The Agenda with Steve Paikin (Audio) - Debating the Carbon Tax

Episode Date: April 22, 2024

Carbon emissions across the country have fallen since the implementation of a federal carbon tax in 2019, but provincial governments are pushing back, saying the program is too costly for residents. Are there alternatives to the policy, or does it simply need to be refined? We ask: Kris Sims of Canadian Taxpayers Federation; and Stewart Elgie of the University of Ottawa.See omnystudio.com/listener for privacy information.

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it's perhaps a bit surprising that so many Canadians still don't understand how the federal carbon pricing policy works. Everyone calls it the carbon tax, but of course there is a rebate aspect to it as well. Tonight we'll debate the merits and problems with the policy, but first, we hit the streets of Ontario's capital city to see what you thought of it. Can you tell me what a carbon tax is and why do we have them? I am not exactly sure what it is. I think it has something to do with the fact that we all pay taxes on the amount of carbon that maybe Canada puts into the atmosphere. I have no idea about it.

People are the ones being taxed for it. However, the majority of the carbon is created by the companies and these factories, manufacturers, but they're not getting taxed. Carbon tax, it's a tax protecting our environment. It's a tax protecting our environment. It's an environmentally aware program that's trying to get us to pay for environmental responsibility. This is a tax for you charge the citizens. Actually, it's like a women's tax. And I don't know why we have it.

Can you tell me what a carbon tax is and why do we have them? Sorry, I don't know. I know why we have carbon tax, but i'm not a fan of it so the carbon tax has to do with fossil fuels oil um the gasoline it affects us with our automobiles um why we have it like all other taxes in Ontario. And yeah, but it's very high. Okay, with that, let's introduce our guests. In Lethbridge, Alberta, Chris Sims, Alberta Director of the Canadian Taxpayers Federation. And in the nation's capital, Stuart Elgee, Professor of Law and Economics at the University of Ottawa and Director of the Smart Prosperity Institute. And I'm grateful to both of you for joining us on TVO tonight for what I'm sure will be a smart debate about a controversial topic.

Stuart, I want to start with you. And before we get into the specifics of this policy, let's just go back to first principles here. The Liberals brought in this policy. What was the problem that they hoped this policy would solve? policy, what was the problem that they hoped this policy would solve? Sure. The problem at its core is climate change. It's probably the greatest threat facing Canada and the world right now. We can talk about why, but Canada's emissions have been going up for 25 years since we signed the Global Climate Treaty. And in the last six years, since we've started bringing in serious climate policies, particularly carbon pricing, our emissions have started to come down. At the core, it's about tackling climate change. And I think people understand that the things scientists have been warning us about for years are now starting to

happen. We've seen the 10 warmest years in recorded history have been in the past decade. starting to happen. We've seen the 10 warmest years in recorded history have been in the past decade. Last year, we've seen record-breaking floods, fires. 200,000 Canadians were evacuated from their homes. The insurance industry paid out over $3 billion. Their payouts have quadrupled for property damage from climate change in the last 15 years, and insurance rates are going up. Canadians pay about $1 thousand dollars per taxpayer because of the impacts of climate change already. And it's going to get worse if we don't take action. OK, good news is we're starting to take action. The carbon price is the core of that action and it's working. All right. Very good. Chris, do you agree that Canada contributes to climate

change and that we ought to do something about it? Well, if emissions are your key concern, I think we only need to date back to what the prime minister said a few years ago in French on the show Tout Le Mans en Parle, where I'm paraphrasing, he basically said, well, even if Canada stopped everything tomorrow, it still wouldn't make a dent in global emissions. And that's, of course, because Canada contributes less than 2% to global emissions. And so if your key concern is global emissions, then it's a real head-scratcher why we're not just tackling the big end of the arithmetic problem. For example, in India, there are between 200 and 300 million people who burn wood scrap and animal dung every single day. Super heavy emissions. What they are asking us to sell them is natural gas,

which would dramatically lower their actual emissions. And so taxing people $13 per minivan fill up in Mississauga is not going to impact global emissions, if that is your key concern. At the Taxpayers Federation, we've been highlighting for years the fact that this is costing Canadians big time every single year. For example, even with the rebates factored in, Steve, the Parliamentary Budget Officer has found that the average Alberta family, for example, will be out more than $900. That's net. That's with rebates factored in, considering economic factors so that includes

