The Decibel - What happened to the ‘carbon tax election’?

Episode Date: April 9, 2025

For years, Conservative Leader Pierre Poilievre has been framing the federal race as a “carbon tax election.” But then Mark Carney became the Liberal Leader and Prime Minister and “axed the tax��� for him, setting the consumer carbon price to zero.Now, Poilievre is targeting another federal carbon tax – the one on the industry’s largest emitters. It’s part of a broader shift in this election toward energy sovereignty. Against the backdrop of U.S. President Donald Trump’s ongoing threats to Canada’s economy, there’s been a surge in public and political support for domestic oil and gas projects.Today, The Globe’s Adam Radwanski, a columnist who covers climate policy, is on the show. He’ll walk us through the ongoing political fight over carbon pricing, why we’re suddenly seeing more support for pipelines, and the cost of slowing Canada’s efforts against climate change.Questions? Comments? Ideas? E-mail us at [e-mail]

He's been saying it for ages. We need a carbon tax election now. An axe the tax election. An axe the tax election now. Why don't we just end the debate and let Canadians decide and have a carbon tax election? Up until a few weeks ago, conservative leader Pierre Polyev has been framing this as a carbon tax election. But then, Mark Carney became the liberal leader and prime minister and axed the tax for him. My government will immediately remove the consumer carbon tax.

Now, Poliev is targeting the other federal carbon tax, the one on the industry's largest emitters. We are going to have a carbon tax election because Mark Carney has proposed to add another industrial carbon tax on top of the existing one. It's part of a broader shift that we're seeing in this election. With a worsening trade war and annexation threats from U.S. President Donald Trump, Canadians are worried about economic independence. And that has led to a renewed focus on energy sovereignty, more support for domestic oil and gas projects,

and less focus on the environment. Today, The Globe's Adam Radwanski is here. He's a columnist who covers climate policy. He'll walk us through the political fight over carbon pricing, why we're suddenly seeing more support for pipelines, and the cost of slowing Canada's efforts against climate change. I'm Maynika Ramen-Wilms, and this is The Decibel from the Globe and Mail. Adam, thanks so much for being here.

It's good to be back. So we're going to start by talking about the carbon tax. And I know this is something we talk about a lot, but I think it's actually important to understand really how it works. So there's of course two carbon prices, the consumer one and the industry one. Let's start with the consumer one, Adam. What exactly is the consumer price on carbon? The consumer price on carbon is, or perhaps we should effectively say was, a cost applied to purchases involving fossil fuels.

So gasoline, home heating, those kinds of things. So it was, at last check in 2024, $80 per ton of greenhouse gas emissions, which meant that if you were paying at the pump, it would have been a little over 14 cents a liter of gas. Okay, so we as consumers were paying it upfront when we buy something like gas, but then we were also getting checks back from the government to make up for that money, right?

Can you explain how that was working? Yes, this is where things get confusing or more confusing. Taxpayers were getting, in most provinces, except where there was a separate provincial system, quarterly payments from the federal government, usually direct deposited by the end. And those were not tied exactly to how much you had paid in carbon taxes. It was just an amount per person rebated quarterly. The concept behind it is that you're creating an incentive

to reduce your carbon footprint. If you're getting a flat amount back, if you have relatively low emissions behavior, you drive less or you drive an EV, you have a heat pump instead of natural gas for your home, then you're gonna be coming out ahead because you're gonna be receiving more money back than you are spending in carbon taxes.

Whereas if you are affluent family with a big house and a couple of cars and all kinds of electronic devices in your home and et cetera, then you're paying more than you're getting back and you're essentially subsidizing lower cost of living for everybody else. By all measures, credible measures, more people were coming out ahead than behind. I guess the last thing that we should talk about when it comes to the structure of how the consumer carbon price worked in Canada was that it was set to increase every year,

right? So this was like an incremental gradual increase of how much we would pay. It was going up steadily by $15 per ton. It was a little over $0.14 a liter for gas that people were paying. It was supposed to go up. Had it gone up, it would have been more like $0.18 a liter. So as we've already alluded to here, Adam,

we no longer will have the consumer price in carbon here in Canada. I guess I wonder when public opinion on this started to really shift. What happened here for so many people to seem to turn against it? Everything was getting more expensive. The carbon price was a very minimal contributor to that.

