MONTREAL – Prime Minister Justin Trudeau delivered a bombshell in the House of Commons on Monday as federal, provincial and territorial environment ministers were meeting in Montreal to negotiate a pan-Canadian climate plan. Here are five things to know:
1. Trudeau’s announcement appeared to stun just about everyone in the Montreal hotel room where environment ministers were cloistered. Federal Environment Minister Catherine McKenna raised her hand to speak at the meeting at exactly the same time Trudeau was addressing Parliament, in what one observer in the room said was a carefully orchestrated intervention. McKenna told her fellow ministers what Trudeau was announcing and briefing notes were handed around. “Well, the air was sucked out of the room,” Yukon minister Currie Dixon later said. “It was a very surprising way to do a collaborative process.”
2. The plan announced Monday leaves Quebec and Ontario completely untouched. The federal government said provinces can choose one of two tracks: broad-based carbon taxes starting at $10 per tonne, or cap-and-trade markets that cap emissions at or below the federal target, which is a 30 per cent cut below 2005 level by 2030. Both Quebec and Ontario are already on track to meet their targets, which exceed the federal ambition by a significant measure.
3. Saskatchewan’s environment minister Scott Moe said his government has calculated that the carbon tax would cost the “average family” about $1,250 a year. At $50 per tonne, he said, the federal carbon tax would “remove $2.5 billion from Saskatchewan’s economy.” But the federal government has repeatedly said that all revenues raised will remain in the province where they are collected, and could be fully rebated as income tax cuts or other tax breaks if the province chooses. When Moe was reminded of this by a reporter, he responded, “Those are the things we’re going to have to discuss right now.”
4. All carbon taxes are not created equal, according to a study by Canada’s Ecofiscal Commission, a cross-partisan think tank that advocates pricing carbon. Stringency, or how much of the economy is covered by the tax, is a key metric. A federal official said the Liberal floor of $10 per tonne is based on using the British Columbia model, which currently covers about 70 per cent of B.C.’s provincial economy.
5. Despite the hot political rhetoric that greeted Monday’s carbon pricing announcement, some provinces expect that matters may cool down once the political calculations are fully explored. As one provincial official said, it may prove beneficial to let Ottawa impose the “Trudeau Tax” and take all the flak, and then have the province take the revenues and offer politically popular income tax cuts.
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