When I was out in Western Canada last week, while eating lunch in Radium Hot Springs, our waitress described how carbon pricing was ripping her off and that she was paying more for everything because of it. I wish I had had Cathy’s article in my pocket at the time. The waitress didn’t believe climate change was a real problem. She didn’t understand the science and I wasn’t about to explain it to her. For her, climate change was a pocketbook issue. Food was costing more. Home heating was costing more. And the gas in her car was costing more. She was convinced she was getting the short end of the stick. That’s why I thought it would be helpful to take Cathy’s missive and share it with readers. It explains the rationale for pricing carbon pollution, why rebates are given to Canadian families, what climate change has been doing to food prices, and current greedflation being conducted by those in the food services and grocery business post-COVID and supply chain disruptions.
Please write to me with your comments and questions regarding carbon pricing, rebates, and how climate change is impacting you or not. But before you do, take 5 minutes to read Cathy’s article.
On July 15, Canadians in most provinces are getting something sure to put smiles on their faces: payment from the government for another quarterly Carbon Rebate.
The rebate is part of Canada’s program to put a fee on carbon pollution and give the revenue from the fee back to households. The additional income will come as relief to those who are feeling the economic pinch of higher food prices.
Several factors are pushing up food costs. One is a phenomenon referred to as greedflation. During the pandemic, supply chain issues and other factors increased costs for retailers, who then passed those costs on to their customers. Well, the pandemic and the problems it caused are essentially over, but instead of dropping prices, corporations decided to leave prices where they were so they could pocket the windfall profits.
Greedflation can be fixed with a government crackdown on companies that indulge in price gouging. However, there’s another problem driving up food costs that can’t be solved that easily — climate change.
As our climate heats up, food production is detrimentally impacted by more prolonged heat waves, longer droughts, extreme rainfall, and unnatural weather patterns such as the January cold snap that decimated fruit trees in the Okanagan. Did you know that heat disrupts the interaction between pollinators and plants that account for one-third of the world’s crops?
Bottom line: As climate change worsens, crop yields drop, pushing up prices. Frederic Neumann at financial services company HSBC, recently told the Financial Times, “It’s easy to shrug off individual events as being isolated, but we’ve just seen such a sequence of abnormal events and disruptions that, of course, add up to climate change impact.”
In the long term, reducing the inflationary pressure of climate change requires reducing the heat-trapping emissions that come primarily from the burning of fossil fuels.
The vast majority of economists agree that the most efficient and effective method to reduce emissions is to put a price on carbon and rebate the people. Canada leads the way with a carbon pricing policy that currently sets the price at $80 per tonne and will increase to $170 per tonne by 2030 with much bigger rebates in 2030.
Farmers and small businesses also are getting carbon rebates as are Canadians living outside cities who get a 20% top-up.
Does this increase energy costs? Yes, and that’s why the Canadian government is taking the revenue collected from putting a price on carbon and giving it to people in quarterly payments now being distributed. Canadians can use this money as they see fit. It can help cover higher energy and food costs.
Canada’s Carbon Rebate came about largely because citizens engaged our government and generated the political will to enact it. Between 2010 and 2018, volunteers with Citizens’ Climate Lobby Canada (CCL) collectively lobbied on Parliament Hill thirteen times and held 793 meetings with parliamentarians. CCL Canada generated nearly 3,000 letters to editors, opinion pieces, editorials and articles on the climate crisis and carbon pricing during that time.
It will take more than Canada’s efforts, of course, to stop climate change. Currently, over 60 countries have carbon pricing policies and there is a campaign to encourage other countries to price carbon pollution: The Global Carbon Pricing Challenge.
Canada is calling on all nations to use carbon pricing as a central part of their climate strategies. Citizens’ Climate Lobbyists in over 50 countries globally are building political will for pricing fossil fuel pollution in their countries too.
Slowing and reversing the impact of climate change on food production is a long-term endeavour, and it will be a while before people will see relief in the form of lower food prices. In the meantime, consumers can get some help with food bills by using money from the Canada Carbon Rebate. It’s a rare cure that can treat both the disease and its symptoms.
Canadians wishing to show support for their carbon rebate can send a letter to their parliamentarians by visiting the CCL website.
]]>Why get this money to offset the federal price per ton on carbon pollution that shows up at the pump when we buy gasoline or diesel fuel, and that is charged when we use natural gas to heat homes? The federal government recently exempted the carbon price for home heating oil in what appears to be an attempt to shore up political support in an area of the country where the majority of homes use it.
