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Carbon Taxers in Full Retreat in Canada

New Ontario Premier Doug Ford announced on August 2nd his government was filing suit in Ontario’s Court of Appeal challenging the Canadian federal government’s constitutional authority to require the provinces to enact taxes on carbon dioxide emissions. Ontario joined another suit brought by Saskatchewan in its provincial court last month.  Saskatchewan Premier Scott Moe said that his government would consider joining Ontario’s suit. 
 
Canadian Prime Minister Justin Trudeau’s Liberal government on August 1st was forced to scale back plans for a cap-and-trade scheme on companies emitting more than 50,000 metric tons of carbon dioxide equivalent (CO2e) per year. The concessions were made in response to the prospect that even more heavy industries are planning to leave Canada than have already done so.
 
The federal scheme was set to tax emissions above 70% of the industry average emissions intensity at an initial rate beginning in 2019 of C$20 per metric ton of CO2e and then to rise sharply to C$50 in 2022.  Companies with emissions below 70% would earn credits which they could sell or trade. 
 
Under the new plan, companies in heavy-emitting industries facing foreign competition are going to be taxed on their emissions above 90% of the industry average. These include iron and steel, cement, lime, and nitrogen fertilizers.  Other industries will be taxed on emissions above 80% of the industry average.
 
In response to the Trudeau government’s decision, new Ontario Environment Minister Rod Phillips said, “The Trudeau Liberals are finally confessing that the risk of a carbon tax is that it will invite an economic catastrophe. Prime Minister, cancel your carbon tax.”
 
The Progressive Conservative Party made canceling the carbon tax their top issue in the Ontario provincial parliamentary campaign. They won an overwhelming victory over the Liberals, who had been in office for fifteen years, in the election on June 7th.