There is a lot of misinformation regarding the Canadian Carbon Rebate (CCR). I believe it’s important to clarify what the CCR is - and isn’t - and provide some facts on the Carbon rebate.
Is it a Tax?
The Canadian Carbon Rebate (CCR) was not created to generate revenue for the federal government. In fact, revenues from CCR are returned to the province or territory where they were collected. Ninety percent of those funds are then further returned to Canadian households in the form of a rebate.
The reason the CCR is designed this way is simple -- to change behaviour. Homeowners with large properties and several gas burning cars, as well as industries that release the most greenhouse gases, will pay more in the form of the CCR than they receive in rebates. That is a price on pollution in action.
Yes, 80 per cent of all Canadians get more back in the rebate than they pay, either directly or indirectly. This is particularly the case for low and middle income households – the very people who are struggling the most with affordability. I know many people do not believe this, but the Parliamentary Budget Officer confirmed this point in a report released this spring, concluding that the average amount that people paid was $555. The average rebate was $804.
This makes the CCR different from other forms of taxation. While there are modest GST rebates for low-income households, the carbon rebates are universal and significantly larger. According to the Statistics Canada model, 94 per cent of households with incomes below $50,000 receive rebates that exceed their carbon costs. At the other end of the spectrum, only about 55 per cent of households with incomes above $250,000 receive more in rebates than they pay. When Conservative politicians say they will axe the tax, lower-income households will suffer the most from those cuts. That is why every party unanimously voted against the Conservative’s plan to cut the Canadian Carbon Rebate.
The Cost of filling up on gas
Yes, gas prices will go up on April 1st. And yes, it will be a carbon pricing increase. But that is the only time gas increases are because of the CCR.
As of April 1st, the cost of carbon pricing on fuel will be:
Other increases in gas prices that we see throughout the year are not a function of the CCR. The only time gas increases are a result of carbon pricing is on April 1st, and that increase is almost always lower than the other increases.
If you were to fill a 60-liter tank of gasoline, at $0.17 a liter, you would be paying $10.20 in carbon pricing. If you fill your tank 30 times, at $10.20 per tank, that would amount to $306 in carbon pricing, well below the annual rebate amount. The rebate is designed to offset the carbon pricing portion, not the overall price of gas.
Fuel price increases outside of April 1st are related to the fluctuations in the global price of oil, and -- as we well know -- to increase oil company profits.
CCR and Home Heating
When it comes to heating your home, the rebate is still a net benefit. If you heat with natural gas, Enbridge’s website states "for the average Ontario household, the federal carbon charge will add about $273-$297 to your annual natural gas bill. In comparison, the average family of 4 in Ontario will receive a rebate of$ 976 in the upcoming year.”
Carbon Pricing and the Cost of Living
Contrary to what Conservative politicians keep repeating, the CCR does not have a big impact on inflation or food prices. The Bank of Canada measures the impact of carbon pricing on inflation, and their calculations have determined the impact on inflation is minimal, roughly 0.1-0.2%. That represents 15 cents on $100.
What about grocery prices? According to many economists, carbon pricing is responsible for less than one per cent of grocery price increases. University of Calgary economist Trevor Tombe estimates that on average, carbon pricing represents 21-33 cents on a $100 grocery bill.
Although Conservative politicians would like to claim that carbon pricing is the primary driver of increased cost of living, this is simply untrue. Just look at the countries that don’t have a carbon price in place. They follow the same trend lines of inflation. In some cases, they have worse inflation than in Canada, which is the opposite of what we’d expect to see if carbon pricing were in fact driving inflation.
Is the CCR working?
We are reducing emissions. We are on track for 467 metric tons of emissions by 2030, representing a 43% decrease. Canada’s emissions have declined by 7% since 2015, and we’ve led the G7 countries in emissions reduction for the past two years.
In British Columbia, where that province implemented its own provincial carbon pricing plan in 2008, they’ve seen a 15 per cent reduction in carbon emissions with no discernible negative impact on their economy.
CCR and the Provinces
Provincial governments are free to implement their own pollution pricing regimes. In fact, carbon pricing is not new in Ontario. Prior to the federal CCR plan, the Ontario government had their own price on pollution where they collected $15 per tonne of CO2. But the Ontario plan provided no rebates to the people of Ontario.
What about the big polluters? Shouldn’t they be made to pay?
Most people agree that large industrial polluters should be held accountable and must be made to compensate the public for the atmospheric pollution that threatens our future and that of our children and grandchildren. This is exactly what carbon pricing achieves; it makes big corporate polluters pay and puts that money directly into the pockets of Canadian families, in the form of quarterly rebates.
CCR and our Economy
The Canadian Climate Institute published a report that estimates the cost of climate change on the Canadian economy will be $25B by 2025 which is 50% of projected GDP growth and that number will rise to three or four times greater by 2050. The cost of climate change is threatening our economic prosperity as a country. This highlights the economic imperative of fighting climate change. With this in mind, our government developed and is implementing the most comprehensive and credible plan for fighting climate change in Canadian history. That plan includes many initiatives and programs to reduce emissions and stay on track for getting to net zero by 2050. We also enshrined our commitments to achieve our targets into law through the Net Zero Accountability Act.
The real cost of doing nothing
We spend a great amount of time talking about the cost of climate action, but we don’t spend much time talking about the cost of inaction. Drought, wildfires, hurricanes, and floods all come with a large cost to the economy and requires significant government spending to rebuild.
When farmers lose their crop to drought or wildfire, there is a significant cost that comes with compensating them for their losses, and that’s not even considering the impact those lost crops have on food prices. When hurricanes tear off roofs or floods fill up basements, the ensuing insurance claims lead to greater premiums and increased costs.
With over sixty countries and jurisdictions around the world implementing a carbon pricing mechanism, we also must consider the global economic impacts of abandoning our climate plan. Jurisdictions like the EU and the US have begun exploring the concept of carbon border tariffs, which would implement a charge on industries and businesses in jurisdictions without a credible climate plan.
Climate change and the impacts from it are real and they are here. Countries need to adapt to these changing realities, and those who are ahead of the curve will benefit the most. We’re investing in a low-carbon economy that will deliver well paying jobs of the future while positioning Canada as a global leader on climate change and a major player in the clean economy.
We may not fully agree on this issue, but it is complex and important enough that we should have an honest and informed conversation about it. We shouldn’t reduce this issue to cheap slogans and misleading information.
