‘A massive blow to his integrity and credibility’: Conservatives blindsided by Erin O’Toole’s carbon pricing plan

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This article was published 14/04/2021 (1353 days ago), so information in it may no longer be current.

OTTAWA–There was no hint when Conservative caucus met Wednesday that Erin O’Toole was about to reverse party orthodoxy and propose a carbon levy.

Sources who spoke to the Star said Conservative MPs were blindsided by O’Toole’s announcement Thursday that his climate change plan included a consumer carbon price of $20 per tonne, rising to $50 per tonne in 2030.

It was a stunning reversal for the Conservative leader, who pledged to scrap the Liberal government’s carbon levy — which Conservatives have routinely labelled a “carbon tax” — throughout the party’s leadership contest last year.

But in speaking to Conservative MPs, and later at an Ottawa news conference, O’Toole steadfastly denied that his proposed price on carbon amounted to a “carbon tax.”

“Zero dollars go to government. This is not a tax at all. I have said it is a pricing mechanism for consumers,” said O’Toole.

“This is transparent for consumers.”

The majority of revenue from the government’s current carbon levy is returned to Canadians via rebates.

O’Toole’s planned carbon price is significantly lower than that of the Liberal government, which plans to raise its levy to $170 per tonne by 2030. In order to make up for the lower emissions reductions from a lower carbon price, O’Toole is proposing a suite of regulatory measures and incentives for investing in technology like carbon capture.

Under the plan unveiled by O’Toole, Canadians would earn spending credits in a “personal low carbon savings account” each time they gas up their car or pay for home heating oil. They could then use that money — their own money — to buy products or services that a Conservative government would designate “green,” like bicycles or a new furnace.

O’Toole’s plan also will consider “new taxes on frequent flyers, non-electric luxury vehicles and second homes to deter activities that hurt the environment.”

Conservative sources expressed confusion over the complicated scheme. But policy debates aside, one MP told the Star that O’Toole will have to explain his reversal to Conservative voters who are hostile to anything that looks like a “carbon tax.”

“There’s a massive integrity issue, because members were sent out to say that we oppose the carbon tax, and that the Toronto Star was wrong in even suggesting that we would support a carbon tax,” said the MP, who agreed to speak on the condition they not be named.

“Conservatives across the country will have to (explain that). But most importantly, Erin will have to do that after making that commitment not only to caucus but to the entire membership of the party. He signed a pledge that he would oppose the carbon tax.

“This is a massive blow to his integrity and credibility.”

Asked about O’Toole’s claim that his carbon pricing system wasn’t a carbon tax, the MP said, “If it quacks like a duck, looks like a duck, and smells like a duck, it’s a duck.”

Many experts saw the Conservative decision to abandon their dogmatic opposition to consumer carbon pricing as a major development in the political debate over climate policy.

“For the first time in history, the Conservative Party of Canada has a real climate plan that could potentially hit our current 2030 climate target,” said Merran Smith, a researcher with Simon Fraser University’s Clean Energy Canada think tank.

O’Toole’s promise to impose mandatory sales targets for zero-emission vehicles — under which 30 per cent of light-duty vehicles sold in 2030 would need to be emissions-free — also shows “leadership,” Smith said.

But Smith said the plan has holes. She noted it is silent on how to reduce emissions beyond 2030, as much of the world — and the Liberal government — pledges to hit net-zero emissions by 2050.

O’Toole’s claim that his plan will achieve Canada’s 2030 target also rests on maintaining the Liberal government’s trajectory for the carbon price on heavy industry, which is set to increase from $40 per tonne this year to $170 per tonne in 2030.

Smith pointed out that O’Toole’s plan includes a review of that carbon price in two years. It also says a Conservative government would only increase the industrial carbon price to that level if major trading partners do the same.

“That’s a serious flaw in this plan,” Smith said.

Michael Bernstein, executive director of the organization Clean Prosperity, called O’Toole’s plan “credible” and said it is a significant “step forward” for the Conservatives in the climate policy debate. But he agreed the vagueness around the future of the industrial carbon price under a Conservative government could hamper emissions reduction efforts.

“I can’t miss the fact that if I’m a business thinking about investing in carbon capture and storage technology … this gives me a little more uncertainty on whether I should make that investment today,” Bernstein said.

Another significant change from current policy is how the Conservatives intend to reimburse consumers for the carbon levy on fuel. Under the current system, residents of provinces where the federal system applies get a flat rebate every year. In Ontario, a family of four is receiving $600 in 2021.

The Conservatives would replace that by placing the money an individual spends on the fuel levy in an account that they can then use for green purchases.

University of Calgary economist Trevor Tombe said this could make the Conservative carbon price on fuel much weaker than the current system if there are broad limits on what people are allowed to buy with that money.

“If there’s a lot of goods that are allowed to be spent, then this is really just a complete wash in terms of the incentive effects that it creates,” he said.

Tombe also said O’Toole’s proposed system would be more beneficial for rich people. The Parliamentary Budget Office reported in 2019 that households with lower incomes benefit the most from the current rebate system, which pays out more to most households than what they pay each year through the fuel levy.

The Conservative system would flip that by giving the most money back to those who spend the most on fuel. Compared with the current system, this would have a “disproportionate benefit on high-end, high-income households, and … would hurt low-income households,” Tombe said.

Alex Boutilier is an Ottawa-based reporter covering federal politics for the Star. Follow him on Twitter: @alexboutilier

Alex Ballingall is an Ottawa-based reporter covering federal politics for the Star. Follow him on Twitter: @aballinga