There's research showing it. It was a tiny portion of inflation. But it was something that if you were running against it, you could point to it as this is making life more expensive and this is something that the government is doing that's contributing to inflation. And I think it took on kind of an exaggerated role in that discussion based on it being something as opposed to the other inflation causes, which are somewhat harder to pin on the government often.

This was something you could point to and say, we can't afford to be doing this right now. Would it, if we're looking at anyone on the lower income scale This was something you could point to and say, we can't afford to be doing this right now. If we're looking at anyone on the lower income scale of things, would those people be affected fairly minimally then, or do we know how that broke down? Well, most people on the lower end would have done pretty well. I mean, there are exceptions.

If you have a particularly expensive type of energy use that's hard to get off of, we saw this in Atlantic Canada, although the government wound up backing off of it somewhat for people who heated their homes with oil. That meant they were paying a lot in carbon tax. And there you get into a challenge where perhaps, A, they have uses that are expensive, and B, perhaps they don't easily have the means,

although there are some supports for this, don't easily have the means to switch to something else, so they're just kind of stuck paying more. So that does happen. I think it would be a small minority of people lower and middle income, but it's not unheard of, certainly. It wasn't unheard of. That caused a bit of an uproar at the time. I just, I wonder how much that had to do with, you know, how Polly have kind of grabbed onto that. I mean, you can kind of understand the logic. If you're being really generous to the liberals on this, you could say, this just was a case where

it wasn't easy for people to switch away quickly, and it was just dramatically increasing their costs. On the other hand, if the whole point of the system is to incentivize behavior, then if you backtrack when you get to the point where people need to change their behavior, it makes you wonder what the point is. But in a more political sense, the issue

was, OK, so they're doing this for Atlantic Canada because they're worried about their seats there. Okay, why aren't they doing it in Western Canada or Ontario? So I think once there was that daylight, the whole thing started to look doomed. I mean, I remember starting to write essentially the carbon prices doomed stories around that time.

So I do think that was where the door really opened to getting rid of it entirely. I also wonder about, I guess, how the government was communicating all of this to people because, you know, you and I are sitting here talking about how this works, even though it's been around in Canada for a number of years. Was that part of the issue that like, did people understand, I guess, how this all happened? A pretty consistent criticism of the government in the last few years on the subject has been that they communicated poorly. Having said that, I think this was a very hard system to explain in a successful way for a government. And the reason for that is because it is kind

of counterintuitive. I mean, this whole business about how you pay tax, but the government is returning it and you're actually coming out ahead. That's not how we normally think of taxes. I think there's skepticism of governments in general and a belief that if the government is collecting money, they're probably coming out ahead in some way from this or a disbelief that was pretty easy for opposition politicians to tap into. And a challenge here is that you can explain opposition to it, whether it's fair or correct or not, in one sentence. You can just say this is making life

more expensive. After this forthcoming hike, the average Alberta family will pay $1,100 more in carbon taxes than he gives back in his phony checks. Trying to explain why it's actually great takes probably a paragraph at best. The finance ministry analyzed turns out that for an average income quintile group, the average household of 2.5 Canadians average net benefit per household in Alberta $723 a year. So it's not an easy debate to win if it gets heated. And while this system was beloved by economists and policy wonks, it may just not have been a politically

viable way of doing this. How effective was it actually in reducing emissions? It did have some impact. There was research and modeling that was done by the Canadian Climate Institute that showed it accounting for somewhere between 8% to 14% of all of Canada's projected emissions reductions by 2030. So that's not insignificant, but for context, the industrial carbon price, which that same study found to be the most effective of all of the policies in place, had about three times that projected

impact. Okay. So the industrial carbon price, much bigger impact, three times the impact that the consumer price would have. Roughly, yes. That was the view of that modeling. And frankly, what I'd heard just from people who've worked in this policy space consistently was everybody knows the industrial price is actually

the more effective one. Doesn't mean the consumer price did nothing, but I think you could reasonably ask whether it was giving enough bang for a buck considering how much angst it cost. All right, so Adam, let's actually talk more about the industrial price on carbon then. Because I think this is much less known.

