With polls showing the Liberals in a tight contest with the Conservatives, the Trudeau government needed to find a defining issue that will carry them to victory in next October’s election.
From the beginning of his mandate, this prime minister has made lowering carbon emissions a centrepiece of his government’s raison d’etre.
Most of the provinces bought into his “putting a price on carbon” agenda, including Alberta, in exchange for federal support for getting its landlocked oil to tidewater.
Now that harmony has fallen apart. How could such a divisive situation possibly translate into that election-winning “defining issue” for the Trudeau Liberals?
The answer came last week with Justin Trudeau’s announcement that Ottawa intends to impose a carbon tax in dissenting provinces, and then return the proceeds, in the form of annual direct rebates, to individuals.
The Liberals claim those rebates will amount to more than people are paying in carbon tax. That means the scheme is yet another layer of taxation upon already overtaxed businesses, all in a cynical attempt to buy votes.
But would this profoundly damaging Liberal plan help the environment? The answer to that question is a resounding no. Here’s why. The carbon tax plan would start at $10 a tonne, rising to $50 a tonne in 2022. That corresponds to gasoline and diesel price increases of two cents, rising to 11 cents per litre.
But federal, provincial and municipal taxes already make up 44 cents of the Canadian average pump price of $1.34 per litre. The reality is that the average Canadian driver already pays the equivalent of a carbon tax of $200 a tonne, costing more than $28 for a 64-litre fill up and generating government revenues of $24 billion in 2018.
Both carbon tax proponents and opponents agree that carbon taxes would need to rise by much more than $50 a tonne to make a perceptible difference in demand. A leaked federal government briefing document obtained by the Canadian Taxpayers Federation states that another $300 per tonne, equivalent to 68 cents per litre, would need to be added to reach Canada’s greenhouse gas emission targets.
Inverse elasticity of price and demand is a fundamental economic premise. So why doesn’t it apply for fossil fuels? Because we can’t do without them, so raising the price just forces people to allocate a larger portion of their income to getting it.
Trying to solve a problem with the wrong solution will inevitably lead to failure. That’s why even those most concerned about global warming should oppose carbon taxes. There is already a solution that will not only reduce Canada’s carbon emissions, but also help our economy.
Two words: natural gas. Converting gasoline or diesel fuelled vehicles to natural gas reduces carbon dioxide emissions by roughly a third.
Canada is endowed with a virtually limitless supply of low-cost, clean-burning natural gas. Yet we have a miniscule 15,000 natural gas fuelled vehicles.
Canadian government data shows that transportation produces 28 per cent of total carbon emissions. Coal fired power produces another six per cent.
Converting half the vehicle fleet and the remaining coal fired power to natural gas would reduce Canada’s carbon emissions by eight per cent, compared with virtually nil under the divisive Liberal carbon tax plan.
Moreover, thousands of high-skilled jobs would be created as Canada seizes the opportunity to become the North American leader in natural gas fuelled vehicle technology.
Troy Media columnist Gwyn Morgan is a retired Canadian business leader.