Feds release data on carbon price impact as cost debate unravels

OTTAWA — Canada’s greenhouse gas emissions will be 12 percent lower in 2030 with carbon pricing than if it were scrapped, new federal data released Thursday suggests.

The data also show that the consumer and big industry pricing system in place could cause Canada’s GDP to be hit by $25 billion by the end of the decade — 0.9% below what it would be without the price carbon.

Environment Minister Steven Guilbeault released the data amid accusations that the government is hiding its own analysis of carbon pricing.

It emerged Thursday just minutes before the Conservatives tabled a motion in the House of Commons asking the federal Liberals to produce it.

The government has been reluctant to share the data because the figures do not compare the cost of the carbon price with the cost of climate change itself. They also do not take into account the potential for economic growth from climate investment.

Guilbeault said the data is specific to what Parliamentary Budget Officer Yves Giroux called for to redo his analysis of carbon pricing after he admitted earlier this spring that his initial findings were flawed.

“It is important to recognize that the data released today does not represent a comprehensive economic picture of the impact of carbon pricing,” Guilbeault said.

“Instead, it’s background data related to a specific request from the PBO, which was then used to develop part of their analysis.”

For example, he said, it does not detail the economic benefits of the $15 billion to $25 billion invested in fighting climate change each year, or the benefits to the economy of slowing the pace of that change.

It also doesn’t look at the economic impact of Canada’s Carbon Credit, which this year is expected to return $11 billion to Canadian families to offset what they pay for the price of carbon.

“These things are not part of the analysis because the parliamentary budget officer did not ask us for (that) information,” Guilbeault said.

The data became a hot topic last week after Giroux accused the government of withholding it, saying it was given to him under a gag order.

That charge came during a tense exchange as Giroux defended his office after admitting he had made a major mistake in his carbon pricing analyses, which have been a key part of the debate over whether carbon pricing is effective or too costly.

The 2022 and 2023 Giroux reports both said that while the carbon reductions outweigh the cost of the carbon price for most Canadians, those benefits are largely erased when the economic impact on jobs and wages is considered.

However, while the analyzes claimed to look only at the impact of the consumer carbon price, they also included what is paid by big industry through a separate system.

Giroux said an updated report will be released in the fall, but he doesn’t think the results will be much different.

Asked why he thought that, he told a parliamentary committee that it was because the government had data to prove it but would not make it public.

These are the data that the government published on Thursday.

Like Giroux’s original report, the modeling considers both carbon and industrial pricing systems.

Consumers, including smaller businesses and entities like hospitals, schools and universities, pay the carbon price — currently $80 per ton — on all fossil fuel purchases, including gasoline, natural gas and propane.

Large industrial emitters such as auto factories, oil sands mines and gas-fired power plants pay the same price per ton for a portion of their actual emissions.

The Conservatives, who have campaigned heavily against carbon pricing, devoted most of question period on Thursday to figures they believe prove their point that the policy is economically harmful.

Leader Pierre Poilievre accused Guilbeault of hiding the data to prevent Canadians from knowing the truth.

“This government’s economic vandalism and carbon tax cover-up has now been exposed due to relentless pressure from the Tories,” Poilievre said.

He called for Guilbeault’s resignation because of it.

The data suggests Canada’s emissions were already 25 million tonnes lower in 2023 than they would have been without the carbon price, which Guilbeault said accounts for half of the reduction in emissions to date.

The carbon price was $65 per ton in 2023.

By 2030, when the price reaches $170 per tonne, emissions reductions are expected to increase to 78 million tonnes, or 12% below what emissions would be without the carbon price.

Most of this is done by industrial sectors, heavy industry such as factories and metal mines estimated to emit 22.4 million tonnes less, with a further 27.2 million tonnes reduced from manufacturing emissions of oil and gas.

Economically, the data suggests that GDP was about $7 billion lower in 2023 than it would have been without the carbon price, and that by 2030, the impact will be $25 billion.

These figures do not take into account the impact that climate change is already having on the economy.

A 2022 report by the Canadian Climate Institute found that in 2025, GDP is expected to be $25 billion lower due to climate change.

Ryan Ness, director of adaptation at the institute, said that when governments and businesses spend money fixing things rather than building new things, productivity slows.

In addition, infrastructure damage — such as power outages, bridge collapses and flooded highways — affects productivity, supply chains and trade, he said.

One of the tricky things about all these data points is that there is no direct correlation showing that if the carbon price stays, climate change is resolved faster.

“Canada’s emissions choices will not instantly stop the increase in flooding and wildfires,” Ness said. “But it’s part of a global global effort.”

He said that if we work with other countries to control emissions as quickly as possible, the economic effects of climate change will slow and “eventually subside.”

“If we don’t, they continue to grow to hundreds of billions (of dollars) by the end of the century,” he said.

This report by The Canadian Press was first published on June 12, 2024.

Mia Rabson, Canadian Press