What are climate policies costing Canadians? Much more than most are willing to spend

Fewer than 50% of Canadians willing to spend 1% of household income a year (about $430) to fight climate change. In fact, the climate bill is roughly $2,800 per household

By Robert Lyman, Friends of Science, May 10, 2024

A global survey published in the journal Nature Climate Change in February 2024 found that fewer than 50 percent of the people asked in Canada and the United States would be prepared to spend one percent of their income to address climate change (see Figure 1, green shading). Such findings stand in sharp contrast to what Canadians are already paying.

Figure 1: Nature Climate Change poll finds fewer than 50% of Canadians (green shading) willing to spend 1% of household income to fight climate change. Canadians are already spending far more than that.

Most of the climate policy-related revenues to governments (i.e., costs to consumers) will be from the carbon dioxide pricing system. Based on the current schedule, the rate will rise to “at least” $170 per tonne by 2030. 

The Parliamentary Budget Office (PBO) estimated that the total direct government revenue from carbon pricing from 2019-20 to 2023-24 would be $31.2 billion, but the amount with GST added (i.e., the tax on the tax) could be $32.3 billion. 

In Budget 2024, Finance Canada projected that the proceeds from the “pollution pricing framework” will rise from $10.4 billion in 2023-2024 to $20.7 billion in 2028-2029. That would place the total proceeds over the decade at over $80 billion.

The government claims that 90% of the revenues received from the carbon dioxide pricing system are rebated to the provincial governments that, in turn, are supposed to rebate the funds to taxpayers. 

However, the Fraser Institute, in its report on the estimated impacts of a $170 carbon tax in Canada, found that the rising carbon tax will cause pronounced reductions in the revenues from elsewhere in the tax system. This means the government cannot sustain the household carbon tax rebates to the extent promised without going further into deficit. In fact, the shortfall could add about $22 billion annually to the consolidated government debt.

While not treated by the federal government as a tax, the Clean Fuel Regulations have a comparable cost effect. Environment and Climate Change Canada (ECCC), in its published analysis of the regulations, estimated that they would decrease real GDP in Canada by up to $9 billion in 2030.

Surprisingly, there is no authoritative and reliable inventory of climate measures now in place; of past, present and planned expenditures; or of the results achieved. This in itself marks an extraordinary failure of governance and public accountability.

Spending on Climate measures already much more than 1%

The Canadian Climate Institute contracted with Navius Research to develop what it refers to as the Climate Policy Tracker, a list of current and projected climate measures and related expenditures. According to it, there are 112 federal government climate policy measures and 364 provincial and territorial climate policy measures where funding has been approved or planned. The grand total of the expenditures made and planned is $172.8 billion by the federal government alone.

The total federal and provincial expenditures on climate measures over the period 2020 to 2030 as listed by the Carbon Policy Tracker are $476 billion, or $11,900 per resident of Canada. This equates to roughly $28,000 per household (i.e. an average of $2,800 per household per year). This is just what has been announced to date; there remain five more fiscal years before 2030 during which governments may add more initiatives.

Canadians through their taxes and prices paid on energy are already spending far more than one percent of their incomes per year to fund federal government climate policies. The amounts paid will undoubtedly rise further. When the amounts spent by provincial governments are included, the total cost is probably more than double what is spent by the federal government. The public just doesn’t know about it.

This is the Executive Summary of a longer article published on the Friends of Science website. It is available by clicking here.

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