This is kind of the business end of the carbon pricing system. How does that work? The industrial system exists for heavy industrial emitters. So we're talking about especially the oil and gas sector, other heavy industries like steel, cement, chemicals, partly designed because those are trade exposed industries that can't fully reduce their emissions realistically. So it doesn't really price all of their emissions and price some of their emissions, but also has sort of a trading system within where they can generate carbon credits

that they can then sell to one another if they manage to get their emissions down below a certain level. So essentially like there's a kind of a limit to what you could pollute to. And if you go over that limit, you have to pay a bit more, or you could buy credits from another company that doesn't pollute as much? Yes. So the idea is there'll be a set price on emissions

above a certain level. And that keeps getting more stringent. So you keep having less and less room over the years to emit, is the theory. And then you pay that amount, or you can buy credits from another company that has managed to reduce its emissions below a certain level and has excess credits. And maybe you're buying those for slightly less than what the price is, so everybody

comes out ahead. Okay. So you get a discount if you buy from another company instead of paying full price. You get a discount, and pivotally for this, the company that's selling the credits gets rewarded for reducing emissions. So what it essentially does is it creates a value per ton of reduced emissions for all of these companies. So if it's hard to justify in your business case investing in things, technologies that will reduce your emissions because they may not be driving revenues in any way, this essentially

attaches a revenue to those investments. Okay. And right now, all the parties are in favor of keeping the industrial price on carbon except for the conservatives So Adam, why are they against it? I mean the cynical answer for why they're against it would be that they already had the campaign signs Printed and they needed to say they were still against carbon pricing I'm not totally joking on that. I mean that is definitely an element of it I mean, that is definitely an element of it. I mean, that being said, they had been struggling with this issue to my understanding for the last couple of years.

And this was a really big subject of discussion in sort of climate policy circles because it is a really important policy and they hadn't come out dead against it. And in fact, there is history of conservatives supporting this. Alberta, a rather conservative province, has had an industrial pricing system since before the federal government acquired it. So there was hope among people who think it's a good policy that they would just quietly keep that, get rid of the consumer price. The concern all along was they may not want to complicate the message like that.

They may not want to open the door to people saying, oh, but you still support carbon pricing among their support base, which may really oppose it. So maybe they just want to keep it simple by saying they get rid of the whole thing. And I think when the liberals, after Mark Carney won the leadership, came out and essentially scrapped the consumer price, I think that's still the deal for the conservatives opposing the industrial one

because they need a differentiation point. And they want to keep the issue alive. And that was their way of doing so. Interesting. OK. And what is Poliev's argument I guess for doing that, for scrapping the industrial carbon tax? Because he must be making some kind of political argument about this too. Yeah the argument I guess would be we just

can't afford to do this right now. You know we need to encourage companies to get oil and gas out of the ground to make their products. We don't need to slap any extra costs on them, complicate their lives. Let's get this out of the way and let them have free reign, essentially. And if we want to take it a little deeper on this, the conservatives aren't saying they would ban industrial carbon pricing. What they're saying is they'd leave it to the provinces. Most provinces, certainly most provinces with a lot of industrial heavy emitters do have their own industrial pricing system right now. The issue is that's

required by Ottawa. So we don't know if they would keep them or not if they weren't required to by the federal government. And more than that, I don't think it's likely that they would keep increasing it the way that the federal government to date is required. We'll be back in a minute. Okay, so Adam, we've talked about the carbon price, but another part of energy policy that we're hearing about in this election is pipelines. There seems to be kind of a resurgence of this related to the idea of economic security. Of course, we're thinking about this more because of Trump's threats. So Adam, how much support is there for pipelines?

