Liberals plan to soften carbon tax plan following competitiveness concerns

Liberals plan to soften carbon tax plan following competitiveness concerns

Liberals plan to soften carbon tax plan following competitiveness concerns

Canada is scaling back its planned carbon pricing scheme to curb greenhouse gas emissions after industry executives warned it would hurt their global competitiveness, the office of the environment minister said Wednesday.

Back in January, Environment Minister Catherine McKenna set the benchmark at 70 per cent of an industry's average emissions performance, meaning companies would have to pay a tax on 30 per cent of their emissions.

Ontario Premier Doug Ford's Progressive Conservative government says it will ask the courts to stop Prime Minister Justin Trudeau's efforts to fight climate change.

The decision is significant because the new right-wing government in Ontario - the heartland of Canadian industry - intends to scrap an existing carbon pricing system.

Stewart Elgie, director of the Environment Institute at the University of Ottawa, said the government is making a smart change because it reflects the reality that very few industries will be able to cut emissions more than 10 to 20 per cent over the next five years. "What we're seeing here today is a watered down initiative of what is essentially economic poison in the nation of Canada", Moe told BNN Bloomberg in an interview on Wednesday.

John Moffet, the associate assistant deputy minister at Environment and Climate Change Canada, said Thursday those changes may not be the last, and that economic pressures facing companies from things like US tariffs are among the factors being looked at.

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Those companies that emit more than their competitors will pay the carbon tax but can deduct either 80 or 90 per cent of their carbon tax burden.

"The federal government would do well to go back to the Vancouver declaration where all first ministers signed on behalf of their provinces and territories to work collaboratively with different provincial plans to achieve our Paris commitments, not this made in Ottawa climate tax", he said.

The change only reduced the amount that heavy emitters or large corporations have to pay on emissions, but did nothing for Canadian households, said Moe. Mr. Ford has said that ending cap-and-trade will reduce electrical bills and gasoline prices.

Firms complained this would make them less competitive, given the United States has no such carbon tax. "The economy in Saskatchewan is different than the manufacturing economy in Ontario, and is different than economies of Atlantic Canada", Moe said.

Taxing above 10 to 20 per cent would hurt a company's ability to innovate and find a viable solution, Elgie said. He said that while industries like lime and steel could benefit from the changes, the energy industry is Canada's key exporter and investment has declined domestically over the past several years, while it has risen recently in the United States, Canada's main customer and competitor.

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