trucking home heating all that other stuff and so this is our key concern is that this is not making a change and it's just making people spend more money and take more of their money out stewart are we so insignificant a part of global climate change that the carbon tax is bad policy boy if you follow that line of logic, we shouldn't contribute to global poverty relief. We shouldn't contribute to NATO. I mean, yeah, Canada is only 2% of world GDP and less than 2% of emissions. But, and Chris is right, it is a global problem. But finally, we actually have a global treaty since the Paris Agreement in 2015, where every country in the world has agreed to put a cap and ultimately to

reduce their emissions. So I guess I want to just check, Chris, are you saying Canada shouldn't take action? We shouldn't reduce our emissions? Because right now there's only two countries in the world who've said they're not part of that treaty, and they're Iran and Libya. I mean, I don't think we want to join them as bedfellows. Every country in the world, including India, is saying that they're going to cap and reduce emissions. So I don't think it's a choice between one or the other. I don't think it's a choice between should Canada reduce its emissions or should we contribute to global solutions? We've got to do both. I mean, if Canada can't reduce our emissions, how can we expect other countries to? We're one of the highest per capita greenhouse gas emitters in the world.

So we can, we must, we've made a commitment to reduce emissions. And I guess I want to be clear, Chris, are you saying Canada should not meet its global climate targets? I don't understand why people are so married to a carbon tax that is not reducing emissions in Canada as a way to solve a global emissions issue. For example, I'm from British Columbia. to solve a global emissions issue. For example, I'm from British Columbia. British Columbia has had a carbon tax since 2008.

Outside of lockdown years, where the government was shutting down businesses, for example, in 2020, we have seen emissions steadily rise in British Columbia, along with the carbon tax. And back then, when the government first introduced the carbon tax in British Columbia in 2008, they said many things. They said it was going to stop at $30 per ton. They said it was going to reduce the emissions. And they said that it was going to create a plethora of alternative,

affordable energies so people could switch away from oil and gas. Today, none of those things is true. Not one of them. We are now tied to a mandatory minimum of $80 per tonne for carbon. What that means in normal people talk is that it's 17 cents extra per litre of gasoline and 21 cents extra per litre of diesel. Despite this carbon tax, the emissions in British Columbia are regularly and steadily going up. The Trudeau government used British Columbia as its model for its federal carbon tax. So we think that we should separate these two issues. The carbon tax is simply impoverishing the lowest income folks and middle income folks

who are trying to fill up their minivans to get to work, who are trying to buy groceries, and who are trying to heat their home. For example, here in Alberta, it's going to tack an extra $400 or so in home heating just to heat your home in the winter this year with natural gas. Okay, Stuart, do you want to respond to that? Sure. So, Chris, you've avoided my question about whether you think Canada should meet our emission targets. So, I want to come back to that because I actually want to have a clear answer from you on that. But let me just, you're entitled to your opinion, but not your own facts. So since the carbon price came in in Canada in 2019, our emissions are down 5.5%, while GDP is up 6%. That's before COVID and after COVID. So that's a lot about-

You're also using, excuse me, you're also using the 2020 and 2021 rates there where people weren't allowed to leave and had to stay in their bubble. Okay, hang on, we got to let Stuart finish his point. Go ahead, Stuart. Let me finish, be fair. So this is when the economy's rebounded, right? The GDP is up 6% since the carbon price came in. Emissions are down 5.5. Those are the numbers. BC is not not what you said isn't correct since the carbon price came in BC's emissions are down 1% and its GDP has grown 42% in that period and the reason it's only down 1% is because BC's oil and gas industry has doubled in that period so the oil and gas industry people forget northeastern BC is actually an oil and gas producer so it's almost a quarter of these emissions are down well it's GDP you can take a look at yourself I've got the data sets on the computer okay well people can look at are down 1% but not down so they're

