Canada’s Path to Climate Action Can and Must Deliver Economic Justice

By Maryo Wahba

Across the country, we are faced daily with the converging crises of global heating and widespread unaffordability. Sometimes, these crises are put at odds with one another. Many “environmentally friendly” products and choices are expensive and out of reach for those hit hardest by rising unaffordability. Similarly, policies intended to curb pollution and greenhouse gas emissions often become scapegoats for rising costs of living and are unfairly blamed for thwarting the economy. Not only do many of these objections obscure the real causes of poverty, inequity, and the climate crisis—they ignore the connections between climate justice and economic justice. Several of Canada’s most impactful climate initiatives offer promising co-benefits. When implemented with a focus on justice, these environmental policies can also help mitigate the affordability crisis, particularly among those most disproportionately impacted by climate change, poverty, and systemic inequities.

Ending fossil fuel subsidies and transitioning to renewable energy

Each year, the Canadian government allocates significant public funds to fossil fuel subsidies. These include direct subsidies, tax breaks, and government-backed financial support. According to Environmental Defence Canada, these subsidies amounted to approximately $12.672 billion in 2023.1 The actual figure may be significantly higher, given the lack of transparency and comprehensive reporting. Ceasing all public subsidies to the oil and gas sector and reallocating these funds towards a fair transition to a low-carbon economy—one that addresses both historic and current inequities—could offer significant relief to those most impacted by the climate and affordability crises. For example, the government could allocate $2 billion CAD of the current subsidies (as per government estimates) to resource the ‘Futures Fund.’ This program aims to expedite the shift of workers in fossil fuel-dependent regions towards sustainable, innovative, and equitable industries.2

Wind and solar have now emerged as some of the most cost-effective energy sources in Ontario and Alberta.3 Additionally, offshore wind holds potential to supply us with abundant renewable and reliable energy.4 Beyond the substantial cost savings from tripling Canada’s renewable energy output and doubling our energy efficiency,5 Canada can enact equitable public policies. These policies can leverage effective climate solutions to simultaneously tackle systemic poverty.

Implementing windfall taxes on oil and gas companies

Following the introduction of a private Member’s motion by MP Mike Morrice to broaden Canada’s Recovery Dividend to encompass fossil fuel companies, the office of the Parliamentary Budget Officer conducted an analysis of these proposed regulations. This analysis revealed that a one-time tax, set at 15% of the average corporate income exceeding $1 billion during 2020 and 2021, could yield approximately $4.2 billion for Canada over five years. Similar regulations have already been enforced on the excess profits earned by banking and life insurance groups in Canada during the pandemic.6 Considering the five largest fossil fuel companies in Canada accumulated over $38 billion in annual profits in 2022—largely through price gouging at the pump—it is reasonable to expect these major polluters to contribute their fair share towards funding Canada’s transition.7 In adopting such measures, Canada would join the EU and the UK, which have already implemented similar taxes on the excess profits of oil and gas companies, generating significant public revenues.8 These revenues could then be redirected to support key aspects of Canada’s transition, such as income supports and job and skill training, as well as incentivizing low-income households to undertake deep energy retrofits via the Canada Greener Homes Grant.

Enhancing the efficacy of Canada’s carbon pricing system

The Canadian federal carbon pricing system, often touted as a panacea for the climate crisis, is not as infallible as perceived. Nevertheless, it can serve as a vital instrument in combatting the climate crisis and providing financial relief to low-income households. As of 2023, the national carbon pollution price stands at $65 per tonne of greenhouse gas (GHG) emissions, measured in CO2 equivalent (CO2e). This price is set to incrementally increase by $15 annually, reaching a maximum of $170 per tonne of CO2e by 2030.9 However, the revenue-neutral nature of Canada’s carbon pricing ensures that most families receive more in rebates than what they spend on carbon taxes.10 Typically, lower-income households have smaller carbon footprints, resulting in lower carbon tax payments while garnering a larger portion of the rebates. The full price of pollution, and the rebates associated with it, cannot come soon enough: waiting until 2030 will fail to nudge the market quickly enough to ease the financial burden of the climate crisis on lower-income Canadians.

