Industrial carbon pricing has three times the impact on emissions as consumer carbon tax: report

As the federal government faces increasing political pressure to halt a planned increase to its consumer carbon tax, a new report shows industrial carbon pricing has three times the impact on greenhouse gas emissions as the consumer tax.

The independent analysis from the Canadian Climate Institute, released Thursday, shows that the current suite of federal government climate policies is set to significantly reduce Canada’s emissions.

The report found that carbon pricing — both the consumer and industrial versions — is projected to reduce emissions by as much as 50 per cent by 2030.

Much of the debate over carbon pricing centres on what many call the carbon tax, the consumer version of the national price on carbon. The report shows the pricing policy for large emitters accounts for most of the projected emissions cuts.

The institute’s report says industrial carbon pricing is projected to contribute “between 23 and 39 per cent (or 53 to 90 megatonnes) of avoided emissions from all policies implemented to date.”

The report says the consumer carbon price accounts for between 8 and 9 per cent (or 19 to 22 megatonnes) of projected emissions reductions.

In other words, the industrial carbon price is driving three times the emissions reductions attributed to the consumer carbon price, said Dale Beugin, executive vice-president of the Canadian Climate Institute.

“Unambiguously, the policies that are in place are working and have been working, and industrial carbon pricing is leading the way,” Beugin told CBC. “It is by far the biggest contributor to emissions reductions.”

But Beugin cautions against seeing the institute’s analysis as a licence to drop the consumer carbon price and maintain carbon pricing for big polluters.

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“Our analysis suggests that all the policies that we have, if we implement everything in the pipe … we are still going to be just shy,” Beugin said.

“So losing any of those pieces does make the job of achieving those targets even harder.”

Canadian Climate Institute analysis shows that Canada is on track to meet up to 90 per cent of its 2030 emissions target of 400 megatonnes or less.

Although Canada’s emissions ticked up slightly last year, the economy has been on a downward emissions trajectory since 2005. In 2021, the latest year for emissions reporting, Canada’s greenhouse gas emissions stood at 670 megatonnes. 

Canada’s national carbon pricing system has become increasingly politicized.

Conservative Leader Pierre Poilievre urged MPs Thursday to back his motion to topple the government over its planned increase to the carbon tax — a manoeuvre that’s unlikely to succeed.

If the motion carries and a majority of MPs vote non-confidence in the government, this Parliament will be dissolved and the country will head into an election.

The Liberal government is expected to survive the vote because of its supply-and-confidence agreement with the NDP, which has agreed to prop up the governing party until 2025.

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