Terence Corcoran: Carbon-tax green light flashing red


Hard realities behind the Supreme Court decision

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It is better not to get too deeply immersed in the constitutional labyrinth embedded in the Supreme Court of Canada’s decision to legally green light the Trudeau government’s carbon tax plan. Beyond the 200-plus pages of convoluted and contradictory legal verbiage lie the real issues, which are economic, environmental and political, not legal. And those issues are festooned with flashing red warning lights: Danger ahead.

A carbon tax regime is no closer to reality, on a national or international level, than it was before the Supreme Court’s decision. In light of current global economic conditions, the prospects for a carbon tax look doubtful — a point highlighted by Conservative Leader Erin O’Toole when he said a Conservative government “will repeal Justin Trudeau’s carbon tax. We will protect the environment and fight the reality of climate change, but we won’t do it by making the poorest pay more.”


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O’Toole is on the right international track. More than the poor will suffer under a carbon emissions tax (CET) — a conclusion reached in the U.K., where Boris Johnson’s government this week confirmed it is “not taking forward the CET.” Instead the U.K. is adopting an emissions trading system.

While the U.S. oil industry now backs carbon taxes — corporations prefer the tax to a phalanx of killer regulations — the drift in Biden-era politics is against the idea, according to Wall Street Journal columnist Greg Ip. “Just as others are moving toward a carbon price, progressive Democrats are moving away.”

Chief Justice Richard Wagner’s one-line summary of the carbon tax issue as vital to Canada’s survival is itself problematic. Writing for the six-justice majority, Wagner said that the imposition of a national carbon tax regime is justified because climate change represents an “existential threat to human life in Canada and around the world” and is ipso facto a matter of “national concern” that justifies Ottawa’s Greenhouse Gas Pollution Pricing Act (GGPPA).

The court did not actually review the climate change science and its global political origins; it did not explore how greenhouse gasses are pollution; nor did it do much to assess the efficacy or impact of carbon taxes and their dramatic impact on economic growth and jobs.

Instead, the court relied on the output of Ottawa’s green bureaucracy and the international purveyors of climate panic at United Nations agencies. The court, in effect, rubber-stamped the climate scare and the Paris Agreement process to reach its conclusion: Giving Ottawa vast power to force a carbon tax on the provinces and all Canadians is essential because greenhouse gases pose an existential threat.


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Let scholars grapple with the legal issues — although it is tempting to take a run at Henry VIII. The dictatorial 16th-century king of England and famed head-lopper appears 27 times in the court decision, mostly in the comments of dissenting justices. They say one section of the GGPPA is essentially a “Henry VIII clause” that allows Ottawa to change the carbon price and make other rules by regulatory fiat rather than going through Parliament.

Ottawa’s carbon ”price” is already set to hit $170 a tonne by 2030, equivalent to about 37.5 cents on a litre of gasoline. Economically, it is hard to believe that Ottawa will seriously move forward with massively disruptive taxes on consumer, industrial and commercial energy consumption in the wake of the economic devastation left behind by the COVID-19 lockdowns.

Canadian federal/provincial government debt has soared up over the $2-trillion level, a debt mountain that can only be levelled by imposing new taxes and curbing spending — or dramatically increasing growth. Imposing carbon taxes under these circumstances will be a hard sell, to put it mildly. No matter how loud the calls are for building back better, the hypothetical better only comes after destroying some part of what already exists.

The post-COVID carbon price challenge is not just a Canadian problem. The pandemic has ruined national fiscal structures around the world and stripped away trillions in growth and wealth. Canada’s little game of carbon tax politics is going to get blown away when the rest of the world gets together for the next United Nations Conference of the Parties (COP) later this year to develop a new globally co-ordinated scheme to reduce carbon emissions to net-zero.


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Known as COP26, the meeting in Glasgow in November is already on rocky ground, with many nations holding different positions and sparring for advantage. Doubts abound as to whether the world’s leaders can agree on a global carbon tax regime, since any national CET would be hazardous for the imposing nation.

No nation, including Canada, has seriously and publicly confronted the climate and carbon tax policy risks — a point raised effectively late last year by Eric Heymann, an economist with Deutsche Bank. In a brief commentary, “Climate neutrality: Are we ready for an honest discussion?”, Heymann warns that global energy demand is rising with population growth, renewable costs and system operating challenges are large, carbon capture is in its infancy, and carbon prices will have to be higher than currently imagined.

Heymann is speaking about Europe, but his words apply in Canada and around the world: “An honest discussion will have to deal with the truth that each euro spent on climate protection is no longer available for expenses on education, research, public health, digital infrastructure, domestic and external security, tax cuts or higher pensions.”

Massive political resistance lies ahead, Heymann writes. “A certain degree of eco-dictatorship will be necessary.” Which, I suspect, is where Henry VIII comes in.

Financial Post

• Email: tcorcoran@postmedia.com | Twitter:

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