Conservative climate rewards program, carbon tariffs don’t stand up to scrutiny

The Conservative Party finally has a climate plan — it’s just too little, too late
Photo: Erin O'Toole
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As the federal election campaign warms up, amid wildfires and heat waves linked to greenhouse gas emissions, Canada’s Conservative Party is promising a new approach to the climate crisis.

Conservative leader Erin O’Toole has said the party can no longer ignore the reality of climate change. “We must also recognize that Canadians expect us to have a real plan for the environment. We need to boldly reclaim the environment as an area where Conservatives are leaders,” he declared a few months ago.

In line with this vision, the Conservatives have laid out what is, for them, an unprecedented climate plan.

To challenge Trudeau’s carbon tax, the plan introduces a rewards scheme that would collect money from consumers every time they bought hydrocarbon-based fuels and put it into an account they could spend on green products. The plan envisions partnering with the Biden administration to develop infrastructure for zero-emission vehicles and a common carbon market. It also seeks to pressure other major polluter countries through tariffs on imported goods.

To assess this plan, Ricochet spoke to several experts who have reviewed the Conservative proposal. Their verdict was less than favourable.

“The Conservatives’ plan would have been impressive 10 or 15 years ago, but it is woefully out of touch with climate science today,” said Amy Janzwood, a postdoctoral research fellow in political science at the University of British Columbia.

According to experts, the Conservatives’ climate plan is weaker and more bureaucratic than the current Liberal government’s policies. However, none of the major parties’ current climate plans will meet the goals of the Paris Agreement.

“We are starting to see that meeting the Paris goal will require virtually all emissions to stop and new technologies to capture carbon that is already in the atmosphere. From this perspective, I don’t think any of the parties really have a plan yet,” said Warren Mabee, associate dean and director of the School of Policy Studies at Queen’s University.

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Unaligned climate and economic platforms

Under Conservative prime minister Stephen Harper, from 2006 to 2015, media access to government scientists was restricted, funding for climate research was cut, and Canada was dubbed the “dirty old man of the climate world” for its ongoing support of Alberta’s tar sands and unwillingness to cut greenhouse gas emissions. The next party leader, Andrew Scheer, unveiled a climate plan without any targets for greenhouse gas reductions. He pointed his finger at China, the United States and Russia, saying they should bear the responsibility of cutting emissions.

“In this election, under the leadership of Mr. O’Toole, really for the first time, the Conservative Party actually acknowledges climate change as something that’s of significance and warrants policies,” said University of British Columbia business professor Werner Antweiler.

The Conservative climate plan starts by stating that “Canada must not ignore the reality of climate change,” then acknowledges “it is already affecting our ecosystems, hurting our communities, and damaging our infrastructure.”

“The Conservative Party learned the hard way last election that they need to address climate and the environment,” said Janzwood. In her view, their climate policy appears to be merely a political strategy. “O’Toole has acted as if the base supports some kind of climate policy in order to have a chance of gaining power nationally. However, the party is still in denial about the scale of the action needed.”

Just months ago at the Conservative Party’s policy convention, delegates voted down a proposal to recognize climate change as real and to have high-polluting Canadian businesses decrease their greenhouse gas emissions.

Antweiler also feels the Conservatives’ climate plan is more political posturing than real action. The Conservatives avoid all the hard things that would reduce emissions, especially from fossil fuel producers, he said.

He pointed out that the plan leaves a lot of wriggle room by saying the Conservatives will “study” certain ideas — like climate border tariffs — rather than take action.

The Conservatives’ dilemma on climate change is that the party wants to attract people in the middle of the political spectrum while not alienating the right wing that is still grappling with the reality of climate change.

“If you read through their other policies, you will see that they are still strongly supporting pipelines,” said Mabee.

In their campaign plan for the economy, the Conservatives indicate they will prioritize increasing fossil fuel export opportunities with the U.S. government. They even emphasize the importance of the Keystone XL pipeline, a project that has been cancelled by two U.S. presidents, Barack Obama and Joe Biden.

