Manitoba’s climbing gas prices and the federal carbon tax explained

Click to play video: 'What to know about the carbon tax increase' What to know about the carbon tax increase
WATCH: The federal carbon tax is going up again and is expected to add another 2.2 cents per litre on your next tank of gas. Will Reimer has more on how the tax works and what the implications of the increase might be. – Mar 31, 2022

Already high gas prices in Manitoba jumped by about two cents per litre Friday.

The reason for the uptick in pump prices is the increase in the federal carbon tax, up by 25 per cent as the calendar flipped to April.

Read more: The federal carbon tax is set to rise April 1. How will that affect gas prices?

Global News spoke with Atif Kubursi, professor emeritus of economics at McMaster University, to break down how the carbon tax works and what the implications might be.

Kubursi, who is also president of Econometric Research Limited and former undersecretary of the United Nations, says the tax is related to the price of carbon which climbs each year – linked with the amount of damage the emissions are likely to inflict.

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Read more: Canada must slash emissions by 42% to hit new 2030 targets, climate plan says

The price of carbon has climbed to $50 per tonne since the federal tax was introduced in 2019, and will increase by $15 a tonne annually until reaching $170 per tonne in 2030.

The carbon tax is one of two pillars that result in higher gas prices, with the other being the carbon budget.

Kubursi explains the carbon budget as a model that calculates the amount of available carbon emissions the world can afford before experiencing a temperature rise of two degrees above temperature levels in the pre-industrial era.

Read more: Federal carbon price rebates to rise more than expected in Ontario, Manitoba

“If it goes really beyond two (degrees), it’s quite irreversible,” he says. “It would trigger extreme events; extreme weather events from tornadoes to hurricanes and to droughts.”

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The biggest culprit for carbon emissions is fossil fuels, which are believed to be directly related to climate change and triggering environmental disasters, Kubursi says.

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“For the past ten years, we’re getting to a higher level of temperature year in year out and that this trend is likely to continue and if it continues (it) is going to bring a lot of damage.”

Read more: Manitoba drops $8.7M into trash, recycling in effort to cut greenhouse gas emissions

Therefore the goal is to stay within the carbon budget and keep emissions in check, but instead of putting a complete stopper on fossil fuels, policymakers invoke the carbon tax.

The taxes are collected by the federal government at the gas station, which are then redistributed back to households in quarterly payments.

“What will happen with this is that people don’t lose income, but they face a situation where the cost of carbon–the cost of fuel — is high, so you don’t lose any income, but you face a situation where you have the incentive to economize to save on how much you’ll have to spend on fuel.”

Read more: Carbon price rises to $50 a tonne, adds 2.2 cents to a litre of gas

Carbon pricing aims to discourage the public from filling up on an excess amount of fossil fuels at the gas station.

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“I mean, the story here is to use economics in a way that penalizes those who profligately use energy, particularly fossil fuels, and they have been given an incentive not to do so.”

Kubursi believes policymakers should take a different route.

Read more: Prairie premiers urge Prime Minister Trudeau to stop carbon tax in joint letter

“If we want to preserve this planet, if we want to prevent … climate change, maybe we should keep 50 per cent of our oil in the ground and maybe 80 per cent of our coal in the ground,” he says. “We have to change the way we consume and produce.”

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As of now, Canada’s climate plan aims to cut emissions by 2030 to a maximum of 60 per cent of what they were in 2005.

According to data, 26 per cent of Canada’s total emissions come from the oil and gas sector.

One of the federal government’s plans for achieving their emissions goal is having car manufacturers produce more electric vehicles. The goal is for half of all new vehicles sold to be electric by 2030, and 100 per cent by 2035.

Read more: Automakers say added support needed to meet new EV sales mandate

University professor and climate researcher Dr. Durdana Islam is the proud owner of an electric car, but believes policymakers need to offer more incentives, along with a change in Winnipeg’s infrastructure, for other Manitobans to make the switch.

“I’m doing my part, but why would you do your part if there’s no infrastructure? You may not be as motivated to do it as me,” she says.

“I would definitely encourage that people should switch, because if we have more EVs on the road (the) government would see the demand of it. It’s like chicken and egg. Do we need more electric vehicles to have more charging stations or do we need more charging stations to have more electric vehicles on the road?”

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Dr. Islam says when it comes to climate change, the lives of future generations are at stake.

“Climate change is here,” she says. “Do we really want to leave the world like this to our children and grandchildren?”

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Experts say Manitoba isn’t ready for Canada’s electric car mandate – Mar 30, 2022

– with files from Global News’ Will Reimer and The Canadian Press

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