OTTAWA –
Newly released federal modeling data suggests that a carbon price on consumers and large industry combined would reduce greenhouse gas emissions by more than 12 percent annually by 2030 and shave 0.9 percent off GDP. the national one.
The government has been reluctant to share the data because the numbers do not factor in comparisons including the cost of climate change or the potential for economic growth from climate investment.
The numbers are being released today just as the House of Commons is set to debate a Conservative motion calling for the information to be released.
The existence of the data became known last week when Parliamentary Budget Officer Yves Giroux said Environment Canada provided it so he could update his analysis.
Giroux was recently forced to admit that his analyzes in 2022 and 2023 were flawed because they claimed to only look at the impact of the consumer carbon price when they also included the costs of the industrial price.
Conservatives accused the Liberals of withholding analysis that would prove carbon pricing is economically harmful, but Liberals say the information is raw data, not analysis.
The numbers come in the form of tables that model GDP and emissions based on raw economic and climate data.
They show that carbon pricing — both the consumer tax and the industrial system — contributed to reducing emissions by 25 million tonnes last year.
That number is projected to increase annually until 2030, when the price of carbon will rise to $170 per ton and emissions cuts attributable to it will reach 78 million tons.
Total emissions would be 12 per cent lower than they would be without the carbon price and make up a third of the total cuts Canada needs to make to meet its 2030 target.
The data also show that the country’s GDP is expected to be about $25 billion lower in 2030 because of the carbon price than it would be otherwise, or 0.9 percent below what it would be without the carbon price.
But the numbers don’t account for several factors that could also have an effect on the economy, including potential benefits from Canadians spending carbon credits or investments businesses make to reduce their emissions and avoid paying as much more carbon pricing.
The carbon credits distributed to households account for 90 percent of the revenue collected, a detail not reflected in the tables.
This year, the rebates are expected to reach $11 billion, sent in quarterly payments to families in the eight provinces that use the federal system.
Giroux’s analysis concluded that the rebates exceed the cost of the carbon price for about eight in 10 households. He found that the approach is progressive in that the lower a family’s income, the greater the benefit.
This is because rebates are shared equally and are not based on an individual household’s carbon price costs. Lower income households tend to spend less overall and therefore have smaller carbon price bills.
Wealthier households, who are more likely to drive bigger or more vehicles, take more vacations, live in bigger homes and buy more goods, will have higher price bills of carbon as a result.
Giroux and the Liberals have clashed over his analysis of the impact of carbon pricing on household incomes.
His reports said that while the carbon rebates given to most households in Canada exceed the direct cost of the carbon price, those benefits disappear when the economic impacts on jobs and wages are considered.
Liberals have said both the 2022 and 2023 analyzes are misleading because Giroux failed to compare his findings to what would happen to household incomes due to climate change.
A 2022 Canadian Climate Institute report found that by next year, the cost of climate change could slow Canada’s economic growth by up to $25 billion a year.
This report from The Canadian Press was first published on June 12, 2024.
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