The climate rewards program

In line with their political opponents, the Conservatives are relying on pricing mechanisms to reduce carbon emissions.

But they’ve come up with a unique way to implement this — a Personal Low Carbon Savings Account, which they compare to a rewards program. The idea is that every time Canadians buy hydrocarbon-based fuel, a bit of the money goes into their account. They can then use the money for “things that help them live a greener life,” like a bicycle or electric vehicle.

This is their answer to the Liberals’ carbon tax, which they loathe. It’s still a tax, whether they admit it or not (they won’t), but they’re proud to say that not one penny will go to the government.

It’s a clever method of ensuring revenues are redirected to lower-carbon alternatives, Janzwood said. However, she added, the maximum carbon price of $50/tonne set by the Conservatives is far too low to have a meaningful impact.

The Liberals have said their carbon price will reach $170/tonne by 2030. And even that, according to Antweiler, is probably not as fast as pricing needs to rise to meet the urgency of the situation.

“I understand that every government has to proceed slowly in order not to lose political support, but the current condition has been called a climate emergency. And we don’t have the time to wait anymore,” said Antweiler.

For Mabee, the Personal Low Carbon Savings Account is ambitious, but “the devil is in the details.”

He has worked on similar types of apps recently, and found it difficult to track micro emissions and tally them up in any meaningful way.

To persuade the public that their policy is superior to the Liberal Party’s carbon tax, the Conservatives have suggested the Liberals would use carbon tax revenue to fund other government projects and that the carbon tax unfairly hurts farmers and residents in rural areas.

This is entirely political rhetoric, according to Janzwood. In fact, 90 per cent of the federal carbon tax revenue is returned to households in the form of a rebate. The government also offers some exemptions for farmers, fishers, greenhouse operators, and power plant operators in remote areas.

Further, Antweiler added, the parliamentary budget officer has found that most households are receiving more money back than they pay, because they’re also getting back money from commercial entities. And the largest carbon emitters end up paying the most.

In contrast, with the Conservatives’ scheme, the biggest polluters would get the biggest benefits, which makes little economic sense, Antweiler said.

All in all, the Personal Low Carbon Savings Account is an utterly flawed instrument, he said.

“It is basically pulling the wool over people’s eyes on what really needs to be done.”

The wrong direction

Antweiler also pointed out that the Conservatives’ main emissions-cutting initiatives, such as carbon price harmonization with the United States and carbon border tariffs, would actually take us backwards.

“Canada today is much more advanced on climate policy than the United States,” he said. Because of Republican influence in Congress, the United States has yet to establish a federal carbon price system.

And carbon border tariffs, where imported goods are taxed for their carbon emissions, play a minimal role in reducing emissions.

Canada already has a policy in place to support emission-intensive domestic industries that compete internationally. The Output-Based Pricing System (OBPS) works by setting an industry emission intensity standard. Companies with higher emissions pay a carbon price while companies with lower emissions effectively receive a rebate by selling carbon credits. The system ensures that all companies face the same carbon price and incentive for reducing emissions, while the industry’s average carbon tax is very low and thus prevents Canadian companies from becoming less competitive in international markets.

According to Antweiler, carbon border tariffs would help level the playing field for domestic industries competing with imports. However, the OBPS is more advantageous for domestic exporters because low-emission leaders actually get a boost from selling carbon credits to their high-emission peers.

Janzwood described the Conservatives’ proposed carbon border tariffs as a runway for carbon-intensive sectors, and said they risk punishing lower-income states.

“We need to be mindful that it doesn’t turn into a detriment to developing countries. They struggle both with dealing with climate change but at the same time developing economically,” Antweiler similarly noted.

The Conservative Party blames big countries for being the worst polluters due to their total carbon emissions, he said. This ignores that Canada is one of the world’s largest emitters on a per capita basis, because of its significant resource industry and relatively small population.

“We are doing poorly. We do need more aggressive policies than the NDP’s and the Liberals’,” said Antweiler.

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