not down a ton but they're down a bit And their GDP growth has been bigger than any province in the country in that time. And the reason they're not down even more is because the oil and gas industry has doubled. So let's look at the whole country, though, right? That's the big picture. How about we want to chat about affordability in a place like British Columbia and how the fact it's two carbon taxes are contributing to that? Okay, folks, let me— Impoverishing people and taking their money is not helping this issue. Carbon prices is generating about 40% of Canada's emission reductions. Almost half of our emission

reductions come from the carbon price. Okay, let me jump in here for a second, you two. And that is, Chris, as a general principle, do you think it is a good idea to reward companies and people who pollute less and make it more burdensome for companies and people who pollute more. Are you talking about the industrial carbon tax or the consumer carbon tax? Because what we're tackling head on is the consumer carbon tax that people are paying to heat their homes, to drive to work and to paying more for groceries. For example, farmers have to pay the carbon tax on natural gas that they use to heat their barns, so to keep chickens alive in minus 30 degrees all year round, okay, and to truck food to people. So if you,

say you're a trucker and you're filling up your big rig. To fill up those two diesel tanks now is going to cost you an extra $200 just in the carbon tax charge. This is helping to contribute to the increased cost of everything. Now, there are other ways to skin a cat. Why aren't folks talking more about capturing CO2 as a waste element instead of trying to tax people to death. All right, let's go there right now. Let's go there right now. Stuart, the carbon tax and rebate policy is obviously one option of a number of options that the federal government considered before landing on the carbon tax and rebate. In your view, might there have been a better, more politically saleable option out there? Well, so carbon tax and rebate, it's important to put

both halves of the equation, right? Because what Chris hasn't mentioned is that the average family in Ontario is going to get more than $1,000 back this year as a rebate from the carbon price. In Alberta, it's more like $2,000. That's a lot of money back. And it offsets for most families what they're paying in carbon price chris and i can debate you know whether or not it completely offsets it for some families it does for some it doesn't the parliamentary budget officer says the same thing some families come out ahead most break even particularly the highly wealthy families pay a bit more the big point is this is where i want to guess what i want to hear from Chris is this. Right. So we there's a letter that came out a couple of weeks ago from 420 economists across Canada saying carbon price is driving down emissions and it is the lowest cost way to reduce emissions.

But I want to hear from you if you don't want to do it with carbon pricing and it's achieving about 40% of our emission Reductions, how would you get that big chunk of emission reductions? You talked about capturing co2 That'll get you two or three percent of it So yeah, we should do that and we are doing it the government has put in place tax incentives So there's a number of things carbon pricing isn't the only policy we've brought in phasing out coal power One of the biggest emitters in the world. We brought that down. We're moving towards electric vehicles. We're reducing methane emissions from oil and gas. We're working on home energy efficiency and heating. The government is doing a number of different things, building codes. But carbon pricing is the centerpiece of it. And

it's going to get us about 40 percent of the emissions we need to meet our global target. Okay, let's let Chris speak to that. What do you want instead, Chris? How would you, if you're committed to reducing emissions, and you still haven't answered that question, if you're committed to it, what would you do instead to get that 40% of emission reduction? Do I need to have an economics degree in order to answer this question? I hope not. I sure hope not. Because I just wanted to really frame that. Okay. Because average working people are struggling right now. We have record numbers. How would you reduce the emissions, Chris? How

would you reduce them? If you don't use carbon pricing, what would we do instead? Or do you not care? For example, we have private companies that are capturing CO2 as an element in the air. Okay, they're taking it from the air and they're reusing it for things like fertilizer, pharmaceuticals, even vodka. Even the blue dye that goes into M&Ms is used from captured CO2. So why don't we let private companies actually capture this as an element instead of taxing average working people for the sin of heating their home and buying food and traveling around this big cold country so i just wanted to very very firmly excuse me no excuse me please let me finish the parliamentary budget officer did two different calculations,

okay, in that report. One of them was the simple cost for cost. So say you're Monica in Mississauga, you're filling up your tiny hatchback, you're spending about $6.50 extra in the carbon tax. Now, based on that first calculation, you might get that fully back in the rebate. Fine. But what the parliamentary budget officer also did was calculate the economic impact of that carbon tax for Monica. That includes her home heating, and that includes everything being more expensive because of the cost on trucking and the cost on farmers. Now you're out money. So I think it is important for us to look at the entire picture of the cost of the carbon tax in Canada before we start saying that you're made whole or better off. By this logic, keep in mind, if people generally or in the majority are made richer by having a higher carbon tax,