A lot more than there was a few months ago is the short answer. I mean, we just saw a Nanos poll that showed 75% of respondents in Canada either supporting or somewhat supporting the idea of a pipeline east-west from Alberta to Eastern Canada for oil, which is certainly quite high. So the tides have definitely shifted on this front. Yeah, it feels like something we haven't really talked about in the last few years and all of a sudden it's kind of front of mind again. It's very front of mind again. I mean, some people have talked about it.

Certainly, you know, conservatives and Western politicians and to some extent the oil and gas industry have talked about it. More though in the sense of lamenting that we haven't done it, then that might have a push to do more of them. Now this idea is alive again, and it's true. The Energy East proposed pipeline, which would take oil from Alberta to Canada, that died in 2017. It's been a long time since this has been a serious prospect.

I'm still not convinced that particular one is a serious prospect, but certainly there's a lot more talk right now of getting oil and gas to other parts of Canada and to overseas markets than there was for the last five to 10 years. Yeah. Okay. So you mentioned the Energy East pipeline. How feasible would building a pipeline like that actually be? I'm not convinced about the feasibility of the Energy East pipeline for a variety of reasons, one of which is that there's currently nobody proposing to build it. Like no company? There's no company proposing. So, I mean, at the time it was TransCanada, TC.

Nobody else has stepped up. The economics are tricky. The permitting is tricky. There is obviously the issue still, which there was then, of where it passes through. If you're going from Alberta to Atlanta, Canada, you would need to go through Quebec, obviously. Through Quebec.

The government there and the population there seem to be quite opposed to previously. There's more openness now, but it will still be very controversial. You would need to go through many different First Nations, which is also a major sticking point. I think there's also a question on the economic case of that particular one. If it's going to take a long time to build, by the 2040s, are we seeing significant declines

in oil demand? Possibly in Europe where some of this would be aimed at going. So I think it's a tricky case to make given uncertainties around approvals and timelines and the lack of anybody offering to build it. Okay. So, if this specific pipeline might be difficult to get off the ground, I guess, are there other options that would help us diversify our exports here? There are certainly other options that are probably more modest in scale and a little

more practical. I think a lot of those would involve natural gas from Alberta or British Columbia. We've seen an expansion of that already with the LNG Canada terminal that's been essentially completed. I think certainly you're going to see a lot more talk around particularly natural gas to the Pacific coast. I mean, obviously that's closer to the Asian markets. And of course, these pipeline projects that we're talking about would originate in Alberta

mostly. How has that province reacted to the surge in support? I'm just curious to kind of gauge that. Danielle Smith, the premier, is very, very gung-ho, of course, on the oil and gas project. You know, to the point of warning of terrible consequences and sort of hinting at national unity crises if the liberals win. You know, the conservatives are certainly more inclined toward deregulation and backing any and all oil and gas project.

So I think there's a high degree of enthusiasm for what's happening coming out of Alberta. You touched on something very briefly there, but this idea of deregulation, in order to get these things done, to actually maybe having to change some of those regulations in order to fast track these projects. Can we talk a little bit about that? Like if we look at Carney and Poliev, is there anything that stands out in what they're saying about that? Yeah, I mean, there's something approaching a consensus between the federal parties in

terms of the need to get approvals done faster. And I don't really know anybody who's worked around government who doesn't think that we need to do these things faster, not just for oil and gas. I mean, for infrastructure, for mining, approval stakes forever. So for instance, we've got the conservatives talking about getting rid of the Impact Assessment Act, which is the federal environmental assessment

legislation for major projects that the liberals brought in. And it's been widely criticized by people in Western Canada and around the oil and gas industry for having too much political discretion and tilting things too far against oil and gas. But I don't know if you can just get rid of it. Because then you're going to run into legal problems that the federal government isn't

fulfilling its responsibility. If you're going to replace it legal problems that the federal government isn't fulfilling its responsibility. If you're going to replace it, that would take a long time if you're going to draft entirely new legislation. So there's some nuance there as to how exactly they would change it that's not totally clear. Similarly, a little bit, the liberals and, you know, the conservatives as well really, have been talking about this idea of one project, one review, which basically means stop overlapping what the problem says. Because there is this problem that they both do environmental assessments on every project.

