Skip to content

The Monitor Progressive news, views and ideas

The fight over carbon pricing is missing the point

Carbon pricing fight a dangerous distraction from real climate policy

November 16, 2023

3-minute read

The greatest casualty of the recent furor over carbon pricing is not the Liberals, despite the blowback to their cynical and widely-panned exemption for home heating oil. Nor is it the NDP, who sided with the Conservatives in their failed motion to extend the exemption to other forms of home heating.

No, the greatest casualty, as is so often the case in these games of political football, is sound public policy in service of a better future.

Not because carbon pricing as a policy is perfect — far from it. It is an inherently conservative approach advocated mainly by economists that counts on the free market to solve the climate crisis on its own — an assumption that works far better in theory than in practice.

To make matters worse, the costs of carbon pricing are highly visible — we see it in the price of gas and home heating — without offering obvious benefits. A price on pollution may “nudge” corporations and investors in the right direction over the long term but for most households that can’t afford the upfront costs of an electric vehicle or a heat pump, it appears solely as an incremental expense.

For that reason, carbon pricing has always faced an uphill political battle. It doesn’t seem to matter that all of the revenues raised through carbon pricing in most provinces are recycled back to households through rebates. It also doesn’t seem to matter that carbon pricing accounts for a far smaller share of increased household costs than other factors, such as corporate profits and the global price of oil. People feel worse off because of the policy — even if, on paper, they are not — and that feeling is driving the latest political firestorm.

The Liberals threw fresh fuel on that fire with their exemption for home heating oil. It was a stunning admission, as the Conservatives have long argued, that the carbon price comes at an unacceptable cost to household affordability. And in voting with the Conservatives to extend the exemption, the NDP further corroborated that narrative.

And that’s what’s so dangerous about all of this. A political consensus is emerging that climate policy is not compatible with a fair and prosperous economy — and even more insidiously, that climate policy is responsible for our economic troubles — which puts Canada’s broader efforts to tackle the climate crisis at grave risk.

The truth is, we can continue to phase out the production and consumption of fossil fuels, whether through carbon pricing or other policies, without putting an undue burden on low-income households. In fact, moving from oil and gas to electricity generally saves households money.

Instead of trying to score political points, federal politicians should tell us how they plan to unleash the affordability benefits of climate action.

In addition, we need our politicians to keep their eyes on the prize of reducing emissions. A political narrative that foregrounds the inconveniences of transitioning away from fossil fuels — as so many of these recurring debates about carbon pricing seem to do — leaves us blind to the rising costs of a heating planet.

The bottom line is that the costs posed by climate change in the long term should worry us far more than the costs posed by climate policies in the short term.

To move forward, we need a narrative that pairs affordability and prosperity with a coherent vision for the net-zero economy. Offering subsidies for household fossil fuel use — which the Liberals, Conservatives and NDP have now all backed in one form or another — is not that solution.

To its credit, the government’s program to subsidize oil to heat pump conversions for low-income households is a step in that direction, but it is too limited. Low-income households across the country need financial support to retrofit their homes regardless of their current heating source.

And it’s not just about home heating. A lack of investment in public transit systems, for example, disproportionately hurts low-income households while pushing more people into emissions-intensive personal vehicles.

A lack of non-market housing in our cities similarly comes at the expense of the poorest households while promoting environmentally destructive sprawl. Not to mention the health effects of fossil fuel pollution that disproportionately affect marginalized groups in low-income communities.

In each of these areas and others, there are solutions that can make life better for people today while also pushing down emissions over the long term. As an added bonus, these kinds of highly visible public solutions are far more politically popular than technocratic regulations or consumer-facing fees.

Carbon pricing still has a role to play in all this, but it deserves far less attention than it receives. It’s time to relegate carbon pricing to an appropriate place in the climate policy discourse and refocus on the big ideas that will build a more prosperous and sustainable economy for everyone.


This article was originally published in the National Observer.

Topics addressed in this article

Related Articles

Will the capital gains tax change affect you? Only if you’re part of Canada’s 0.13 per cent.

The business lobby is spinning the tax increase as a middle class issue. It’s not.

Budget 2024 pushes new climate action down the road

It is too soon for the federal government to rest on its climate laurels.

Federal government goes big on housing—is it enough?

2024 federal budget makes biggest investments in housing, care economy in generations with its second-to-last budget before an election