why don't we make it $500 a ton? Everybody would be super rich. That's nonsense. Okay. Everybody with common sense understands that that doesn't make any sense. People on average are out money because of the carbon tax. Further, if they weren't out money, two things. Why did Prime Minister Justin Trudeau make a carve out for a home heating oil for folks in the Maritimes if it wasn't really a financial burden? And two, where's the stick then? If people are magically getting carrots in their inbox all the time in their bank accounts because the carbon tax rebate makes them all rich, then where's the incentive to switch to something that actually doesn't exist for them? All right, let me get, Stuart, in particular, if you would speak to the carve out that the prime minister really gave, recently gave rather, to I guess mostly folks in the Maritimes, but also people in rural Canada who rely on home heating.

Sorry, what's the expression I'm looking for here? Furnace oil. Furnace oil. There we go. Yeah. That seemed to a lot of people, including the former minister of the environment, Catherine McKenna, to undercut the entire argument behind the carbon tax and rebate plan to begin with. Speak to that if you would. Sure. I don't think that was a good decision. But let's put it in context.

So the home heating oil carve-out is going to affect about one-tenth of 1% of Canada's emissions. They did it, you know, for their own reasons. A lot of low-income families are using home heating oil and the cost is high. So, but what they should have done is just increased the rebate. What they have done, though, in order to get at that problem is they've given a rebate for families to install a heat pump. So, you can get $10,000 to $15,000 to put a heat pump in your home as a way of reducing home heating oil use. And that's exactly the kind of choice I want to put to Chris. So what the government's done instead is a really expensive way of reducing emissions. And that's

why I want to come back to this point that you keep trying not to answer, which is if we're going to deal with climate change, not just Canada, but the whole world, we've got to transition away from gas powered cars. We've got to move to homes that are energy efficient and are heated with heat pumps and low emissions technologies. And so what we're doing now is we're using a mix of carrots and sticks. So, yes, the carbon price encourages people. Everyone can make their own choices to move away, to move towards more energy efficient vehicles, more energy efficient home heating, and there's lots of choices for doing that. People can buy more high efficiency cars.

There's a $5,000 rebate for buying a hybrid car right now. There's an incentive to move to heat pumps. So yes, there's a price, but there's a government giving people back a carbon rebate, and there's care-outs. There's incentives for families to adopt these new technologies. If you don't want to use carbon pricing to move towards a world in which we have emissions-free cars and low-emissions buildings, how do you think we should do that? Or do you think it doesn't matter? Do you think we should just go on driving high-p polluting vehicles and not worry about climate change?

Because I can tell you the 200,000 Canadians that got evacuated from their homes last summer, the people that are suffering through floods and fires and it's just getting worse, are concerned about it. There are real costs to climate change. Over $1,000 a working taxpayer right now in Canada and it's going up. What do you think we should do about making that shift to a low-carbon economy if we're not using carbon pricing? You've just given tiny solutions. You've said the oil industry should capture more emissions. Sorry, selling natural gas to India with 200 million people burning very heavy fuel is not

a tiny solution. That is a tiny solution. But that means we shouldn't do anything? Just leave it up to India to solve climate change? But what about Canada? We're one of the biggest emitters in the world. I'm just saying. Okay, are you ready? Okay, Canada is sitting on a wealth of natural gas, which is very, very low emissions, very low particulate emissions compared to other fuels.

India, a gigantic country and a democracy, is asking to please purchase our natural gas. You're looking at the big end of the arithmetic problem. That is going to reduce your global emissions. To our point, even if, say, God forbid, we stopped existing tomorrow, and we're just using that term metaphorically, okay? So if suddenly Canadians stopped eating, heating their home, driving to work, we just blinked out of existence. It wouldn't make a dent in the global emissions. And so if your concern is global emissions, I'm listening to you. OK, I hand sewed my baby's cloth diapers.

