Canada’s carbon price is set to increase next month despite several premiers asking Ottawa for a pause.
The carbon price is a “cornerstone policy” of Prime Minister Justin Trudeau’s minority Liberal government, said Hadrian Mertins-Kirkwood, a senior researcher with the Canadian Centre for Policy Alternatives.
But provincial leaders like Newfoundland and Labrador Liberal Premier Andrew Furey are calling for a halt over affordability concerns.
So how much is the carbon price going up by? Here is what you need to know.
Why is the carbon price increasing?
The looming April 1 carbon price hike is not an “unexpected increase,” Mertins-Kirkwood said.
“The idea is that by putting a price on pollution, people will use fewer fossil fuels, and that drives down overall emissions from the economy,” Mertins-Kirkwood told Global News.
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Annual increases make up the government’s overall pricing scheme. In fact, increases are planned until at least 2030.
“A province or territory can decide to voluntarily adopt the federal pricing system,” the government said on its website.
“If a province or territory decides not to price carbon pollution or proposes a system that does not meet the minimum national stringency standards, that jurisdiction is subject to the federal pricing system to ensure there is an appropriate price on carbon pollution across Canada.”
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British Columbia, Quebec and the Northwest Territories are the only regions that have their own carbon pricing systems in place.
Where will the carbon price increase be reflected?
The planned April 1 increase will be most noticeable at the gas station and on energy bills in provinces and territories where the federal backstop plan applies, Mertins-Kirkwood said.
“It’s still a smaller effect on your energy bills than just the global price of oil, or even things like corporate profitability,” he said.
“It’s one factor, but on its own, the kind of effects of the carbon price are overblown when it comes to household affordability.”
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Mertins-Kirkwood added Canadians will also see “indirect effects” of the carbon price, pointing to transportation costs that can filter down into food prices.
Inflation has been cooling in Canada after peaking at 8.1 per cent in June 2022; inflation came in at 2.9 per cent in January, Statistics Canada said, and as part of that, food inflation at the grocery store cooled to 3.4 per cent, down from 4.7 per cent in previous two months.
However, the prices of food purchased from restaurants were up 5.1 per cent annually in January, the agency said, down from growth of 5.6 per cent in December.
Why are premiers calling for an April 1 pause?
In a letter to Trudeau, Furey said that while his government is “deeply invested” in environmental sustainability, the planned increase “is causing understandable worry as people consider how they will manage the mounting financial strain.”
Ontario Progressive Conservative Premier Doug Ford, Alberta United Conservative Premier Danielle Smith and Saskatchewan Premier Scott Moe, who leads the conservative Saskatchewan Party, each signaled their endorsements for Furey’s call by reposting the letter to their own X accounts on Tuesday.
“If they don’t start putting money back in people’s pockets instead of filling their pockets, guess what? They’re going to get annihilated, as I’ve said before, they’re done. They’re done like dinner,” Ford told reporters in Pickering, Ont., on Wednesday.
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Furey asked for Ottawa to address ramifications currently faced by families and “to not compound them,” urging the government to pause the increase until inflation cools, interest rates lower and pressures on the cost of living “significantly cool.”
The federal Conservatives have criticized carbon pricing for much of its existence, with Conservative Party Leader Pierre Poilievre promising to remove it if the party takes government in the next election.
Trudeau didn’t signal a pause was coming when speaking to reporters in Calgary on Wednesday.
“The price on pollution was designed to do two things: send a clear signal to investors, to companies, to Canadians that it makes good sense to invest in reducing our carbon emissions and saving energy, and a price signal is the clearest way of doing that,” he said.
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“The second goal of the price on pollution was to make sure that middle-class families and vulnerable families across the country weren’t carrying the brunt of that price on pollution, and that’s exactly what we’ve done.”
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Mertins-Kirkwood said a pause wouldn’t drastically change affordability.
“The politics here are totally out of sync with what the actual policy is. Now, of course, it doesn’t mean every household is better off. If you’ve got a big house that you heat with gas, you got two big trucks in the driveway, you are going to pay more, but that actually doesn’t describe most households in Canada,” he said.