A time to come together for climate and affordability

The global mean temperature of 2023 (recorded up to this past October) is approximately 1.4°C above the 1850–1900 average. 2023 is poised to have been the hottest in the 174-year observational record.11 The cost of climate inertia far transcends mere monetary valuations—because the wide-ranging implications of the climate crisis’ can include extreme weather events, wars, and the mass extinction of endangered species12—it’s crucial that climate justice should go hand-in-hand with social justice. The most impactful climate solutions are those that also foster the democratization of affordable and reliable energy and food systems, and hold polluters accountable, particularly those profiting billions from trading fossil fuels while leaving others to deal with resulting environmental and social destruction. By intertwining the pursuit of climate justice with that of social justice, we bolster each movement’s advocacy for sustainable, rights-based, and equitable public policies.

The illustration was created using OpenAI’s DALL-E.

References

  1. Environmental Defence Canada. “The Running List of Federal Fossil Fuel Subsidies in Canada in 2023.” Accessed December 15, 2023. https://environmentaldefence.ca/the-running-list-of-federal-fossil-fuel-subsidies-in-canada-in-2023/.
  2. Liberal Party of Canada. “Ensuring Workers and Communities Prosper as We Move to Net-Zero.” Accessed December 15, 2023. https://liberal.ca/our-platform/ensuring-workers-and-communities-prosper-as-we-move-to-net-zero/.
  3. Clean Energy Canada. “A Renewables Powerhouse.” Accessed December 15, 2023. https://cleanenergycanada.org/report/a-renewables-powerhouse/.
  4. Pembina Institute. “Offshore Wind in Canada.” Accessed December 15, 2023. Available as a PDF via https://www.pembina.org/pub/offshore-wind-canada.
  5. Canadian Climate Institute. “New Analysis Finds Most Canadian Households Will Save Money in Switch to Electricity.” Accessed December 15, 2023. https://climateinstitute.ca/new-analysis-finds-most-canadian-households-will-save-money-in-switch-to-electricity/.
  6. Parliamentary Budget Officer (PBO), Canada. “Applying the Canada Recovery Dividend to Fossil Fuel Companies.” Accessed December 15, 2023. https://www.pbo-dpb.ca/en/publications/LEG-2324-011-M–applying-canada-recovery-dividend-fossil-fuel-companies–application-dividende-relance-canada-entreprises-secteur-combustibles-fossiles.
  7. CBC News. “Oil and Gas Climate Change Windfall Tax.” Accessed December 15, 2023. https://www.cbc.ca/news/politics/oil-gas-climate-change-windfall-tax-1.7011125.
  8. David Suzuki Foundation. “Windfall Tax on Fossil Fuel Profits Could be Win for Affordability and Climate Crises.” Accessed December 15, 2023. https://davidsuzuki.org/press/windfall-tax-on-fossil-fuel-profits-could-be-win-for-affordability-and-climate-crises/.
  9. Government of Canada. “Carbon Pollution Pricing: Federal Benchmark Information.” Accessed December 15, 2023. https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/carbon-pollution-pricing-federal-benchmark-information.html.
  10. Government of Canada. “Pricing Pollution: How It Will Work.” Accessed December 15, 2023. https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work.html.
  11. Copernicus Climate Change Service. “November 2023: A Remarkable Year Continues with Warmest Boreal Autumn; 2023 Will be Warmest Year.” Accessed December 15, 2023. https://climate.copernicus.eu/copernicus-november-2023-remarkable-year-continues-warmest-boreal-autumn-2023-will-be-warmest-year.
  12. United Nations Framework Convention on Climate Change. “Conflict and Climate.” Accessed December 17, 2023. https://unfccc.int/news/conflict-and-climate.

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