Canadian Prime Minister Justin Trudeau said Tuesday that his Liberal government will impose a federal carbon tax on provinces and territories that have chosen not to implement their own.
Trudeau, facing re-election next year, had been facing a backlash from some fossil fuel-rich western provinces who challenged his federal carbon tax plan in court.
Trudeau has allowed provinces to come up with their own carbon pricing plans, and has said the federal government will force a carbon tax on industrial emitters starting Jan. 1, 2019 on all provinces if they don’t adopt adequate ones.
He views the carbon tax as key for Canada to achieve its Paris climate change target of reducing emissions 30 percent from 2005 levels by 2030.
“The science is unequivocal: putting a price on pollution is one of the best ways to move forward,” Trudeau told reporters Tuesday, in comments reported by CBC News in Canada.
“The problem exists because your political leaders have done far too little about this. Will we kick this can down the road yet again? Or will we show some courage to do what needs to be done?” Trudeau added.
His plan aims to counter the impact that the carbon tax would have on energy prices, and win over skeptics, by using the revenue to provide households in the resistant provinces with annual rebates. He said the majority of households will receive more in dividends than they would pay in additional costs.
“If Canada is successful getting this across the finish line, they become the world’s climate policy leader, both in terms of policy stringency and cost-effectiveness,” Noah Kaufman, a Columbia University economist who studies energy and climate change policy, told the Washington Examiner. “There is no right way to use carbon tax revenue. There are also clear political advantages of the fee-and-dividend approach. It keeps the policy simple, reduces government involvement, and builds a constituency of supporters who like receiving dividend checks. So I understand why they chose this approach for the unwilling Canadian provinces, where opposition is high and trust in the federal government on this issue is low.”
The federally imposed plan will apply to Ontario, Saskatchewan, Manitoba, and New Brunswick. In those provinces, emitters will have to pay a C$20 ($15.27 USD) fee on every metric ton of greenhouse gas emissions starting in 2019, rising by C$10 per ton ($7.63 USD) each year to C$50 ($38.14 USD) in 2022.
As an example, in Ontario — Canada’s most populated province — the average household would receive about C$300 ($229 USD) from the carbon tax revenue.
Ontario Premier Doug Ford, a populist businessman elected this summer, has been a leading opponent of Trudeau’s climate change policies, fulfilling a campaign promise in July by rejecting the province’s cap-and-trade agreement and challenging the federal carbon tax in court because he deemed it too costly.
Trudeau’s carbon tax plan works similarly to an approach being promoted by multiple free-market groups in Washington D.C. which is supported by some major oil and gas companies.
Exxon this month said it would provide $1 million over two years to Americans for Carbon Dividends, an advocacy organization set up to lobby Congress to support a carbon tax-and-dividend plan proposed by the Climate Leadership Council, a group led by two former Republican secretaries of state, James Baker III and George Shultz.
The Climate Leadership Council proposal would impose a carbon tax beginning at $40 per ton, and give the proceeds to the public through rebates, while scrapping carbon regulations imposed by the EPA.
Mark Reynolds, executive director of Citizens Climate Lobby, another group that has encouraged the federal governments in the U.S. and Canada to adopt a carbon tax-and-dividend, said he hoped Trudeau’s action resonates with its southern neighbor.
Canada, like the U.S. and other places across the world, has suffered this summer from wildfires and heatwaves that many climate scientists say are being made worse by climate change.
“We have been telling Congress this is the best solution to climate change,” Reynolds told the Washington Examiner. “Hopefully, it gives additional ammunition for people making the case to our Congress. If you start to see people getting an actual check, and they see it is mitigating the increase in cost, it doesn’t just help for the program being sustainable in Canada, but gives real examples to bring to Congress.”
