Fact check: Scheer slams Liberal’s carbon tax for exemptions, but experts say that’s not the whole story
The carbon tax, which was announced last fall, will tax large companies $20 for each tonne of carbon emitted. That price will go up until $50 in 2022.
The Liberals call it a “price on pollution” and say the tax will incentivize companies to lower emissions. It will be imposed on Manitoba, Ontario, Saskatchewan and New Brunswick, four provinces that don’t have their own federally-approved climate policy.
But on the first day of an election year, Scheer slammed the plan, making contradictory statements on how the plan works.
First, Scheer claims that carbon tax plan won’t reduce emissions sufficiently because there are exemptions for the “largest emitters.”
“The point I’m highlighting — that the largest emitters receive an exemption — is to highlight the fact that this is not an emissions plan, this is a plan that raises money for the government,” Scheer said Tuesday in Regina.
Scheer is right that there is an exemption. According to a report by environmental action organization Environmental Defence, though, it’s only for 80 per cent of emissions, not all of them.
Environmental Defence executive director Tim Gray told Global News these “exemptions” come from the output-based pricing system, which will give the companies a tax break based on how much product, and not emissions, the companies produce.
Up to a certain threshold, the companies will get back the carbon tax they pay. It’s a similar concept to the carbon tax break Canadians will receive on their tax return, he explained.
Chris Ragan, chair of Canada’s Ecofiscal Commission, said it’s less of an exemption and more of a tax break to keep Canadian companies competitive.
“You’re paying a carbon price on your emissions but you’re getting a rebate based on your output,” Ragan explained. “The result of those two things together is you actually pay the carbon price on your emissions beyond the threshold.
“And when Andrew Scheer talks about exemptions, he is either misunderstanding or intentionally misrepresenting how this system works.”
Gray also explained that it doesn’t reduce the amount the companies pay to zero. There’s still a tax on carbon emissions above the threshold, and therefore still an incentive to lower emissions.
Environment Canada spokesperson Sabrina Kim said the policy was derived from real-world examples and aimed to keep Canadian businesses competitive.
“Under our system, everyone will see a price on pollution, including heavy industry,” Kim said in an email to Global News.
“This is the same approach taken by the EU, California, Quebec, Alberta, and it will cut pollution, drive innovation and keep our industries competitive.”
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Secondly, Scheer said the carbon tax will force companies to close facilities in Canada and open them in other countries.
“If the government of Canada imposes huge new taxes on companies, on employers, people who are giving people jobs, so if a factory closes down here and pops up in China or another country where they don’t have access to clean technology clean energy, then the world isn’t better off,” he said.
Experts say that might be true, but the government is addressing this by giving the companies the output-based pricing system mentioned above to allow them to remain competitive.
“If all you did is you put a carbon price in place,” Ragan explained, “you’d be paying that tax on your carbon emissions but your competitors in Nebraska wouldn’t be.
“So that’s exactly why the output-based pricing system is there. It’s designed to address that issue head on.”
Gray also said that he thinks the output-based exemptions are too high, but he understands why there would need to be the tax break for the companies: it would allow the companies to stay competitive in their markets.
“I understand why there needs to be a break provided for energy-intensive trade exposed industries. I think that’s quite different from what Andrew Scheer’s saying, he is just saying that there shouldn’t be a tax at all,” Gray explained.
Andrew Scheer’s spokesperson said that the output-based system only affects those companies that emit 50 kilotonnes of carbon dioxide or more per year, and the tax could still affect small to medium-sized businesses.
Countries and provinces which already have carbon taxes in place haven’t reported that factories or companies left, and in places like Sweden the economy has grown under a carbon tax, and the government says small- to medium-sized businesses were competitive on the global marketplace because of their green initiatives, the World Bank reported in 2016.
Ragan also pointed out that the output-based pricing system is similar to the one announced by Alberta Premier Rachel Notley, and oil companies like Suncor were on stage with her, and approved of the measure then.
Finally, Scheer alleged the carbon tax will go up to $300 per tonne of carbon emitted.
“In his own documents from Environment Canada, that department is currently planning a carbon tax of $300 a tonne,” Scheer said.
According to a report from the National Post, advisors told Environment Minister Catherine McKenna in a leaked secret report from 2015 that the carbon tax might have to go as high as $300 per tonne by 2050 to meet the goals of the Paris Climate accord if the carbon tax was the only environmental policy instituted. At the time, officials from Environment Canada said they planned to supplement the tax with other environmental policies, including phasing out coal.
But there is no mention of a $300 price in the current carbon pricing plan put forth by the Liberals, and there is no plan for the tax past 2022.
While that means there’s the possibility it could rise to a higher number, Ragan said $300 is not likely.
“If you talk to most of the modellers who have modeled where the price would need to go to achieve the Paris commitments by 2030, the number is something like a $150 per tonne,” Ragan said.
Officials from Environment Canada said any numbers past 2022 are “pure speculation.”
“We have clearly stated that our current system, starting this year at $20/tonne, will be in place until 2022, at $50/tonne, at which point we will do a review. Anything past 2022 would only be pure speculation by Mr. Scheer,” spokesperson Sabrina Kim said.
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No alternatives presented
While Scheer slammed the Liberals’ climate plan, the Tories have not presented their own version of climate policy.
Scheer emphasized that the Conservatives’ plan will be released with ample time for Canadians to review it before the upcoming federal election in 2019.
WATCH: Scheer says Conservatives will reveal their climate change plan with ample time before election
But Ragan was skeptical, saying the carbon tax is the lowest cost way to reduce emissions that we know of.
“Anybody that wants to disagree with a carbon price needs to put some alternative in the shop window, and I don’t hear an alternative from any of the so-called resistance,” Ragan said.
Gray agreed that the carbon tax was a good start, but said Canada needs to do more, including introducing regulations on selling more electric cars and reducing subsidies to the oil and gas industry.
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