A political and media storm is swirling around the federal government since it offered a three year pause on the application of the carbon tax on heating oil, a response to mounting pressure from the Atlantic Canadians and their Liberal MPs. The action has further stirred up carbon tax discontent, and provided Pierre Poilievre and his Conservatives more ammunition to aim at the tax and the Prime Minister.
Political pundits are almost unanimous that the Liberals have damaged their signature policy and their integrity, credibility and political brand. That argument is not totally convincing. It is, so far, one limited exemption. PM Justin Trudeau and the Finance Minister are adamant it will be the only one. Time will tell if they can resist further concessions. In any case, additional political fallout is coming. Several premiers have already aggressively called for similar treatment for other heating fuels.
The carbon tax is only one component of the Liberal’s climate change agenda that is under significant stress. The Impact Assessment Act, seeks to govern the environmental impact of projects that are under federal jurisdiction. The Supreme Court has ruled that those sections that deal with projects not on federal lands or federally financed – “designated projects” – are not aimed at the impact of the project, but are aimed at regulating the project even when under provincial jurisdiction. The court’s Chief Justice wrote, “Parliament has plainly overstepped its constitutional competence ….”
The government claims it can rewrite the legislation to comply with the decision. It promised the revised act would add tools to collaborate with provinces and respect jurisdictions. It remains to be seen if that is so. The environment minister’s authority, “to designate projects will be paused” until the revisions are complete. Reviews in process will offer “an opinion” on whether projects impact federal jurisdiction.
The court’s decision creates uncertainty for federal climate change initiatives in development. First, the proposed Clean electricity regulations are already very contentious. The Alberta government has offered to comply with net-zero electricity supply by 2050, while Ottawa demands compliance by 2035. (The success of another important clean power program is in doubt with the cancellation of the Atlantic Loop power project.) Second, Premier Danielle Smith has repeatedly stated Alberta’s opposition to a proposed federal emissions cap on the oil and gas industry. Details on the cap are expected soon.
Last week’s Alberta throne speech warned of a response under the Alberta Sovereignty Act to the federal imposition of the two proposals. The recent Supreme Court decision may not impact directly on either proposal, but an Associate Professor of Law at the University of Calgary told the CBC that the ruling sent a message that Ottawa does not have complete jurisdiction over emissions. Martin Olszynski said, “There’s a bit of a warning here, a vibe from the Supreme Court that it wants the federal government to play conservatively.”
There are yet more problems with Ottawa’s climate agenda. Sustainable Development Technology Canada, with a budget of $1 billion from 2021 - 2030, is tasked to invest in clean energy start-ups. The minister appointed a 3rd party to investigate alleged improprieties. The probe revealed inappropriate funding and breaches of conflict of interest rules by management and board members. The Auditor General decided subsequently to launch an inquiry into the agency, and will likely find more violations.
Easy money promotes abuses. A negligently executed Liberal program to promote federalism resulted in the sponsorship-scandal two decades ago. A current assistant deputy minister in the department of industry was secretly recorded linking the SDTC offenses with “free money”. “That is almost a sponsorship-scandal level kind of giveaway,” he said. Almost $83 billion has been allotted for clean energy tax credits and incentives to 2034-35. If the violations at SDTC foreshadow problems in any of the other multiple clean transition programs, the whole agenda will attract further scrutiny and criticism.
The affordability crisis already impacts households across Canada. New federal Clean Fuel Regulations require refiners to reduce the carbon intensity of transportation fuels by 3.7% this year, growing to 15% by 2030. The costs will be passed on to consumers. The Parliamentary Budget Officer estimates in 2030 the regulations will cost households from $231 to $1008, depending on income levels. As the bite of these regulations and the carbon tax grows, Canadians’ household budgets will be increasingly strained. A response to climate change is critical, but it must be affordable for Canadians and the government.
The biggest threat to the Liberal’s climate agenda is the government’s electoral prospects. It is unlikely to survive the next election. (A recent Leger poll showed the Liberals trail the Conservatives by 14%.) It is clear a Poilievre government would kill the carbon tax and likely more pieces of the clean transition. But it is entirely unclear if the Tories would advance new, effective, Conservative climate measures.
Bruce W Uzelman
I attended the University of Saskatchewan in Saskatoon.I obtained a Bachelor of Arts, Advanced with majors in Economics and Political Science in 1982.
I have maintained a healthy interest in politics throughout my adult years, and wish to put that and my research skills to work as a political columnist.