Just the Facts: The Price on Carbon
We’ve put together some facts to help you when friends and neighbours grill you about the federal price on carbon:
Q: I don’t believe that putting a price on carbon has any effect on climate change or use of fossil fuels. Prove me wrong.
A: As the price of fuel and home heating increases, people will look for ways to save these costs. They may take public transit or carpool. They may replace their vehicle with a hybrid or EV. They may decide to save on heating costs with a smart thermostat, better insulation, or a window upgrade. Solar panels and heat pumps can be used. The combined effect of spending less on fuel and heating, together with an increased carbon incentive rebate, means more money in the pockets of Canadians.
Economists say that carbon pricing is the most effective way of reducing climate-altering greenhouse gas emissions and actually helps with affordability because without those changes, the public will pay for the impacts of a warming planet, including pollution-related health care costs, floods, fires, and droughts.
Q: Why is the government increasing the carbon tax when there is an affordability crisis in Canada?
A: The Bank of Canada says that the price on carbon accounts for .15% of inflation, a very small amount. Blaming the price on carbon for affordability issues ignores the real issues and politicians doing this are offering false solutions.
Q: Danielle Smith says that the price on carbon is a government cash grab and that the money collected is being used to “buy votes” in other provinces. What do you say about that?
A: She’s wrong. Carbon pricing is revenue-neutral, and the money received is returned to the provinces where it is collected. 90% of revenue goes back to Canadian households through the rebate program, and 10% goes to programs to help schools, businesses, and municipalities reduce their emissions.
Q: If carbon pricing is such a great idea, why don’t other countries have it?
A: They do! 52 countries and 42 subnational jurisdictions use carbon pricing including the UK, Ireland, Australia, Poland, Norway, Portugal, and Sweden. The EU has the world’s first international emissions trading system and covers all EU member countries. One quarter of the population of the US lives in states with carbon pricing systems.
Together the carbon pricing schemes now in place amount to about 23% of annual global greenhouse gas emissions (source: World Bank carbon pricing dashboard).
Q: Why should we bother with a price on carbon when countries like China are the big polluters?
Every country needs to aggressively move to reduce emissions, and those that do can put pressure on high-emitting countries to follow.
That said, China’s CO2 emissions are set to fall in 2024 due to record growth in new, low-carbon energy sources including wind and solar (source: CarbonBrief). China also dominates the global EV battery market.
Q: My grocery bill is ridiculously high because of the carbon tax. Why is Justin Trudeau making life difficult for Canadians?
Many factors affect the cost of groceries, and the impact of carbon pricing is negligible. Global energy costs, climate change (drought, flooding, heat), and the lack of competition among large retailers are the main drivers of grocery price increases. Statistics Canada has estimated that the price on carbon has increased the average cost of food by only 0.33%. Food coming from outside Canada from places without a price on carbon is not any cheaper.
Q: I saw some guys on farm tractors in Edmonton this weekend, protesting against the price on carbon. Farmers need to survive. Why does carbon pricing affect tractor fuel?
A: It doesn’t. Fuels used to operate farm equipment are exempt from the carbon tax.
Q: Why put a price on carbon on the backs of hard-working Canadians? Why not collect from industrial emitters instead?
A: Canada has regulations in place for industrial emitters that are designed to incentivize them to invest in cleaner operations. These programs vary by province and include output-based pricing (OBPS) such as Alberta’s TIER system. Provinces without programs use the federal system for pricing emissions.
In Alberta, large oil and gas companies like ExxonMobil are investing in large carbon capture and storage projects. As an example, the Strathcona Refinery in Edmonton will be producing renewable diesel in 2025 by using plant-based feedstock and carbon capture technology. The project will create 600 direct jobs and hundreds of indirect jobs.
Compiled by:
Larry Krushelnitzky, Edmonton Strathcona Chair and Eleanor Olszewski, LPCA Chair
