OTTAWA – Prime Minister Justin Trudeau declared victory Friday in his campaign to craft a national “framework” agreement on climate change – even though Saskatchewan and Manitoba refused to sign on to the deal.
Saskatchewan Premier Brad Wall‘s full-throated opposition to the plan, which includes imposing a price on carbon, was fully expected going into today’s day-long first ministers meeting.
But surprise resistance from British Columbia’s Christy Clark and Manitoba’s Brian Pallister threatened throughout the day to upset Trudeau’s hopes for a triumphant finale to a year of federal-provincial climate negotiations.
Pallister, who has been pressing the federal government for concessions on health care funding, appeared to withhold his support solely for the purpose of extracting additional help from Ottawa in dealing with escalating health costs.
“As they rise, through demographic realities, we have to face that as team members and partners, as we have demonstrated we can do today,” Pallister told a group news conference late Friday.
“I have an obligation, because that’s the first concern of the people of my province, to raise the issue, and I will continue to raise the issue.”
The sticking point for Wall and Clark was Trudeau’s plan to set a national price on carbon – starting at $10 a tonne in 2018 and rising to $50 a tonne by 2022 – and impose it on provinces that do not implement their own carbon pricing plan.
Wall is ideologically opposed to the idea of a carbon tax; B.C. already has a carbon tax but Clark wanted – and got – assurances that Ontario and Quebec’s cap-and-trade carbon market would impose an equivalent carbon price.
“If there is a prima facie case for jobs to potentially be threatened in trade-exposed industries – and that’s what we have, in carbon-intense industries – then I am going to defend the interests of the province,” Wall said.
“We will be participants in the battle on climate change … no one ought mistake this for a lack of interest or will or desire to impact this issue. But if it’s a carbon tax and it’s imposed federally, we’re not signing on.”
At that point, Trudeau jumped in – seemingly to remind Wall and others that he wasn’t the only provincial leader being asked to make concessions.
“What animated all of us today -every single one of us on this stage – is a desire to do the right thing for our kids and grandkids, a desire to make sure that we have a protected environment for the future, and that we have good, clean jobs in the future,” the prime minister said.
“Every single person on this stage fought hard for their region, for their jurisdiction, for the region that they serve, as did I fight hard for Canadians, and we came together with a historic agreement, and that’s the thing that we really do need to focus on.”
As the talks appeared to be winding down Friday, a deal looked unlikely.
Clark emerged from the meeting to publicly kneecap the prime minister’s signature climate plan, but within minutes of her remarks, word began to emerge of a compromise.
Trudeau had initially and unilaterally imposed an escalating floor price on carbon dioxide emissions, starting at $10 in 2018 and topping out at $50 in 2022, when the policy would be reassessed.
Under the compromise deal, the carbon price would pause at B.C.’s existing $30 level in 2020, when an independent expert panel will look at how the plan is evolving.
It was a sudden and surprising about-face from Clark, who less than an hour earlier had was telling reporters that the talks were grinding along slowly, that the matter was hard slogging and that an agreement appeared a long way off.
Indeed, before talks even began, it was Clark herself who shoved a hockey stick in the Liberal spokes, citing the unresolved matter of comparing Quebec and Ontario’s cap-and-trade carbon market to a national floor price proposed for other provinces.
“It’s got to be a fair deal. And you have to have one price for all Canadians if it’s going to be a national price,” Clark – who faces the B.C. electorate in a May election – said earlier in the day.
Wall had already flatly stated he wouldn’t sign the proffered agreement and Clark was suggesting it might be prudent to “set aside clauses.”
Trudeau had already set the table when he opened the morning session with premiers, indigenous leaders and U.S. Vice-President Joe Biden by asserting, “We should not waver” in the fight against climate change.
Biden, just weeks away from the end of the Obama administration and the ascendency of Donald Trump’s Republicans, gave a rallying speech of sorts before departing the meeting.
“We’re always stronger when we’re working together,” said Biden.
But the promised show of pan-Canadian unity on climate policy was showing strains as the meeting began.
Wall said Ottawa has failed to provide an economic analysis of the biggest tax change in a generation, which he asserts will hammer Saskatchewan jobs and industry.
He brandished a heavily redacted Finance Department memo – obtained by a media outlet through an access-to-information request – that says a carbon tax would “cascade throughout the economy and prices would increase most for goods that make intensive use of carbon-based energy.”
And he made common cause with Clark, saying the federal plan will result in a competitive “imbalance” given emitters in central Canada, where cap-and-trade will mitigate emissions, face a lower carbon price than in western Canada.
Quebec’s carbon market is currently trading permits for about $8 per tonne, with a forecast the price will rise to $16 per tonne once Ontario’s market is fully up and running with Quebec and California in the Western Climate Initiative.
Paul Boothe, an economics professor at the Ivey Business School and member of the non-partisan Canada’s Ecofiscal Commission, said there’s no reason provinces must have identical tax rates, pointing to differing provincial sales and income taxes across Canada.
“I think this fairness discussion is a bit of a red herring,” Boothe, a former deputy finance minister in Saskatchewan, said in a telephone interview.
“What we’re trying to do is meet our (emissions) target at the lowest possible cost, not the highest cost.”
Ideally, B.C. and Alberta companies should be free to buy carbon credits from other jurisdictions instead of paying the carbon tax, which would ensure emissions reductions are achieved at the lowest price available.