And if one government was doing everything, it would be way faster. But they're sort of just talking as though you can snap your fingers and do really fast reviews, which doesn't work for a variety of reasons, including the likelihood of legal challenges, particularly from indigenous communities that are near projects.

Yeah, Adam, I think we should mention, of course, while we're talking about pipelines, these are pretty controversial projects for a lot of people. We've seen big protests against them in the past in this country. So even if we need to increase our energy independence, I guess where is that discussion about balancing it with environmental concerns?

We're at a point where our national, at least economic sovereignty is in question. The world economy is blowing up in all kinds of ways. It's understandable that longer term climate concerns are not, or other environmental concerns, are not as top of mind as how do we keep our economy working, and this is one way to do that. So that's understandable.

That being said, these environmental issues don't just go away even if popular support isn't tilted that heavily there. I mean, first of all, all it requires really is opposition from an affected community near a pipeline or another project to slow it down. That can be through protest, but especially through the legal system. I mean, there are obligations that the federal government has, and if it doesn't meet those, then these projects will get stopped in court, which we've seen previously. So even if a public opinion has tilted away from the environmental balance, governments

still need to strike that balance, especially if they want to get these projects off the ground. Yeah. If we can look past pipelines for a moment, are there other options here, like more carbon neutral options that could still help us diversify our energy? There are absolutely all kinds of energy or energy related policies, which are climate friendly or low carbon and also work hand that could have an edge economically.

Geothermal energy would be one example. Working on biofuels, particularly sustainable aviation fuels would be another example. And of course, you also have to probably include here, as we're in the midst of a transition, particularly to electric vehicles, there are all kinds of opportunities in the battery supply chain. And that includes mining, it includes processing,

it includes battery components and battery making. So that's another area where, given our natural resources, plus the manufacturing sector that can accommodate that, that whole industry as well is certainly there. So I certainly would say it would be, in my view, unwise to give up altogether on other forms of energy that are likely to become in greater demand through energy transition, even if we are saying right now

that we can't overlook the current demand of oil and gas. Just very lastly here, Adam, even though our focus has shifted away from environmental concerns for the moment, I mean, last year was still the hottest year on record, right? Like climate change is still a major concern. What is the cost of Canada moving our attention away from that? Well, the cost with this decrease focused, I mean, we are going to lose some emissions, reductions from getting rid of the carbon tax, the consumer carbon tax. We are going

to see higher ones if we're sort of going with a drill baby drill approach. I also would suggest that economically and in terms of where Canada fits in in the world, there is some danger here of winding up behind the curve internationally. I mean, the US is certainly taking a pretty hard turn against climate policy right now. That's not necessarily the case around the world. I mean, yes, it's been deprioritized somewhat everywhere in the current narrative by what's happening with the Trump administration, but Europe is still pushing pretty hard toward decarbonization. Many Asian countries are. You don't necessarily want to be on an island with the US as countries

that have ceased to care about this and are not investing in new, cleaner forms of energy and technologies and are sticking with the old, eventually that could catch up with you in terms of your economic standing as well. Adam, thank you so much for taking the time to be here. Thank you. That's it for today. I'm Maynika Ramon-Wilms. Our associate producer is Aja Souter.

Our producers are Madeline White, Michal Stein, and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer, and Matt Frainer is our managing editor. Thanks so much for listening, and I'll talk to you tomorrow.