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Is affordability versus climate really a tradeoff?

Proponents of unrestrained fossil fuel consumption like federal Conservative Leader Pierre Poilievre falsely claim carbon pricing hurts the most vulnerable. Photo by Mark Blevis/Flickr (CC BY-NC-SA 4.0 DEED)

There’s no doubt that it’s been a rough couple of years in terms of affordability. Inflation has finally crept out of hiding, the central bank rate is pushing five per cent and the cost of basic needs like food, gas, shelter and electricity has given us all a scare. This scenario leaves many Canadians worrying more about their finances and caring less about the environment and climate change.

The situation is perfect for organizations that would like to see fossil fuel production continue to increase for a very long time. Simply blame inflation on efforts to tackle climate change and, in particular, demonize the evil and destructive carbon tax. Repeat often and gleefully watch public opinion turn against the policies you want to eliminate.

It won’t matter that carbon pricing has a small influence on Canadian inflation compared to the multiple factors that trigger global inflation, including COVID-related supply shortages and Russia’s invasion of Ukraine. It won’t matter that the funds raised through carbon pricing are returned to Canadians in the form of a rebate.

The University of Calgary School of Public Policy states, “There are numerous policy options for using revenues to offset costs without undermining the carbon pricing system.

“These range from rebates (income-tested or lump sum) to lower income or sales taxes.” The multi-pronged campaign against carbon pricing will never talk about rebates or other measures to offset costs because the end game is to convince Canadians that carbon pricing is too difficult to bear.

Because the carbon price increases are relatively small compared to the average household income in Canada, proponents of unrestrained fossil fuel consumption falsely claim the tax hurts the most vulnerable, writes Rob Miller @winexus #cdnpoli

In 2023, the carbon price on gasoline is just over 14 cents per litre and that carbon price will increase by approximately three cents per litre annually until 2030. This yearly increase is very small compared to normal gasoline price fluctuations based on global petroleum markets.

The carbon tax adds more to the price of natural gas because one gigajoule (GJ) of natural gas is roughly equivalent to 26 litres of gasoline and the cost per GJ of natural gas is relatively low.

In New Brunswick, for example, the average household with natural gas heating will see an increase of around $300 to their annual heating costs.

New Brunswick’s government is complaining loudly about the sudden rise in costs, but the province is just introducing federal carbon pricing this year, which means it will see a big jump in fuel costs in comparison to provinces that have had carbon pricing since inception. Laggards will feel more pain but are unlikely to accept the blame.

British Columbia and Quebec have their own provincial carbon pricing schemes, but all other provinces are participating in the federal program and, therefore, households receive the Climate Action Incentive Payment (CAIP).

The CAIP is paid quarterly and refunds over 90 per cent of the funds collected. The rebate is split evenly between Canadian households, regardless of your family’s fossil fuel consumption.

Because the carbon price increases are relatively small compared to the average household income in Canada (currently around $75,000), proponents of unrestrained fossil fuel consumption claim the tax hurts the most vulnerable households.

This message is heavily repeated until vulnerable people begin to believe it. However, low-income Canadians are more likely to be subsidized by the CAIP at the expense of high-income Canadians who are big users of fossil fuels.

In the midst of the increasingly obvious societal costs of the climate crisis, perhaps it’s not unreasonable for wealthier Canadians to pay more for the privilege of burning copious amounts of fossil fuels to drive their SUVs and keep their spacious homes nice and warm.

So far in 2023, the top-selling vehicle in Canada was the Ford F-series pickup, followed by the Dodge Ram. These gas-guzzlers have been the perennial market leaders for at least the last 10 years, with the GMC Sierra, Chevy Silverado and Ford Escape typically holding top 10 positions as well. Every year, more than 200,000 trucks are added to the nationwide fleet of greenhouse gas (GHG) polluters.

Are the purchasers of new vehicles priced in the $50,000 to $100,000 range feeling the pinch of the affordability crisis? They complain loudly over spending an extra $15 on a weekly fill-up, but it’s OK to pay an additional $50 per tank of gas to drive a pickup truck versus a fuel-efficient car.

If you’re living in a low-income household, you may not even own a car. You might be living in a rented apartment or a small house. Your heating bill is going to be much less than someone living in a home with picture windows and 11-foot ceilings. You will spend much less on transit than people spend on car payments, insurance, maintenance and gasoline costs.

But you will get the same rebate as a household with two big vehicles and a 4,000-square-foot home. Your rebate will be hundreds of dollars more than what you’re spending on carbon pricing and that rebate gets larger as the price of carbon increases. This is an equitable policy aimed at incentivizing reductions in fossil fuel consumption. Those who choose to live large will pay more.

It should now be pretty obvious who doesn’t want carbon pricing. This is the voter base that Big Oil loves. It’s also the corporations and governments that are heavily spending on advertising campaigns to sway people into thinking carbon pricing isn’t fair.

It’s a simple but effective plan. To date, the fossil-fuel-loving base and a sizable number of converts are telling pollsters they'd be willing to elect federal Conservative political candidates who promise to terminate carbon pricing and keep a few extra dollars in some already fat wallets.

The climate continues to warm and the public continues to pay increasingly more for the damages caused by floods, droughts, wind storms and wildfires.

And the vulnerable? They always end up with less.

Rob Miller is a retired systems engineer, formerly with General Dynamics Canada, who now volunteers with the Calgary Climate Hub and writes on behalf of Eco-Elders for Climate Action.

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