Canada’s carbon tax is popular, innovative and helps save the planet – but now it faces the axe | Greenhouse gas emissions

Mass hunger and malnutrition. A looming nuclear winter. An existential threat to the Canadian way of life. For months, the country’s Conservative leader Pierre Poilievre has issued dire and increasingly apocalyptic warnings about the future. The culprit? A federal carbon levy meant to curb greenhouse gas emissions.

In the House of Commons this month, the Tory leader said there was only one way to avoid the devastating crisis: embattled prime minister Justin Trudeau must “call a ‘carbon tax’ election”.

Hailed as a global model of progressive environmental policy, Canada’s carbon tax has reduced emissions and put money in the pockets of Canadians. The levy, endorsed by conservative and progressive economists, has survived multiple federal elections and a supreme court challenge. But this time, a persistent cost-of-living crisis and a pugnacious Conservative leader running on a populist message have thrust the country’s carbon tax once more into the spotlight, calling into question whether it will survive another national vote.

In 2018, Trudeau announced plans for the “pan-Canadian climate framework”, modelled after British Columbia’s pioneering carbon tax. Notably, the levy is revenue neutral: the government doesn’t keep any money. Instead, it remits all of it back to taxpayers in the form a quarterly rebate. Any increase in costs from a tax on fuel is offset by a rebate of roughly equal value.

According to the federal government, a family of four in Ontario will receive C$1,120 (£630) this year in rebates. Those living in a rural community receive C$1,344. A rural family of four in the province of Alberta receives C$2,160.

Anyone willing and able to change their behaviour would end up in the black. Economists, political scientists – and the parliamentary budget officer – have found low-income households receive more from the rebate than they pay in additional costs. But the Conservatives, with a significant lead in the polls, are keen to capture mounting frustration with the incumbent government and transform a federal vote into a referendum on Trudeau’s marquee climate policy. Their campaign message, on billboards and T-shirts, has been simple: “axe the tax”. They argue that levy burdens Canadians at a time when rents, groceries and transportation costs have all surged.

Kathryn Harrison, a political scientist at the University of British Columbia, who has spent years studying the effects of carbon levies on behaviour and emissions, laments the “outright falsehoods” peddled for political benefit.

“The current political discourse means a lot of Canadians misunderstand how the policy affects them. They don’t think it works. They think they’re paying more than they are. And that’s a very distressing thing for me, from not just a climate policy perspective, but a democratic perspective,” she said. “This isn’t a debate about how much emphasis to put on one issue or another. The unpopularity of the carbon tax is, to a large degree, driven by voters misunderstanding it and having the facts wrong.”

For Canada’s environment minister, Steven Guilbeault, the fractious debate represents a crossroads for the country in addressing the effects of the climate crisis.

“The reality is, it’s easy to say ‘axe the tax’,” he said. “No one likes to pay taxes. It is more complicated to explain that climate change is real, it’s costing Canadians billions of dollars and carbon pricing is one of many measures we’re putting in place to try and fight climate change. That’s harder to communicate than a slogan.”

But the tenor of the debate – and the misinformation – also suggests something deeper is at stake.

“Climate, and more generally, the environment is now caught into this culture war where facts don’t matter, where the truth has no currency,” said Guilbeault. “This is an issue that speaks to the fundamental elements of our democracies around the world, many of which are being weakened by those campaigns of disinformation.”

Still, the perceived benefits of abandoning the tax have lured in other party leaders. Last month, the New Democratic party leader Jagmeet Singh suggested his support was waning because he doesn’t want a policy that puts the “burden on the backs of working people” – a claim dismissed by experts.

“It is surprising the federal NDP are turning their back on a very progressive policy that both reduces carbon pollution, but also delivers rebates greater than carbon payments for lower income households – the people he purports to be most supportive of,” said Harrison.

Guilbeault admits federal government was “a bit slow” in course-correcting the waves of misinformation surrounding the levy.

“We could have done better, but the 2019 and 2021, and partially, the 2015 elections were fought in part on the issue of carbon pricing – and we won those elections,” he said. “

Initially, the tax was remitted in the form of a tax cut that few people noticed when they filed their taxes. Later, the government began directly depositing the money – but couldn’t get the banks to indicate the money was a rebate from the carbon tax. It took a change to the law that finally compelled banks to label government payments as the “Canada Carbon Rebate” or “CdaCarbonRebate”.

As nations around the world unveil politics to blunt the effects of a rapidly changing climate, recent report from the Canadian Climate Institute found the national carbon levy, which targets both consumers and industry, is projected to reduce emissions by as much as 50% by 2030.

In the event that a Conservative government abandons the national carbon levy, Canada will have “no way” of meeting its 2030 emissions targets,” said Guilbeault, adding it “reduces our credibility” when negotiating with other nations moving ahead with plans to lower emissions.

Most of the debate right now is on the fuel charge the consumer-facing carbon price, with little focus on the industrial carbon tax, said Dale Beugin, vice-president of the Canadian Climate Institute, which “delivers three times the emissions reductions by 2030” than the consumer component of the tax.

Opposition party leaders, including Singh, have vaguely suggested strengthening the industrial part of the carbon tax to make up for the lost benefits of the consumer tax.

“But the reality is, when you remove one policy – in this case, the consumer carbon tax – you’re forced to pushing harder on other levers to go after emissions,” said Beugin. “And there aren’t many sources – buildings, vehicles – that haven’t been looked at yet.”

For Beugin, the debate underscores an uncomfortable reality about policies meant to unwind the sustained environmental damage from unfettered emissions.

“Climate policy isn’t easy. It requires some effort to push against the things that are easy and simple politically, because that’s this transformation that we need,” he said. “Yes, technology is getting cheaper, but climate policy is inevitably hard – and you don’t want to shy away from that.”