly affect consumers. If he does, it would add around 15 million tonnes of carbon dioxide to the atmosphere by 2030. Some people argue that, in these tough economic times, reducing household costs is more important than making gradual emission reductions. But this is not the choice we face. The majority of taxpayers receive more money in rebates than they pay in carbon taxes—they just don’t believe it. Some Canadians can pocket the money and do nothing more. Others will respond to the tax by making eco-conscious choices, like weatherstripping their homes and buying electric vehicles.
Poilievre’s stance on the industrial levy is less clear. He may tweak the policy to significantly weaken it. For example, Canada sets benchmarks for different sectors, which allow those that operate in international markets—like cement production—to pay the tax on a smaller portion of their emissions, so they can stay competitive during their transition to cleaner energy. With Poilievre in charge, industry lobbyists may win more lenient benchmarks that could gut the policy entirely, with most Canadians none the wiser.
While any province could, in theory, replace the federal carbon tax with their own measures, few are likely to do so. Ontario, Saskatchewan and Alberta all unsuccessfully challenged the act in court. Even B.C., which initially defended it, now says it will drop its consumer fuel levy if Poilievre repeals the federal tax. By then, misinformation will have won over public opinion, making it nearly impossible for any province to reintroduce a levy.
The irony is that removing any part of the carbon tax will ultimately cost us more. Humans tend to think in terms of the present—will this policy make me better or worse off than today? But failing to address climate change guarantees bigger costs down the road. We’re already getting a taste of what will happen if Canada and the world fail to meet the Paris Agreement targets. Rampant wildfires and extreme flooding are displacing Canadians and destroying communities. The 2021 heat dome in Western Canada led to billions of dollars in damages and claimed 619 lives. And that’s just now, at 1.2 degrees over pre-industrial levels. The planet will only keep warming, with increasingly severe impacts, until we reach net zero. Every cost-benefit analysis from economists points to the same conclusion: acting now to curb climate change is the safer, cheaper path.
Axing the tax will reinforce the myth that we can meet our climate goals at no inconvenience to everyday Canadians. But road transportation and buildings account for 27 per cent of Canada’s carbon pollution. We are part of the problem. Carbon taxation is the most cost-effective and transparent climate policy we have. It spells out exactly what it’s doing, what it costs and who is paying for it. The question is whether we want to know.
Kathryn Harrison is a professor of political science at the University of British Columbia.
