Federal government rebates to Ontarians will outweigh costs from carbon tax, official says

The new payouts, called “climate action incentives,” will grow to $718 for a four-person household in 2022, as the carbon tax increases and the government expects average annual costs for a family of four to hit $564, the official said.

The rebate details could blunt Conservative criticism — from Queen’s Park and the opposition benches on Parliament Hill — that the carbon tax designed to curb greenhouse gas emissions is really a government cash grab that’s bad for the economy. The official, who spoke to the Star on background ahead of Trudeau’s Tuesday announcement, said the payout cheques will account for 90 per cent of the revenue from the federal tax. The other 10 per cent will go to sustainability initiatives, retrofitting projects and green infrastructure initiatives, the official said.

The federal tax, which kicks in Jan. 1 at $20-per-tonne of emissions, will also apply to Saskatchewan, Manitoba and New Brunswick — jurisdictions without their own carbon price that meets federal standards, the official said. People in each province will receive different payouts, but all of the rebates will outweigh the amount the government anticipates their costs to rise. This is possible, the official said, because revenue from emitters paying the tax is expected to be more than enough to cover increased costs passed on to households for expenses like heating and fuel.

The official did not say how much people in other provinces will receive, but said those who live in “small, rural or remote” communities will get larger rebates. The Liberals are dispatching cabinet ministers to different parts of the country to explain the tax details Tuesday morning.

“There is no money that the federal government keeps as a result of this,” the official said. “The prime minister is going to outline how the system is going to be applied across the country, and how families are going to be better off because of it.”

Until this year, Ontario was among the provinces with a carbon pricing scheme that met federal standards. The previous Liberal government created a cap-and-trade system, where companies could buy and sell permits within a set emissions limit. But Progressive Conservative Premier Doug Ford won the June election campaigning against this “carbon tax” and is now dismantling the system, a decision the provincial budget watchdog estimates will cost $3 billion over four years.

Ontario also joined Saskatchewan’s court case that challenges Ottawa’s authority to impose a carbon tax on the provinces. But that’s not the only pushback on the plan. Manitoba cancelled its $25-per-tonne carbon tax last month to protest Ottawa’s insistence that the price on carbon increase $10 each year until 2022. Alberta, which already has a $30-per-tonne tax on transportation and heating fuels, placed future increases in doubt after a federal court quashed Ottawa’s approval of the Trans Mountain oil pipeline expansion.

But the Trudeau government insists carbon pricing is a central plank in its plan to reduce emissions to at least 30 per cent below their 2005 level by 2030. Alongside regulations such as the national phase-out of coal-fired power and restrictions on methane emissions, the Liberal government crafted a plan to make sure greenhouse gas polluters in every province and territory pay a price for their emissions — whether it be through a carbon tax or the purchase of emissions credits.

The federal carbon price — called the “backstop” — involves a tax that starts at $20 per tonne of emissions next year and rises $10 each year until it hits $50 per tonne in 2022. It also features a second component called an ouput-based pricing system, which allows large industrial emitters to avoid paying the tax on a certain portion of their pollution.

Ottawa gave provinces and territories an option: devise your own carbon price that meets our standard by the fall of 2018, or use the one we created. Trudeau will announce Tuesday the federal government has approved pricing plans in all provinces and territories except Ontario, Saskatchewan, Manitoba and New Brunswick.

But even with the measures in its climate plan, government projections say Canada is on track to fall short of its 2030 emissions reduction target. Environmentalists, New Democrats and the Green party have urged the Liberal government to ratchet up its effort. Earlier this month, the United Nations scientific panel on climate change released a stark report that called for unprecedented action if the world is to avoid the worst effects of global warming. To meet the Paris Agreement target of restraining global warming to 1.5 degrees C above pre-industrial temperatures, the report said emissions around the world need to drop by 45 per cent over the next 12 years and hit net zero by 2050.