Lewis Francis-Denny - AoW - Carbon Tax Controversy

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A temporary change to a pivotal Canadian environmental policy has stirred up controversy and is
putting Prime Minister Justin Trudeau’s governing Liberal Party in the hot seat.
In October, the federal government announced that it was placing a three-year moratorium on a
nation-wide carbon tax collected from people who heat their homes with oil. Oil is a highly
polluting fossil fuel.
A carbon tax primer

So what exactly is a carbon tax? In Canada, it’s officially called the Greenhouse Gas Pollution
Pricing Act (GGPPA). This law was passed in 2018 and is designed to put a steep price on
greenhouse gas emissions causing climate change. The goal of the tax is to encourage Canadian
businesses and consumers to gradually stop using fossil fuels such as coal, oil, gasoline, and
natural gas.
The tax provides an incentive to do that by charging a levy on the amount of greenhouse gases
that are emitted into the atmosphere. The hope is that we’ll reduce our use of dangerous carbon
emissions in order to pay less of the tax.
Putting a price on pollution in this way also makes the cost of renewable energy more
competitive, so choosing alternatives to fossil fuels becomes increasingly attractive.
But does it work? That’s a hard one to call. Canada’s emissions did fall by 53 million tonnes in
the two years after the law was introduced, but experts say it’s hard to know how much of that
was because of carbon pricing.
However, in British Columbia, which has had a carbon tax since 2008, research indicates that the
tax has reduced emissions in the province by between five and 15 percent.
A broad initiative
Although it’s commonly called a carbon tax, the GGPPA actually applies to all greenhouse gases
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that contribute to global warming. But it gets its nickname because such emissions usually take
the form of carbon dioxide (CO2) – a side effect of burning fossil fuels.
These energy sources are the biggest contributors to – and are directly responsible for – the
current climate change crisis. But some are worse than others. For example, to produce the same
amount of energy, coal sends more carbon into the atmosphere than natural gas, so the federal
carbon tax on coal is higher.
The nitty-gritty
That’s the big picture. But how does the tax work at the local level? The concept is simple. The
government sets a price that emitters must pay for each tonne of greenhouse gases they produce.
The price starts low to give Canadians time to change their habits. It then increases at regular
intervals as they keep adjusting. In 2023 the carbon tax is $65 per tonne, but it will go up by $15
per tonne each year until it hits $170 by 2030, where it will stop.
The plan takes a two-pronged approach. The first affects everyday consumers who must pay a
fuel charge on their use of coal, natural gas, gasoline, and other polluting energies. Distributors
of these products pay the tax, but pass the cost on to users.
The second component of the tax, called an output-based pricing system (OBPS), is aimed at
industries like chemical plants that typically produce more than 50,000 tonnes of CO2 annually,
or the equivalent in other greenhouse gases. To remain competitive, such enterprises don’t pay
the tax on the energy they consume. Instead, they pay for the emissions they produce.
A flexible program
When the Liberals formulated the GGPPA, several regions already had some kind of carbon
pricing in place. Others resisted the idea of a carbon tax altogether. So the government provided
flexibility. Individual jurisdictions were given the option of setting their own carbon pricing
system or choosing the federal government’s plan. However, they all have to meet minimum
GGPPA guidelines.
At present, 10 of the 13 Canadian provinces and territories have adopted the federal system.
Three – British Columbia, Quebec, and the Northwest Territories – have a separate plan that
meets the minimum standard.
A painless tax
As taxes go, the GGPPA has a lot in its favour. The reason: nearly all the proceeds from the tax
must be returned in the form of a rebate. Bottom line? About 80 percent of Canadian households
get more from the rebate than they pay in carbon tax. The remaining 20 percent pay more tax
than they get back because they tend to drive gas-guzzling cars or live in big houses that need
more energy.
Why the controversy?

But now the Liberals have called for a pause in the tax as it affects heating oil – something only
three percent of Canadians use. The federal government justifies the decision by saying it must
give tax relief to those lower-income families that have been hit hardest by inflation. “Heating oil
is two- to four-times more expensive than natural gas. It went up by 75 percent in 2022,” Energy
and Natural Resources Minister Jonathan Wilkinson said in a recent interview. “If you look at
the people who typically are using heating oil, it is people who generally are less well off.”
However, critics say the move unfairly benefits the Atlantic provinces because it’s the region of
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the country where oil is most used to heat homes. And some observers believe that Mr.
Trudeau’s Liberals made the decision to exempt heating oil as a way to win favour with Atlantic
voters with the 2025 federal election fast approaching.
For his part, Pierre Poilievre, leader of the opposition Conservatives, wants to abolish the carbon
tax entirely and will campaign on that promise in the next election. At the moment, he’s
demanding a temporary stop of the carbon tax on all forms of home heating. He is getting
support from an unlikely ally, NDP Leader Jagmeet Singh, who supports the carbon tax but has
called the Trudeau policy on home heating oil “divisive.”
And many people worry that the pause severely undermines the effectiveness of a key tool that
the Canadian government is using to help mitigate the worldwide climate change crisis.
Meanwhile, the Liberals are insisting that they won’t make any more changes to the carbon tax.
But many believe that they’ll have a hard time regaining the confidence of Canadians in this
regard.
“The challenge for the government on this is that for years, they’ve been virtuous and so value-
driven. They often suggest there’s no compromise. And so in this case, they’ve backed
themselves into a corner,” said Lori Turnbull of Dalhousie University. “Because it’s made
people in other parts of the country – who don’t use heating oil but are still feeling the
affordability crisis – even more angry.”
Response option(s):
● What are your thoughts about the controversy over the carbon tax? Explain.
● Did something in the article surprise you? Explain.
● Pick a word/line/passage from the article and respond to it.
I believe that the carbon tax should only affect people who drive cars, factories, and anything
else that uses fuel too much. But home heating should never be taxed, no matter what it is.
Driving a car or running a factory is a luxury, but staying warm during the colder months
shouldn't have to cost anymore than it already does. Especially when it comes to oil, because that
is already very expensive, the carbon tax would just make it harder for people who need to use it.
Oil is rarely used, with less than 5% of Canadians using it, and that is because oil is something
that is easily transportable.
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A carbon tax primer

Why the controversy?

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