It might seem like a distant memory now, but it’s worth remembering that every major federal party ran in 2021 on a platform that included a consumer carbon tax.
Nearly every single Liberal, NDP and Conservative MP who currently sits in the House of Commons — up to and including Pierre Poilievre, who now says Canada needs a “carbon tax election” so he can “axe the tax” — won their seat while carrying a commitment to apply a price on carbon.
The carbon tax had survived both a provincial legal challenge and Doug Ford’s stickers. The Conservative platform in 2021 stated, “We recognize that the most efficient way to reduce our emissions is to use pricing mechanisms.”
But then the Conservative leader whose face was on the cover of that platform, Erin O’Toole, was deposed by his own caucus. And inflation reached eight per cent. And Poilievre was chosen as O’Toole’s successor.
To explain how the carbon tax came to be (nearly) dead less than four years after that election campaign, you could reasonably point to that simple sequence of events: O’Toole lost, inflation rose and Poilievre took over the Conservative Party. For the carbon tax’s sake, it also surely didn’t help that its loudest proponent — Justin Trudeau — was an increasingly unpopular prime minister leading a government that was nearing the end of its natural life expectancy.
Despite the claims of the Conservative leader, the carbon tax does not seem to be a significant factor in the rising cost of groceries — the latest research suggests it contributed less than 0.5 per cent to increases in consumer prices since 2019. And because the revenue is rebated to households, many people could actually end up worse off if the carbon tax is repealed.
As a result, it is tempting to conclude that the carbon tax suffered from a simple failure to properly communicate its merits — and perhaps a larger government advertising effort would’ve helped. But it was also possible to believe in the fall of 2021 that the fight over the carbon tax was effectively over.
Liberal leadership hopeful Mark Carney has suggested that, if elected, he would get rid of the consumer carbon tax. Sources tell CBC News that Chrystia Freeland, who is expected to launch her leadership bid soon, is also reconsidering the policy.
Three weeks into 2025, the fight might be over again — this time because it seems likely that not a single major federal party will campaign in the upcoming federal election on a promise to maintain the consumer carbon tax.
Trudeau arguably wounded his own policy in 2023 when he exempted home-heating oil. The NDP then started to wobble on the policy last year. And now both Mark Carney and Chrystia Freeland seem to be preparing to move away from the carbon tax as they campaign to replace Trudeau as Liberal leader and prime minister.
Fans of carbon taxes (or proponents of economist-endorsed climate policy) might lament. But the end of the consumer carbon tax won’t necessarily bring an end to carbon pricing in Canada.
The death of the carbon tax might also clarify that the real debate is not whether or not Canada should have a carbon tax, but how Canada is going to reduce its greenhouse gas emissions.
No carbon tax, but still pricing carbon
The federal carbon-pricing policy introduced in 2019 has always included two parts: a fuel levy that impacts the price of gas that consumers pay and a trading system for large industrial emitters. When politicians talk about the “carbon tax,” they’re typically referring to the former.
But for all the attention heaped on the fuel levy, it’s actually the industrial system that is expected to generate the largest emissions reductions between now and 2030 — somewhere between 20 and 48 per cent of total projected reductions, according to an analysis performed by the Canadian Climate Institute. And even Poilievre has stopped short of saying he would repeal the federal rules for large industrial emitters.
Opposing that policy would almost certainly open Poilievre up to attacks that he was giving a break to “big polluters.” It would also make it that much harder for Poilievre to explain how a Conservative government would meet Canada’s international emissions targets.
Looking further into the future, Canada’s industrial pricing system could take on added importance as other countries or regions begin to consider carbon border adjustments — tariffs to account for differences in emissions policies.
So even if the carbon tax does not survive into 2026, there is still some chance that a significant part of Trudeau’s carbon-pricing policy will endure. It’s also possible that the existing industrial policy could be strengthened to further reduce emissions.
Following the launch of his Liberal leadership bid, Mark Carney tells reporters that if the consumer price on carbon was to be removed, then it should be replaced by ‘something that is at least if not more effective.’
In his limited public comments to date, Carney has suggested he would focus on industrial emissions.
“The vast majority of our emissions in Canada come from our industry,” he said during his appearance on The Daily Show. “So part of it is cleaning that up, getting those emissions down, more than changing in a very short period of time the way Canadians live.”
Transportation still accounted for 22 per cent of Canada’s total emissions in 2022. But it’s now obvious — not that it wasn’t understood already, just ask Stéphane Dion — that a gradually increasing carbon tax on fuel makes one politically vulnerable and liable to be scapegoated for any number of maladies.
(Last fall, Poilievre described the carbon tax as an “existential threat to our economy and our way of life,” a description that could actually be applied to climate change. In 2007, Stephen Harper said climate change was “perhaps the biggest threat to confront the future of humanity today.”)
How do you fill the gap?
Could the Liberals have done more to save the most politically prominent element of their climate agenda? Probably. As the 2021 election briefly showed, the carbon tax was not so inherently flawed that its demise was inevitable.
But its disappearance would not necessarily mean that the carbon tax’s brief existence was a waste of time and energy. Though Canada’s climate plan going forward may not be as economically efficient as it could have been — though it may end up being more costly or disruptive to reduce the emissions that the carbon tax would have tackled — the carbon tax might still register as progress, if it ends up having raised the bar for climate policy in Canada.
While the industrial price was projected to account for a larger share of reductions, the fuel charge was still expected to reduce greenhouse gas emissions by eight to 14 per cent by 2030. That’s not a small amount. And as Natural Resources Minister Jonathan Wilkinson said this week, when asked about Liberal leadership candidates potentially walking away from the policy, the question for anyone who wants to scrap the levy is “how are they going to fill the gap.”
Poilievre has not yet answered that question — other than his pledge to “axe the tax,” his climate platform remains a mystery. Carney, Freeland and Karina Gould will no doubt be asked to detail their proposals over the next six weeks.
“I’ve said for a long time that if you are going to take out the carbon tax, you should replace it with something that is at least, if not more, effective,” Carney said this week. “And by effective, it’s not just having the same impact in reducing greenhouse gas emissions, but it’s making our companies more competitive, it’s creating jobs, it’s ensuring that Canadian households are made whole in terms of their finances.”
Conservative Party Leader Pierre Poilievre says he believes the question of a carbon tax is important to Canadian voters because it could result in Canadian resource companies moving jobs and money south to the U.S. He added that massive tax cuts on energy are needed to bring production back to Canada.
If no party ends up committed to a carbon tax, it’s going to be pretty hard to have a “carbon tax election.” For all intents and purposes, it might instead become a “Trump election.” But otherwise it might be more accurate to describe it as a “climate change election” — if only because every election is a climate change election now.
Whether or not the carbon tax remains in place, climate change will remain a present and growing threat and so there will still be a pressing need to reduce emissions. The political fixation on the carbon tax had arguably come to obscure those realities.
The death of the carbon tax might be a setback for Trudeau’s climate agenda. But in its absence, the questions for his successors don’t get any easier.
The issue was never the carbon tax. The issue is climate change. Perhaps that will at least become clearer now.