I grew up on Vancouver Island. I recycle everything. This is from Value Village. I buy thrift. I buy use. I do my very, very best for the environment. And I know that there are millions of Canadians that are in exactly this same boat. from Value Village. I buy thrift. I buy use. I do my very, very best for the environment. And I know that there are millions of Canadians that are in exactly this same boat.

Why don't we use our brains and actually tackle the big end of the arithmetic problem? And here in Canada, we can get private companies to do things like CO2 capture, like I just described. We don't need to be taxing people for the essentials of life. And I really wanted to get to this because I hear what you're saying about everybody switching to electric correct is that what I said there's lots of choices you can move to a higher efficiency vehicle you can move to a hybrid there are many ways to reduce your transportation emissions you don't have to all switch to electric eventually that's what we're gonna be by 2035 or 2040 you won't be able to buy a gas-powered car where we're going to be. By 2035 or 2040, you won't be able to buy a gas-powered car, but we're in the middle of that transition now. So in the short term, there's lots of other options to get there. There aren't that many options for people because,

frankly, the carbon tax is such a financial punishment for most working people and average families that if there were an option, say you switch to LED lights from incandescent, or you're opting for paper over plastic, depending on what is the most environmentally sustainable solution nowadays. Again, I was born in the 70s. I remember when plastic bags were brought in to save the trees for environmental reasons. Now we've come full circle, and we're using paper bags again. So there is not a simple switch here for most people when it comes to finding an alternative, abundant, sustainable, and affordable energy solution. In fact, there's been calculations done where, say, Santa Claus brought everybody in the

province of British Columbia an electric car, okay, for free. It didn't cost them anything. Just by switching over private transportation and bare bones, like your pipes probably won't freeze level heating, we would need nine new site C dams. That's just British Columbia. And so when I hear you're saying they just need to make the switch, number one, it's not available for most people right now. Average working families, not available for them. Otherwise, they would have. Because nobody wants to be paying through the nose. Where's the juice coming from? Let me jump in here, Chris, and get you to speak to one aspect

of this carbon pricing policy that has been, I think, quite misunderstood. And that is, the federal government said to every province, if you have your own made in Alberta, made in Ontario, made in British Columbia policy, then the people in that province don't have to pay the carbon tax. And that's the way we had it in the province of Ontario until 2018. We had cap and trade, which the previous government had brought in, and therefore Ontarians didn't pay the carbon tax. However, after the Doug Ford Conservatives came to power, they cancelled cap and trade, which meant we now have to pay the carbon tax.

And I guess my question is, do you find it ironic that a provincial government that is beating the drum for axing the tax has its citizens paying this tax because of a decision they made? There is an ongoing fight between these provinces. Now, Ontario is switching to cap and trade versus how much they're paying for the carbon tax. I don't have that math in front of me exactly to tell you how much that is trickling down for savings for the consumer versus cost for the consumer. However, very recently, more recently, in fact, than Premier Doug Ford deciding

to get rid of cap and trade and opting to fight Trudeau on his carbon tax, we have the example of Nova Scotia. So for the longest time, folks in Nova Scotia were on their own system, so much so that the full implementation of the federal carbon tax was delayed for them. That's why all of a sudden this erupted last summer. So the rest of us in places like Alberta and Saskatchewan and Manitoba here at West, we've been steadily paying the increase in carbon tax. But in places like Nova Scotia, they had a sudden sticker shock on July 1st, just this past year. So all of a sudden they went from around 2.5 cents per litre of gasoline all the way up to 12. And now it's up to 17 cents per litre.

This is why there was this sudden sticker shock over the summer. And what's interesting here is that the premier there in Nova Scotia, they said, hey, we came to the government several times with our own version of cap and trade or a way to reduce emissions, our own made in Nova Scotia way to reduce emissions. And it wasn't good enough for the Trudeau government. And now we're even seeing a provincial liberal premier in Newfoundland and Labrador saying, guys, this is unfair. We need to get rid of this tax. So I actually find it really interesting that this is now crossing party lines here in Alberta. The provincial NDP has at least, I think it's two major candidates who are running to replace former leader Rachel Notley, who are now saying no more carbon tax. And this is coming from a party that imposed one provincially. So I really do think that the tide has turned on this.

