Shift carbon price debate to large emitters, Green leader says

With the federal carbon tax on consumers losing political support by the day, New Brunswick's Green leader says it's time to shift the debate to the pricing system for large industrial polluters.

David Coon says a recent report on climate policies shows that it's the most effective way to lower greenhouse gas emissions, so the province's regime should be toughened.

The study by the Canadian Climate Institute says the carbon tax on large emitters could yield emissions reductions six times as large as the tax on drivers.

"The focus does need, I think, to be placed much more on the industrial carbon tax," Coon said.

"We know industry responds well to market signals. They're always looking for ways to reduce their costs, and with the carbon tax increased on industrial polluters, they will look for ways to cut their carbon emissions."

There's growing momentum to eliminate the federal carbon tax on consumers, with Conservative Leader Pierre Poilievre holding a large lead in polls as he vows to axe the tax if he becomes prime minister.

Last week New Brunswick Liberal Leader Susan Holt endorsed a call by him, other premiers and provincial Liberal leaders for Ottawa to suspend a scheduled increase to the tax next week.

When he was in the province earlier this month, Conservative Leader Pierre Poilievre criticized the federal Liberal government's carbon tax. (Ed Hunter/CBC)

It will rise to 17.6 cents from 14.3 cents on a litre of regular gasoline.

Coon has dismissed the argument that the tax contributes to affordability problems, accepting Ottawa's analysis that 80 per cent of Canadians — especially those with the lowest incomes — get more back in carbon rebates than they pay.

But he admits that many New Brunswickers lack transportation options so don't have the flexibility to give up driving gasoline-fuelled cars.

"If you don't have a choice to do anything but drive, what are you going to do? You're going to drive," he said.

"But with industry, they have choices about how they can minimize their exposure to the carbon tax, and that will benefit the environment."

Irving Oil, whose Saint John refinery is the province's largest emitter, has been exploring decarbonization options.

A U.S. company supplying the refinery with carbon-negative natural gas from biowaste said last year the industrial pricing system and federal climate policies made the deal viable.

Liberal Leader Susan Holt has called on the federal Liberals to suspend a planned hike of the carbon tax. (Ed Hunter/CBC)

The institute report projects existing climate policies will reduce greenhouse gas emissions in Canada to 549 megatons in 2030, compared to 775 megatons if no policies were in place.

With other measures announced but not yet implemented, that number would go down further to 467 megatons, close to the target of 440.

Modelling shows the industrial pricing system will be responsible for 20 to 48 per cent of those reductions, while the consumer price will be accountable for eight to 14 per cent.

"We've really found that industrial carbon pricing is going to be the single biggest driver of emissions reductions between now and 2030," said Anna Kanduth, one of the report authors.

She said the consumer carbon tax still plays an important role in the emissions reduction scenarios, however.

"They all add up and every megaton of emissions reductions matters," she said.

"If one policy is taken off the table, other policies are going to have to be strengthened or new ones added to make up that difference."

Energy Development Minister Mike Holland says large emitters would likely pass any increased carbon-pricing costs on to consumers. (Jacques Poitras/CBC)

While Poilievre has vowed to end the consumer carbon tax, he hasn't said if he would eliminate the pricing system for industry.

Coon said New Brunswick's industrial carbon price — designed by the provincial government and approved by Ottawa as complying with its policy — is too weak, taxing only "a tiny portion" of emissions.

The system requires major emitters to reduce emissions by two per cent each year until 2030, when they must reach 82 per cent of 2020 emissions levels.

Emitters that exceed the targets must pay a carbon tax on anything above the threshold, or buy tradable credits.

Critics say this in effect means they're not taxed on 82 per cent of their emissions.

Coon said the price should cover all emissions, "not just a tiny percentage of it."

But Energy Development Minister Mike Holland says large emitters would likely pass those costs on to consumers.

“We’ve really found that industrial carbon pricing is going to be the single biggest driver of emissions reductions between now and 2030,” said Anna Kanduth, one of the report authors. (Submitted by Canadian Climate Institute)

"The conversation about taxation concerns me because it all winds up seeming to land in the pockets of New Brunswickers," he said.

"Is there a way we can reward large industrial users [who reduce emissions] rather than penalize?"

Provincial officials have also said a more stringent industrial carbon price would threaten New Brunswick companies with foreign competitors not subject to such taxes.

Holland said other initiatives, such as non-carbon-emitting small nuclear reactors and smart metres to allow people to calibrate their electricity consumption, are a better way to drive emissions down.