Is carbon pricing a politically viable climate policy? Research says maybe not

It was intended to significantly help meet Canada’s greenhouse gas emissions targets.

It was also intended to remain a central part of Prime Minister Justin Trudeau’s legacy, both at home and abroad, as part of the urgent global effort to combat climate change.

But instead of fulfilling these liberal hopes, carbon pricing has become a significant political burden.

Conservative Leader Pierre Poilievre’s crusade against carbon pricing for consumers and his promise to “cut the tax” if he wins the next election has resonated with many Canadians amid an affordability crisis.

The Tory leader has accused climate policies of raising food and fuel costs while dismissing or ignoring their alleged benefits, including discounts for consumers.

The government has struggled to respond to the Conservatives’ attacks, even though a carbon price has broad support among economists.

Have the Liberals dropped the ball?

Or maybe this policy was always doomed to failure?

Research suggests liberals may be fighting a losing battle, and some experts are urging policymakers to look for alternative policies to lower emissions, warning that the threat of climate change is too serious to delay action.

“It’s very difficult to find places with high, economy-wide carbon prices that wouldn’t generate significant political opposition,” said Matto Mildenberger, an assistant professor of political science at the University of California, Santa Barbara.

“This leads political scientists like me to have real reservations about the viability of carbon pricing as a short-term strategy to address the climate crisis.”

Mildenberger said consumers pre-pay the cost of carbon emissions in a very visible way. Its benefits can only be enjoyed in the long run.

The purpose of the federal government’s Canadian Carbon Rebate is to compensate voters for the financial costs. Eight in 10 families receive more in rebates than they pay in carbon taxes, according to the Parliamentary Budget Officer.

However, Mildenberger’s research suggests that the rebate is not as effective in boosting public support as liberals would hope.

One study examining public support for carbon pricing in Canada and Switzerland found that people do not know about the rebates they receive and tend to underestimate their value.

Another study looked at the impact of rebates on public support for a carbon tax in the US and Switzerland and found that it was ultimately small.

“Our results indicate that in the absence of political messages, rebates increase public support for carbon taxes in both countries, building support among lower-income groups,” the 2022 paper said.

“But politics is always politicized, and when respondents are exposed to political messages about carbon pricing, the effects of rebates are weakened or eliminated.”

Mildenberger said it’s safe to say the discounts haven’t changed consumer perceptions.

“People’s ideological preferences dominate their perceptions of carbon pricing to a much greater extent than the objective costs or benefits of these policies.”

Supporters often blame the Liberal government for failing to effectively communicate policies and rebates to Canadians.

Mildenberger agreed that the Liberals had not done a good job of selling.

For example, they didn’t heed attorneys’ advice to send rebates in the form of checks, he said, which would have tied the money to the policy in a “tangible” way.

However, Katya Rhodes, an assistant professor of public administration at the University of Victoria, said blaming communication alone was an oversimplification of the problem.

Rhodes said some of her research shows that the more information people receive about complex climate policies, the more confused they become.

“It’s really hard to be a politician when you introduce a carbon tax. Is this the ideal approach? I wouldn’t do it if I were a politician.”

Rhodes added that trust in government plays a significant role in the success or failure of a carbon tax, as seen in countries such as Finland and Norway.

Economists say carbon pricing is the cheapest and most effective way to combat climate change.

By putting a price on pollution, the government does not impose a way to reduce emissions. Instead, it provides an incentive for polluters to invest in technologies that reduce greenhouse gas emissions, they say.

It also encourages consumers to choose goods and services that emit fewer greenhouse gases.

In March, more than 300 economists signed an open letter supporting a carbon price on consumers and trying to dispel misconceptions about the policy.

“I think a lot of Canadians say they care about climate change…. but somehow they think we can reduce emissions without changing behavior,” said Christopher Ragan, director of the John Paul II School of Public Policy. Max Bell at McGill University and one of the organizers of the letter.

Both Mildenberger and Rhodes said they believe a carbon tax is, theoretically speaking, the best choice to fight climate change.

However, both advocate for governments to find other ways to reduce emissions because of how politically difficult it is.

Experts say carbon pricing based on a cap-and-trade system like Quebec’s may be more acceptable because people don’t see its direct costs.

Such systems place an upper limit on the amount of greenhouse gases an organization can emit, but allow unused credits to be purchased from other groups or companies that have not fully used up their allowance.

However, this form of carbon pricing is also not politically foolproof.

Ontario Premier Doug Ford abandoned plans to introduce a cap-and-trade system in 2018, arguing that the policy would hurt businesses and raise costs.

Mildenberger is a supporter of US President Joe Biden’s approach, which relies heavily on government investment and subsidies in the green economy.

He said this puts the emphasis on the economic benefits of fighting climate change “while sidestepping tax policy.”

But while Canada has tried to keep pace with the United States with a package of investment tax breaks, Rhodes said Canada can’t compete with the United States’ deep pockets.

Instead, she said Canada could lower greenhouse gas emissions with flexible regulations such as clean fuel standards.

In a statement, Environment Minister Steven Guilbeault defended the carbon tax as the most “cost-effective and efficient” way to reduce emissions. He cited departmental work that suggests replacing consumer and industrial carbon prices with subsidies would cost taxpayers billions more.

“Pierre Poilievre has absolutely no plan to address climate change in Canada and would rather exploit people’s real concerns for his own political gain than acknowledge that eight in 10 Canadians get back more than they pay under the Canadian Carbon Rebate,” Guilbeault said.

A change in approach would be a political blow to the Liberal government, which has been trying to push Canada to the forefront of the global fight against climate change.

In 2021, Canada launched an international challenge to encourage other countries to adopt a carbon price, with the goal of bringing 60% of global emissions under such a system.

But with the Conservatives maintaining a double-digit lead in opinion polls, the future of carbon pricing is in serious doubt.

“Canadians feel the pain of Justin Trudeau’s punitive carbon tax every day as they buy food, pump gas and heat their homes, and they don’t need the opinions of pointy ‘experts’ and radical Liberal politicians to know they are much worse off,” he reported in statement by Sebastian Skamski, spokesman for Poilievre.

Conservatives would eliminate carbon pricing, lower the cost of zero-emission energy and approve green projects, Skamski said.

Poilievre didn’t say anything more about what he would do, though he promised to prioritize “technology, not taxes.”

“I think it’s unfortunate that you’re going to lose fundamentally good policy,” Ragan said.

“Actually, my biggest fear is that they won’t put anything in its place.”

Editor’s note: This is a corrected story. An earlier version stated that BC uses a cap-and-trade system.