Conservative MPs Feel ‘Blindsided’ as O’Toole Embraces $50/Tonne Carbon Levy
Conservative Leader Erin O’Toole was facing intense criticism from within his own caucus Thursday evening, just hours after releasing a glossy, 15-page brochure he’d touted as his party’s new climate plan, with backbenchers telling media they’d had no advance warning that he planned to turn his back on long-standing policy and embrace a half-hearted carbon price.
“It was a stunning reversal for the Conservative leader, who pledged to scrap the Liberal government’s carbon levy—which Conservatives have routinely labelled a ‘carbon tax’—throughout the party’s leadership contest last year,” the Toronto Star reports. “Sources who spoke to the Star said Conservative MPs were blindsided by O’Toole’s announcement Thursday that his climate change plan included a consumer carbon price of C$20 per tonne, rising to $50 per tonne in 2030.”
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“This is a massive blow to his integrity and credibility,” said one unnamed Conservative MP.
“Members were sent out to say that we oppose the carbon tax, and that the Toronto Star was wrong in even suggesting that we would support a carbon tax,” the MP told the paper. Now, “Conservatives across the country will have to (explain that). But most importantly, Erin will have to do that after making that commitment not only to caucus but to the entire membership of the party. He signed a pledge that he would oppose the carbon tax.”
O’Toole maintained the levy is not a tax, since “zero dollars go to government. This is not a tax at all. I have said it is a pricing mechanism for consumers.”
But the MP was unconvinced. “If it quacks like a duck, looks like a duck, and smells like a duck, it’s a duck.”
A ‘Personal Low-Carbon Savings Account’
O’Toole’s ceiling of $50 per tonne is far below the 2030 target of $170 per tonne proposed by the Trudeau government late last year. “In order to make up for the lower emissions reductions from a lower carbon price, O’Toole is proposing a suite of regulatory measures and incentives for investing in technology like carbon capture,” the Star says. A centrepiece of the plan is a “personal low-carbon savings account” where Canadians would earn credits every time they filled their gas tanks or bought home heating fuel. “They could then use that money—their own money—to buy products or services that a Conservative government would designate ‘green,’ like bicycles or a new furnace,” the Star explains.
“We recognize that the most efficient way to reduce our emissions is to use pricing mechanisms,” O’Toole told media. “However, having a market-based approach means we cannot ignore the fact that our largest and most integrated trading partner—the United States—does not yet have a national carbon pricing system.”
That would be the same large, most integrated trading partner where President Joe Biden is under sustained pressure from civil society and more than 300 major corporations to declare a 50% carbon reduction target for 2030—far below Canada’s current target of fractionally more than 31%. Since last August, climate hawks have been warning that the real competitive risk the country faces is that more decisive climate action from the U.S. and other major economies will leave Canadian exporters behind.
The Conservative plan says the new low-carbon savings accounts could be managed by a consortium of private companies, just like the Interac e-banking system. “Canadian families and businesses have been trailblazers in the use of affinity or rewards programs and have great expertise in both managing and using them,” it states.
That had an almost certainly delighted Environment and Climate Minister Jonathan Wilkinson mocking the plan as an unserious variant on PetroCanada’s Petro-Points loyalty program. “If you think about it, you now have to create these separate accounts for every Canadian, you have to track their use of gasoline and natural gas and propane…and find a way to flow back into these accounts the money that is associated with a price on pollution that will be different in different jurisdictions,” he told media, all of which would make the approach “incredibly complicated”.
‘The More You Burn, the More You Earn’
“The more you burn, the more you earn,” the Liberals added in a fundraising email obtained by The Energy Mix. And indeed, University of Calgary economist Trevor Tombe told the Star the Conservative plan would place “disproportionate benefit on high-end, high-income households, and…would hurt low-income households.”
“The Parliamentary Budget Office reported in 2019 that households with lower incomes benefit the most from the current rebate system, which pays out more to most households than what they pay each year through the fuel levy,” the Star explains. “The Conservative system would flip that by giving the most money back to those who spend the most on fuel.”
O’Toole said the plan would achieve the same emission reductions the Trudeau government is currently promising by 2030, citing analysis by Vancouver-based Navius Research to back his claim. But that 2030 target that falls far short of other major economies’ plans and Canada’s fair-share commitment to a global climate solution, and Trudeau is widely expected to replace it with a more ambitious goal next week.
But in the Navius assessment, even the more limited emission reductions by 2030 depended on the Conservatives setting a $170-per-tonne carbon price for industry—something the O’Toole plan hints at, but doesn’t promise.
Deterring Low-Carbon Investment
“Rather than choosing an arbitrary carbon price in advance, we’ll tie Canada’s industrial carbon price to that of our biggest trading partners—the European Union and the United States,” the Conservatives say. “We will assess progress after two years and be prepared to set industrial carbon prices on a path to $170/tonne by 2030, but only if the combination of adopting a price based on that of our major trading partners and working with the U.S. on North American standards has not assured us that we are on a path to our Paris commitment.”
But “seeking policy alignment with the U.S. (to establish a North American standard) introduces uncertainty into the future carbon price for industry, which could deter low-carbon investments,” Navius warned. “By guaranteeing a price of $170/t by 2030, the Conservative Plan can offset this uncertainty.”
“I can’t miss the fact that if I’m a business thinking about investing in carbon capture and storage technology…this gives me a little more uncertainty on whether I should make that investment today,” added Michael Bernstein, executive director of Clean Prosperity, speaking to the Star.
Bernstein still described the plan as “credible” and a “significant step in the right direction for the Conservative Party of Canada and for climate action.” The Star says many experts saw the Conservatives’ move to “abandon their dogmatic opposition to consumer carbon pricing as a major development in the political debate over climate policy.”
‘A Real Climate Plan’
“For the first time in history, the Conservative Party of Canada has a real climate plan that could potentially hit our current 2030 climate target,” said Clean Energy Canada Executive Director Merran Smith, adding that O’Toole’s pitch for a mandatory 30% sales target for zero-emission vehicles by 2030 showed “leadership”.
Smith agreed that the vagueness on the industrial carbon price is “a serious flaw in the plan,” noting that the Conservatives are saying nothing on how Canada will push beyond 2030 to achieve net-zero emissions by 2050.
Pembina Institute Federal Policy Director Isabelle Turcotte said she was “pleased to see the Conservative Party acknowledge that ‘the most efficient way to reduce our emissions is to use pricing’”. But she warned that “the lack of an increasing, ambitious price schedule doesn’t provide investment certainty and doesn’t commit to reaching pricing levels we know are necessary to incent low-carbon investment decisions.”
Now is also the time for political parties “to commit to science-based targets that are more rigorous than ever,” she added. “The Conservative Party plan fails to deliver on a 2030 target that is commensurate with the level of ambition required to safely limit warming, and also fails to deliver a commitment to the science-based target of net-zero by 2050. Without these key commitments, this plan falls short.”
“While he’s moved to where the puck is now, he’ll need to get to where the puck is heading,” Clean Prosperity’s Bernstein agreed. “Many countries, including Canada, are expected to announce 2030 targets that go well beyond Paris. All political leaders, including Mr. O’Toole, would be wise to consider ramping up their ambitions further.”