As far as getting the data breakdown on how much it's costing Ontarians on cap and trade versus current consumer carbon tax, I would have to get back to you and give you the math. OK, with just a few, boy, the time has really flown by here with just a few minutes to go. Stuart, I wonder if I could get you to speak to this. We know what the polls say. Everybody knows what the polls say. There are obviously a lot of people who anticipate that whenever the next federal election happens, the Liberals are going to be out, the Conservatives are going to be in, and if Pierre Poliev keeps his promise and quote-unquote acts as the tax, that'll be it for this policy.

Can you tell us what, in your judgment, the consequences would be if this policy were cancelled? Well, if the policy's cancelled and it's not replaced by another one, Canada's emissions are going to stop going down and we're going to go up. And that's not just about us. I mean, this is a global bargain. All countries in the world except Iran and Libya have agreed to reduce their carbon emissions.

So if Canada decides it's not going to keep do its share and that's what Stephen Harper decided, he pulled us out of the treaty last time, then why should other countries, why should India, why should China, why should Europe, why should America do its share if we're not doing our share? And this is what troubles me about what Chris is saying actually, is she's saying, look, the solution to this is to produce more gas and sell it to India. And sure, that's part of the solution. This is a global problem.

But we've got to do our part too. We shouldn't give up contributing to global poverty relief, contributing to NATO because we're only a small part of it. We're one of the wealthiest countries in the world. We've got to lead by example if we want other countries to live up to their commitments. And so if all the people criticizing a carbon price don't have another alternative, they don't have another option for here's how I would reduce Canada's emissions. We are moving towards a low carbon economy. We're going to be in 10 to 15 years, we'll have emissions free vehicles, we'll live in

highly insulated energy efficient homes, we'll have industries that are running off of clean power. And if we're smart, if we have policies like the carbon price, we'll be punching above our weight in generating the jobs and growth in doing that. We'll be building electric vehicles and low emission vehicles in Ontario. We'll be making carbon free cement and aluminum in Canada. And the carbon price is part of that transition. Sure, there are costs in any policy, but those costs are coming down.

Ten years ago, electric vehicles and clean energy were completely unaffordable. No one has them. And now electric vehicles are the highest-selling, the highest-increasing vehicle in the market because costs are coming down, and they're going to keep coming down as we drive demand and we drive innovation. That's what happens with new technologies. Okay, Stuart, I gave you the first word, so I'm going to give Chris the last word on this. Chris, you've got the last minute. Go ahead.

I just wanted to reach out to people right now who are struggling with affordability. We hear you. In fact, we're hearing more and more from you every single week. And so hang in there. We do think that we're going to eventually see some affordability relief when it comes to scrapping the carbon tax. we're going to eventually see some affordability relief when it comes to scrapping the carbon tax. And as far as solutions go, again, there are lots of homegrown solutions that we can do. Like I just described, private companies are already doing CO2 capture, very similar to the way that we will capture aluminum in the waste stream and we recycle it and we reuse it. That doesn't need to have a massive tax on people. And so there's a way to tackle the issue of global emissions without tying ourselves down to an expensive carbon tax for

folks here at home in Canada. And I just wanted to go over those numbers again really quick for you. So right now, it's going to cost people 17 cents extra per litre of gasoline. To fill up an average family minivan, that's an extra $13 per fill up. If you're fill up an average family minivan that's an extra 13 dollars per fill up if you're filling up a big rig truck that's an extra 200 or so extra just in the carbon tax on your diesel it's this layering effect and now you work in the farmers keeping their chicken barns warm right or drying their grain using propane and natural gas this is why we're seeing the layering effect of the increased cost of the carbon tax. And so we're imploring all levels of government, we don't care which party it is,

to turn around on this thing and to scrap the carbon tax. Okay, friends, that's our time. Forgive me, I'm jumping in here. That's our time. I want to thank both of you two for a very civilized yet sparky discussion here on TVO tonight about a very interesting policy. Chris Sims, the Alberta Director of the Canadian Taxpayers Federation, Stuart Elge, University of Ottawa, and Director of the Smart Prosperity Institute. My thanks to both of you very much.

Thank you. The Agenda with Steve Paikin is made possible through generous philanthropic contributions from viewers like you. Thank you for supporting TVO's journalism.