Liberals plan on softening carbon tax because of competitiveness

James Marshall
August 4, 2018

The Liberal government had initially planned to tax companies for emissions over 70 per cent of an industrial sector's average pollution intensity, "with the possibility of adjustments to that starting point based on an assessment of the potential risks from carbon pricing to the competitiveness of the sector and to carbon leakage".

Although Ottawa won't be assessing which provinces have such plans until September, Moffet said when the original consultations took place, the federal government analysed and consulted industries only in provinces that were expected to use the federal pricing program.

The government says the plan all along was to set an initial target and then amend it after more specific review, and that the changes made will not have a material impact on the amount of greenhouse gases that will be cut from Canada's total annual emissions.

Earlier this month, Ontario quit the California cap and trade market and joined Saskatchewan in suing the federal government to try to block it from imposing its carbon tax on them.

Saskatchewan opposes the federal pricing plan, while new Ontario Premier Doug Ford scrapped the province's cap-and-trade system in one his first moves after taking office.

"This climb-down by the federal government is a signal that we have been right all along", Ontario Environment Minister Rod Phillips said during Question Period on Wednesday. Provinces are also allowed to create their own rules and avoid federal regulation if they accomplish the same goal.

"The federal carbon tax will have its day in court".

"This is a sensible decision for both the environment and the economy", said Elgie.

Those companies that emit more than their competitors will pay the carbon tax but can deduct either 80 or 90 per cent of their carbon tax burden.

Taxing above 10 to 20 per cent would hurt a company's ability to innovate and find a viable solution, Elgie said.

But Scott Moe still wants Ottawa to cancel the tax entirely.

The government released a regulatory framework for carbon emissions in January, which was to take effect in 2019.

Industry response on Wednesday to Ottawa's move was muted. "There's still so many things to be determined".

The oil and gas business was not included on the special treatment list. The industry feels "a certain amount of frustration", said Tim McMillan, president of the Canadian Association of Petroleum Producers. Trudeau has said carbon pricing is essential as other nations move forward on measures to prevent global warming, and that Canada will remain competitive even as the USA loosens environmental protections.

"It seems to be politics driving the policy rather than economics or the environmental outcome", Mr. McMillan said.

Other reports by Click Lancashire

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