From Resource Works

When it comes to Canada and carbon taxes, times have certainly changed in very little time.

We had wondered how long Ottawa’s national carbon-tax system would last when, after implementing it as a mandatory national scheme, the feds suddenly announced an exemption for home heating oil in Newfoundland and Labrador.

Pressed by NL Premier Andrew Furey, a Liberal, and Liberal MP Ken McDonald, Prime Minister Justin Trudeau announced the exemption last October, saying it would help Atlantic Canadians with the cost of living.

The exemption would last until March 31, 2027. And for NL households that burn oil, the feds said it would mean an average $250 annual savings.

Alberta and Saskatchewan saw the exemption as unmitigated vote-buying politics, and they weren’t alone.

On Jan. 1, 2024, Saskatchewan stopped collecting the federal carbon tax on natural gas used for home heating in that province. Premier Scott Moe declared that this was in response to Ottawa’s “unfair” exemption for Newfoundland and Labrador.

“Trudeau has provided a carbon tax exemption on home heating for families in one part of the country, but not here. It’s unfair, it’s unacceptable.”

Saskatchewan went on to challenge the exemption, in federal court, on constitutional grounds, and won a temporary injunction. Later, pending a final court decision, Saskatchewan and Ottawa agreed that the province would be responsible for “50 percent of the outstanding tax amounts.”

But Ottawa’s carbon tax (oops, sorry, Ottawa likes to call it “carbon pricing” and “carbon pollution pricing”) has now run into new political trouble.

First, national NDP leader Jagmeet Singh, who had voted for the carbon tax, pulled out of a deal supporting Trudeau’s Liberal Party in government.

Singh then went on to slam Trudeau’s approach of exempting fuels in favored geography. And he said the NDP would come up with a system that doesn’t “put the burden on the backs of working people.”

Then, British Columbia Premier David Eby, long a strong supporter of the carbon tax — but facing an election on Oct. 19 — suddenly declared: “I think it’s critical to also recognize that the context and the challenge for British Columbians have changed. A lot of British Columbians are struggling with affordability.

“If the federal government decides to remove the legal backstop requiring us to have a consumer carbon tax in British Columbia, we will end the consumer carbon tax in British Columbia.”

Would Prime Minister Trudeau remove the backstop requirement?

Apparently not. Instead, Environment and Climate Change Canada is looking to run a $7-million “climate literacy and action” advertising campaign to promote the carbon tax and the quarterly rebates that many Canadians receive under it.

And the prime minister, earlier this year, declined to meet the premiers of Alberta, Ontario, Saskatchewan, New Brunswick, and Newfoundland and Labrador on the issue.

“The carbon tax has contributed to increasing stress and financial pain for millions of Canadians,” Alberta Premier Danielle Smith wrote to the prime minister.

Ontario Premier Doug Ford wrote: “While we all have a role in protecting the environment, it cannot be done on the backs of hardworking people.”

But Trudeau turned down the call for a meeting: “We had a meeting on carbon pricing and every single premier came together to work on establishing a pan-Canadian framework on climate change years ago.

“And part of it was that there would be a federal backstop to make sure that pollution wasn’t free anywhere across the country.”

Whether the carbon tax has “worked” or not to reduce pollution is an open question. Supporters say yes. Opponents say no.

A poll late last year found that Canadians were feeling slightly more confident in the carbon tax’s effectiveness at combating climate change — but uncertainty was still high.

But the Liberal government is already getting a message from voters — having lost in two recent by-elections in Manitoba and Quebec, and in an earlier one in a “safe seat” in Ontario (Toronto-St. Paul’s).

In the Quebec one on Monday, the Liberals lost their longtime safe seat of LaSalle—Émard—Verdun to the NDP, by just over 200 votes. It had been a Liberal stronghold for years, won by more than 20 percent of the vote in previous campaigns.

The next federal election will take place on or before October 2025, and Trudeau’s opponents have already been loudly cranking up “Axe the Tax” campaigns.

And that means the carbon tax.

From the Canadian Energy Centre

Dave McKay sees the opportunity to ‘lead on both sides’ with conventional energy and cleantech innovation

Despite the rise of “Buy American” policy, the CEO of Canada’s biggest company says there are many opportunities to improve Canada’s sluggish economy by supporting the United States.

Near the top of the list for RBC boss Dave McKay is energy – and not just the multi-billion-dollar trade between Canada and the U.S. The value of Canada’s resources to the U.S. stretches far beyond North America’s borders.

“Canada has to get in sync and create value for our largest trading partner,” McKay told a Canadian Club of Toronto gathering on Sept. 10.

Security, he said, is one of America’s biggest concerns.

“Energy security is a big part of overall security…As we think about these power structures changing, the U.S. needs us to supply Asia with energy. That allows the United States to feed energy to Europe.”

He said that for Canada, that includes oil exports through the new Trans Mountain pipeline expansion and natural gas on LNG carriers.

“Particularly Asia wants our LNG. They need it. It’s cleaner than what they’re using today, the amount of coal being burned…We can’t keep second-guessing ourselves,” McKay said.

Asia’s demand for oil and gas is projected to rise substantially over the coming decades, according to the latest outlook from the U.S. Energy Information Administration (EIA).

The EIA projects that the region’s natural gas use will increase by 55 per cent between 2022 and 2050, while oil demand will increase by 44 per cent.

With completion of the Trans Mountain expansion in May, Canada’s first major oil exports to Asia are now underway. Customers for the 590,000 barrels per day of new export capacity have already come from China, India, Japan and South Korea.

Canada’s long-awaited first LNG exports are also on the horizon, with first shipments from the LNG Canada terminal that could come earlier than expected, before year-end.

According to the Canada Energy Regulator, LNG exports from the coast of British Columbia could rise from virtually nothing today to about six billion cubic feet per day by 2029. That’s nearly as much as natural gas as B.C. currently produces, CER data shows.

But the federal government’s proposed oil and gas emissions cap could threaten this future by reducing production.

Analysis by Deloitte found that meeting the cap obligation in 2030 would result in the loss of about 625,000 barrels of oil per day and 2.2 billion cubic feet of natural gas per day.

This could wipe out significant sales to customers in the United States and Asia, without reducing demand or consumption.

McKay said the “massive complexity” around climate rules around the world and the lack of a cohesive path forward is slowing progress to reduce emissions.

Canada has opportunities to advance, from conventional energy to critical minerals and cleantech innovation, he said.

“We have to continue to leverage our resources…We can lead in clean tech, but in the meantime, there is an opportunity to get more carbon out of the economy sooner,” he said.

“We are in a race. Our planet is heating, and therefore we have to accept there can be transitionary energy sources.”