The Liberals have taken the extraordinary step of announcing that they will eliminate the carbon-pricing system in 2019, a move that risks turning off the brakes on Canada’s clean-energy ambitions.
The move could leave the door open for the Liberals to eventually impose the levy again, as they have done with other measures that have sparked major political controversy in the past.
The announcement Friday is likely to fuel criticism from the opposition, which has repeatedly questioned how the Liberals could leave behind the $15-per-tonne carbon tax.
“The carbon tax has done far more to create a climate change crisis than any of these other measures,” said former finance minister Jim Flaherty, who will now lead the Liberals’ climate strategy.
“If the carbon price is repealed, it’s really going to be an untenable situation.
You can’t simply walk away from a climate crisis.”
The announcement comes amid mounting criticism from environmentalists and some other critics that the carbon levy is ineffective, ineffective and unfair.
“For the Liberals, they are trying to take away our carbon-trading mechanism, which is not the carbon pricing system they promised,” said Marc Garneau, a climate-change expert with the Natural Resources Defense Council.
“They’re also trying to remove an incentive for the provinces to invest in clean-technology, but that will cost them money.”
The Liberals are also cutting taxes on corporations and individuals.
“As long as carbon is being charged, the provinces and territories are not paying for it,” said Doug Porter, a former Ontario Liberal finance minister and president of the Climate Action Coalition.
The Liberal government’s plan would eliminate the levy for the first time in 2019 and will replace it with a new levy for corporations and provinces, which would be levied at a rate of 20 per cent on incomes above $200,000.
The tax would be charged to carbon credits that would be available for use by consumers in certain industries.
Those credits would be sold to consumers and businesses, and the money would be spent on carbon-cutting measures.
The plan also would give the government authority to impose a cap on the amount of carbon dioxide that can be emitted by a new or existing power plant, for example, by capping emissions from the new plants.
The cap would have to be set at the same level as the amount that the previous carbon-tax system would have charged.
In the past, governments have attempted to cap carbon emissions, which was one of the reasons they were required to put in place a carbon tax for the carbon trading system in the first place.
That carbon tax, which will have to fall by half by 2025, has been criticized for making a costly investment.
However, Garneau said it could be a much cheaper way to address greenhouse gas emissions, because it could reduce emissions over time and because it would eliminate loopholes that allow for the emissions to remain the same.
A Liberal government would also be able to introduce legislation requiring the province to reduce emissions by 30 per cent by 2020, rather than 2020 and 2030, instead of 2020 and 2025.
The Liberals’ plan is expected to be voted on by Parliament on Thursday.
“We have a carbon plan that’s not just a carbon cap, but also an approach to the future,” said Environment Minister Catherine McKenna.
“Our goal is to have a plan that addresses climate change and the challenges we face as a country.”
With files from The Canadian Press