Canadian Prime Minister Justin Trudeau embraced a top-down governance style this past Monday morning as he imposed a one size fits all federal carbon pricing scheme. Starting in two years, Canadians will see the price of carbon go from $10 to $50 in 2022. While Trudeau appeared justified imposing this constraint under the guises of the Paris Accord and climate change, such a move runs counter to the census reached on how Canada best responds to climate change. Since 2007, Canada’s Premiers have expended time and political capital creating a shared vision for energy in Canada, culminating in the signing of the Canadian Energy Strategy in 2015. As highlighted in this document, the Premier’s agreed that “the transition to a lower carbon economy will be supported by provinces and territories examining the potential use of market-based polices to reduce GHG’s.”
Based on this quote alone, one could surmise several province’s skepticism regarding the applicability of such taxes within their sectoral economies. Saskatchewan Premier Brad Wall is repeatedly on record recounting Saskatchewan’s thorough examination of the idea throughout the past decade, but concluded its inferiority to other strategies to solve the climate problem, such as by attracting international interest in clean coal technology.
This, along with other tax strategies utilized in the Territories, Nova Scotia and New Brunswick, has existed in relative peace with carbon markets rising in Quebec, BC and soon to be Alberta and Ontario. Why then, would the federal Government fracture the consensus reached by what could only be described as the most federalist type of meeting? Trudeau’s dictate imposes a carbon price on provinces who already invested and spent taxpayer dollars achieving their tailored strategies, like Nova Scotia’s push to renewable energy. It also doubles the market price for the provinces with a tax already in 2022. Are goods imported from BC by the Yukon going to be taxed in BC before being taxed in the Yukon? Trudeau has played elusive politics by coining a ‘revenue-neutral’ tax structure. Canonical economics enforces that every tax subjects a market to a dead weight loss. While governments gain revenue from a tax, the market bears the burden greater than the dollars collected by the taxman.
It’s hard to see promises broken, constitutional action threatened and the wasting of political capital due to apparent glaring lack of communication, but time flows on and its worth to note the statements issued by the provincial bodies in regard to this matter. The following is a list of the responses:
Rachel Notley didn’t waste any time taking the opportunity to horse trade pipeline politics and carbon saying that she will not support Ottawa’s plan for a national carbon price unless we can make it to tidewater. Given Trudeau’s plans to approve one pipeline anyways, I find it hard to take Notley’s statement as a defense of Albertan economic interests. But nonetheless, given Notley’s track record in defending Albertan economic interests, this appears to be the strictest stance ever taken by her to defend it.
Earlier this year, Canada’s territorial governments joined forces against carbon taxation. For one, their unique climate requires unique energy solutions. As highlighted in this recent CBC article, Nunavut, and many of NWT’s communities are reliant on diesel for energy, given their remoteness and small-scale, this is the only option. Additionally, a cause for concern was the advent of double taxation. Since they purchase many goods from other provinces, they fear that the carbon tax imposed there will be carried onto them, before getting carbon taxed again.
Newfoundland and Labrador’s Environment Minister Perry Trimper left the inter-provincial meeting of environmental ministers on Monday early on consul of the province’s premier Dwight Ball, who went on record to support this decision Tuesday saying he thinks ‘this is far from over.’ Newfoundland, unsurprisingly, has its own systems designed to meet emissions targets. What they opted for was a flexible pricing scheme for onshore industrial emissions.
Nova Scotia also had their environment minister walk out of the Montreal meeting on Monday. Apparently, being the most successful Province at reducing emissions isn’t enough to convince Ottawa that their strategy is superior to a tax or cap-and-trade policy. Premier Stephen McNeil’s address on Tuesday highlighted that Nova Scotia ‘definitely won’t’ impose a carbon tax.
While Quebec Premier Philippe Couillard called Ottawa’s price plan positive, he neglected the elephant in the room: That the proposed rate is over double what they were expecting to pay in 2022. As highlighted in this CBC article it is shown that the cap-and-trade system is only expected to price carbon at $18 in 2022, as opposed to Trudeau’s demands for a $50 price at that time.
In typical fashion, Saskatchewan Premier Brad Wall wrote this impassioned and rational statement on this whole situation, highlighting the fact how ill-suited Saskatchewan is for a carbon tax, but still well suited for fighting climate change. Wall points to the fact that fulfilling global demand for innovation in power production, especially from coal, are areas where Saskatchewan excels against climate change. Fulfilling this demand is best done not by taxing industry, but by accruing the savings to do so.
Oct. 03, 2016 will be remembered in Canadian politics, not because the Canada achieved a monumental goal, but because it so miserably failed in its execution. A decade of province’s spending their time and political capital orchestrating Canada’s transition into a sustainable future, by combining the individual strategies of each province, was scrapped when Trudeau dictated that a one-size-fits-all scheme to all, going against his promise not to do so in March.
Trudeau threw a curve ball that is set to test the legal framework of federation. A general consensus from each province’s Premier regarding the matter is that this is not the last we will hear of this matter.