The current price per ton of carbon is CDN $85, roughly US $62, which came into effect on April 1, 2024. Each year the carbon price per ton will rise by CDN $15 until 2030. As the price rises so too will the rebate payments.
Is it unusual for governments to put a levy or tax on fuel? No. In Canada, the federal government collects a fixed excise tax per litre of gasoline and diesel. Provincial and municipal governments also tax gasoline, diesel, natural gas, and home heating oil. For drivers of internal-combustion-engine vehicles, federal, provincial and municipal levies inflate the price of these fuels by as much as 30 to 40%.
Canada is not alone in putting a price on carbon pollution. Its rebate paid to families, however, is unique. The world map below shows where carbon pricing schemes were in place in 2022.
As you can see, placing a price on carbon whether described as a tax or as a levy, appears to be the exception to the global rule. Note as well that in Canada, marked in the lighter green, carbon pricing and policies vary. Québec, for example, entered into a cap and trade agreement with the U.S. state of California.
This second world map shows an alternative scheme to reduce carbon emissions using a trading system that popularly goes by the name cap and trade.
To say the least, the policy of pricing carbon pollution is perceived by many to be a tax in my country. Some provinces have challenged the federal government’s constitutional authority to impose carbon pricing. The challenges have failed in court.
The majority of Canadians recognize the need to reduce fossil fuel demand but don’t necessarily understand how pricing carbon pollution gets us to net zero by 2050.
The recent pricing increase in April has caused leaders of provincial, municipal, business, and federal opposition parties to call for a rollback. The leader of the opposition in the federal parliament launched an “axe the tax” campaign.
So how did a market-driven carbon pricing scheme come into being? Its origins date back to the creation of the American Environmental Protection Agency under the Nixon Administration in the 1970s. Offsetting emissions led to regulations to deal with noxious chemicals in the air and water. Companies entered a marketplace with assigned pricing per ton on pollutants like lead, sulphur dioxide, nitrous oxide, and more. The acid rain crisis and the chemical threat to the ozone layer could be addressed by using this market-driven policy to make companies pay for every ton of contributing pollutants and reward others for not polluting.
In the 1990s, the idea of putting a price on carbon emissions using a market-driven scheme began to take hold. The Kyoto Protocol in 1997 included carbon pricing mechanisms within the global treaty. In 2008, the province of British Columbia was the first Canadian jurisdiction to implement carbon pricing and make it revenue-neutral. The federal government adopted the British Columbia approach to reducing carbon pollution in 2019.
Pushback against carbon pricing to combat rising emissions and global warming can produce two results.
The first is to do nothing, to be in utter denial, to act as if there is no carbon problem for humanity to address, that science is wrong, or it’s our fate and God’s will.
The second is to develop an alternate policy like that of the current U.S. administration where a carbon tax has been an unsaleable national program. In the absence of a national strategy before the 2020 election, individual states, 24 in total, had adopted carbon reduction strategies that included pricing carbon, cleaner transportation initiatives, and emission caps.
With the change in leadership beginning in 2021, the federal government in the U.S. passed the Inflation Reduction Act (IRA) and along with other government legislation has produced multiple strategies combining policies, investments, subsidies, and regulations aimed at decarbonizing the entire economy.
The IRA includes initiatives to:
Of course, putting a price on carbon pollution could have been incorporated into the mix of such aforementioned policies and practices. In Canada, along with carbon pricing have come many programs similar to those in the U.S. But in choosing carbon pricing Canada has attempted to have citizens participate in the process of tackling carbon emissions and dealing with climate change more directly. Through the market mechanism of carbon pricing, Canadians are either buying in or not.
Of the two strategies, the market-driven one or the regulatory one, which is preferable?
A majority of economists believe carbon pricing is more effective to decarbonize and combat climate change. Assigning a cost to carbon in the form of a tax or levy, or in creating carbon trading markets, polluters, in their best interests, find ways to reduce emission exposure. That’s not to say that combining carbon pricing, regulations and subsidies doesn’t have merit, particularly in targeting specific sectors of the economy.
The majority of economists ascribe to a balanced strategy that includes efficiency and equity. Efficiency comes from carbon pricing using market forces to reduce emissions. Equity comes from rebates to households that offset the disproportionate impact of carbon pricing on those earning a lower income.
Finally, regulations and subsidies when applied to individual economic sectors spur investments and innovation in emission-reduction technologies.
So carbon pricing almost a decade later in Canada remains a good idea that maybe needs a better sales pitch.
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