“Corporations, the private sector, make investment decisions based on the carbon pricing schedule. They are counting on it going up, and that’s an important factor for investors. If you put a pause on this policy arbitrarily for one year, that’s going to affect those sorts of investment decisions, and that is going to have an impact on our economy.”
So, how much is the carbon price set to go up?
Right now, the carbon pricing plan is set at $65 a tonne. As of April 1, it will be $80 a tonne, and will continue to rise annually by $15 until it reaches $170 a tonne by 2030.
At the pumps, the April 1 hike will add roughly three cents to the cost of gas, Mertins-Kirkwood said.
It’s a “much smaller increase than you’d normally expect through a fluctuation of oil prices,” he said.
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Part of the government’s carbon pricing system is the Canada Carbon Rebate, formerly known as the climate action incentive payment. Ottawa rebranded the program in February, which sees quarterly tax-free payments delivered to eligible Canadians.
The government has said about 80 per cent of Canadians are getting more from the rebates than they pay in carbon pricing. Ottawa’s rebate impacts those in provinces where the federal carbon price applies.
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Mertins-Kirkwood said the carbon price is a “classic case” of a policy that’s great on paper, but is bad politics in practice.
“We all see the cost and we don’t really see the benefits, versus shutting down a coal plant, where we see the benefit and none of us experience the costs directly, even though of course there are costs to the economy. My point here is that the discussion around carbon pricing is overblown,” he said.
“It distracts from a lot of the work we need to be doing, both on the climate front and also on the affordability front. If we’re concerned about affordability, there’s way more important things than pausing the carbon price. We need to invest in housing, we need to invest in public transit, there’s so many other problems we have as a country that we should be focused on, and carbon pricing is frankly not that high up the list.”
HALIFAX – Nova Scotia’s justice minister has released a set of 39 standards for all police services in the province including the RCMP.
Barbara Adams says the new standards are in response to recommendations made by the commission of inquiry that investigated the mass shooting in Nova Scotia that claimed the lives of 22 people in April 2020.
Adams says the standards, which are being updated for the first time since 2003, are designed to ensure the effective delivery of policing services across the province.
The standards govern five areas of policing, including critical incident response, use of force, police investigations, service response and records management.
Adams also issued a ministerial directive that requires all police forces to comply with the standards.
The minister says a public safety audit unit will also be created to ensure police forces are in compliance with the standards.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Inflation finally hit the Bank of Canada’s two per cent target in August after a tumultuous battle with skyrocketing price growth, raising the odds of larger interest rate cuts in the coming months.
Canada’s annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
The slowdown can be attributed in part to lower gasoline prices, Statistics Canada said Tuesday in its consumer price index report.
Clothing and footwear prices also decreased on a month-over-month basis. It marked the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
CIBC senior economist Andrew Grantham says the latest data suggests inflation is no longer threatening and the Bank of Canada should focus on stimulating the economy again.
“I’m already worried that the economy is a little weaker than it really needed to be to get inflation down to two per cent,” Grantham said.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
Grantham noted that excluding mortgage interest costs — which have been driven up by high interest rates — the annual inflation rate was only 1.2 per cent last month.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
Governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
“With inflation getting closer to the target, we need to increasingly guard against the risk that the economy is too weak and inflation falls too much,” Macklem said after announcing a rate cut on Sept. 4.
The Canadian economy has slowed significantly under the weight of high interest rates, leading to a declining real gross domestic product on a per person basis.
The unemployment rate has also been steadily climbing for the last year and a half, reaching 6.6 per cent in August.
Macklem has emphasized that the inflation target is symmetrical — meaning the Bank of Canada is just as concerned with inflation falling below target as it is with it rising above the benchmark.
The central began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The Bank of Canada increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The Bank of Canada’s key rate currently stands at 4.25 per cent.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Police say a man is dead after an industrial accident at Ontario Place.
Toronto police say officers responded shortly after 9:30 a.m. Tuesday to reports that a person was injured by construction equipment at the waterfront
Police say he died at the scene.
Ontario Place is set to be redeveloped under a controversial provincial plan that includes a new privately owned spa and a relocated Ontario Science Centre.
Police say the Ministry of Labour has been notified.
The ministry investigates all workplace deaths.
This report by The Canadian Press was first published Sept. 17, 2024.
