Carrots taste better than sticks in recipes to reduce climate change, but they’re expensive

Opinion

So much for the stick.

For the past six-plus years, the federal Liberal government has attempted to use carbon taxes to discourage Canadians from burning fossil fuels. This approach — the stick, if you will — has been very successful in other countries that have made much bigger cuts to their overall carbon output.

But in Canada, it’s been a colossal failure. Even though the federal carbon tax is revenue-neutral — 90 per cent of Canadians who pay the federal levy get back as much or more than they pay — politicians of all stripes are running away from the whole notion of carbon taxation as fast as they can.

Conservative Leader Pierre Poilievre’s disingenuous campaign to undermine the federal carbon tax — based entirely on fallacious claims about how it has driven inflation — has spread like a virus across the country.

It’s hardly surprising a right-wing leader such as Poilievre is dead-set against a carbon tax. More surprising is the fact that leaders from the left are joining his chorus.

NDP Leader Jagmeet Singh has called for an overhaul of carbon tax so that it is not “putting the burden on the backs of working people.” British Columbia NDP Premier David Eby, currently fighting a tight re-election campaign, said last week he would eliminate his province’s carbon tax if Ottawa agreed not to replace it with the federal levy.

And in Manitoba, NDP Premier Wab Kinew is lobbying Ottawa for carbon-tax relief, arguing that the province already has a low-carbon economy.

Welcome to the age of the carrot.

Instead of taxing individuals in the hope they’ll give up fossil fuels, more political leaders are embracing a strategy to motivate people to embrace cleaner transportation and home heating.

The countries with the best records on lowering carbon emissions — including Sweden, Denmark, and Belgium — have invested huge sums of money in helping their citizens transition away from burning fossil fuels and embrace energy efficiency.

But in almost every case, those incentives and supports were paid for with the revenue generated by carbon taxation. It’s why most economists who have studied strategies for lowering carbon emissions believe that impactful carbon taxes, combined with government support for the transition to cleaner energy sources and large-scale clean-energy generation, is the most effective way to save the planet.

Here in Canada, as political leaders of all stripes rush to abandon carbon taxes, it remains unclear how we’re going to pay for the transition to a cleaner-energy economy. That is particularly true in Manitoba, which is concurrently trying to eliminate carbon taxes and increase investment in clean energy.

Kinew first signalled during last fall’s election that he no longer supported carbon taxation on individuals. And in his first year in government, his government cut gasoline taxes while trying to create incentives to facilitate the purchase of things such as electric vehicles, air-source heat pumps and geothermal heating systems.

That overarching strategy was reinforced last week with the release of the government’s landmark energy strategy, which promised major investments in clean-energy generation, along with enhanced incentives for the purchase of EVs and clean heating systems.

On the generating side, the Kinew government will pursue an unprecedented strategy of partnering with First Nations and Métis organizations that build wind-power projects. The province hopes to source up to 600 additional megawatts of electricity through these deals, which would involve a government guarantee on any money borrowed to build the wind farms.

It’s a clever strategy that would not only add much-needed capacity to Manitoba’s current generating system, but also create economic benefits for Indigenous communities and groups without adding to Manitoba Hydro’s debt.

However, while government will not be required to provide huge investments up front, generating additional wind power does not help generate the revenues needed to help Manitobans pay for EVs or heat pumps.

Manitoba offers incentives right now, but they are very small when compared with the overall cost of acquiring new EVs or heating systems. For example, Manitoba offers rebates of up to $3,000 for an air-source heat pump and $5,000 for a geothermal heat pump. Unfortunately, both forms of home heating can cost tens of thousands of dollars to purchase and install.

At some point, government is going to have to provide much bigger incentives to fund the transition to clean energy. And right now, most governments in this country do not have that money. Particularly in Manitoba, where the NDP government is absorbing the loss of more than $300 million from a controversial provincial gas-tax holiday.

All these factors have combined to create a perilous environment right now for political leaders.

Opinion polls show an overwhelming number of Canadians want government to take aggressive action to slow climate change. At the same time, however, those same polls confirm more than half of Canadians want the carbon tax eliminated or, at least, suspended for a number of years.

In that kind of debate, it’s not surprising that politicians are abandoning the carbon tax stick in favour of carrots.

What is surprising is that they believe they can afford the carrots. And right now, they can’t.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.

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