As carbon pricing continues to climb, feds can't pin down its effect

Three years after the implementation of its signature environmental policy, the Liberal government can't say how much carbon its carbon pricing regime has prevented from being emitted.

"Unfortunately, we don’t have the specific data to respond to this question at this stage," Gabriel Brunet, parliamentary affairs advisor for the office of Environment and Climate Change Minister Steven Guilbeault, said in response to a CTV News request for modelling or analysis on the effect of carbon pricing on emissions.

The federal carbon pricing backstop came into effect in April 2019 at a rate of $20 per tonne of carbon — adding 4.42 cents per litre of gasoline, for example. The backstop applies to Alberta, Saskatchewan, Manitoba and Ontario, which do not have their own carbon pricing plans.

The backstop rose $10 each year, up to $50 last week, and now adds 11.05 cents per litre to the cost of gasoline. It's set to rise to $170 per tonne in 2030.

As the price of carbon increases, so do the revenues generated and the subsequent rebates households receive. In 2022, a family of four will receive $745 in Ontario, $832 in Manitoba, $1,101 in Saskatchewan, and $1,079 in Alberta. Families in rural and small communities are eligible to receive an extra 10 per cent.

About 90 per cent of the cash from carbon pricing is distributed to households. The other 10 per cent goes to small and medium-sized businesses, municipalities, universities, schools, and hospitals for projects to decrease energy use and energy costs and reduce carbon pollution.

As of March 31, 2021, $5.2 million was committed to 127 business projects in Saskatchewan along with $12 million for improvements at 132 schools.

"Carbon pricing is a mechanism to recognize that pollution isn't free, and to give an incentive, to be fuel-efficient and to drive down pollution," Terry Duguid, Winnipeg South MP and parliamentary secretary to the minister of environment and climate change, said in an interview with CTV News.

"For those folks who take the bus, drive a fuel-efficient vehicle, they will receive even more back in rebates than they pay."

However, a March 24 report from the Parliamentary Budget Officer Yves Giroux paints a complex picture as to whether families in backstop provinces will actually be ahead under the program in 2031-31.

From a strict fiscal impact — the carbon levy and related GST paid minus the rebate received — the vast majority of households will see their rebates exceed their carbon costs. The average Saskatchewan family would be $495 in the black.

Under a broader economic impact — including the loss in inflation-adjusted employment and investment income due to carbon pricing — carbon costs will exceed rebates in 2030-31. Under this model, carbon pricing would cost the average Saskatchewan family $1,464.

But the report does not account for the economic and environmental costs of climate change. And Duguid pointed to what he called "the cost of inaction" of not pricing carbon.

"In Manitoba and Saskatchewan, we have had the worst flooding, and in 2011, 2014, we had one-in-300-year floods in the Assiniboine River Valley. That is southeastern Saskatchewan, southwestern Manitoba. In Manitoba, those floods cost our treasury $1 billion each, displaced 7,000 people in Manitoba, and I'm sure in southern Saskatchewan were devastating to agriculture.

"So, you know, there is a cost to pollution. And that's one of the other reasons we need to do this. We need to get a handle on climate change, both by reducing pollution and also adapting to climate change. And you know, one of the ways to combat climate change, of course, is pricing pollution. It's a central feature, once again, of our emissions reduction plan, and it is going to help us get to net-zero by 2050, minus 40 to 45 per cent by 2030."

He also said the world is moving to a low carbon economy and investors are not putting their money in sectors with a high carbon footprint, so there is an economic argument for carbon pricing.