August 2, 2018 5:05 pm
Updated: August 8, 2018 12:35 am

‘We’re not done’; Carbon tax plans could still change more as feds weigh cost to Ontario businesses

Changes recently announced to federal carbon pricing plans could still fluctuate as officials weigh the impact on Ontario businesses and from American economic protectionism.

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There could still be further changes to federal carbon tax rules set to go into effect next year.

In a briefing held with reporters in Ottawa on Thursday, senior officials from Environment and Climate Change Canada told reporters that the prospect of an ongoing trade war with the United States and considerations of how the federal plan could hit Ontario industries mean it’s possible the adjusted targets reported on Wednesday could shift again before they go into effect.

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“We’re not done. No final decisions have been made,” said John Moffet, assistant deputy minister of the environmental protection branch of Environment and Climate Change Canada, in a briefing at the National Press Theatre in Ottawa.

“In principle, I would say this government is open to further changes.”

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In an update to the carbon pricing plan quietly posted online last week, officials with the department said they plan to ease the thresholds at which a company will have to start paying for pollution over a set limit.

Under the federal plan, industrial averages for emissions form a benchmark for polluting companies.

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Those that produce emissions above the target will have to pay a fee per tonne.

Those that produce emissions below that target earn credits that represent the difference between the number of tonnes they emit and the benchmark.

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With the old plan, the government had said businesses that emit more than 70 per cent of average emissions — which is what the target is set at — have to pay for each tonne above that 70 per cent target.

But with the changes now being studied, that benchmark will instead be generally set at the 80 per cent average of emissions, and at a 90 per cent mark for industries that are deemed “in a high competitive risk category.”

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That essentially means that polluters above that new benchmark will pay less than they would have under the previous plan.

However, Moffet pushed back at the suggestion that moving that target provides less of an incentive for polluters to change their ways.

“It won’t be significant,” he said.

According to the officials, that’s because the companies that do cut their emissions to below the benchmark will still get credits they can sell to polluters to help offset the total cost the polluters have to pay back to governments.

“The core concept here is opportunity cost.”

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While Conservative critics have long argued imposing a carbon tax will add up to higher costs of doing business, recent protectionist policies south of the border and economic uncertainty caused by the Trump administration have found their way into federal assessments as they get closer to rolling out the carbon tax.

Officials said they were already carrying out the analysis that sparked this change.

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But it was the additional concerns posed by American protectionism as well as how the federal program could impact Ontario businesses that are sparking the reassessment, and could mean further changes are still possible.

Ontario Premier Doug Ford scrapped the carbon pricing plan developed by the former provincial Liberals last month. Barring any kind of court injunction stemming from the legal challenge his government launched against the federal government Thursday, the federal program will apply in January 2019.

By applying the federal plan in Ontario, officials said roughly 20 sectors that operate only in that province will now be subject to the federal rules. As a result, officials are now trying to figure out what the direct impact will be on those additional sectors.

“Ontario has some sectors that are not elsewhere, so we needed to take that into account,” Moffet told reporters.

Those discussions with Ontario stakeholders remain ongoing but the plan is to have the final regulation drafted and made public this fall.

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