Contributed by Robert Lyman © 2025. Robert Lyman’s bio can be read here.

 EXECUTIVE SUMMARY

On January 31, 2025 Mark Carney, the ex-banker now running to be the leader of the Liberal Party of Canada and Canada’s ad interim Prime Minister, issued a press release in which he presented the main elements of a revised climate policy that a government he seeks to lead would implement. The proposal placed special emphasis on replacing the current carbon dioxide pricing regime, generally known as the carbon tax.

In this article, I will describe the main features of the Carney plan and explain why, in my view, they differ little in substance from the carbon dioxide pricing regime that has been the central feature of the climate policy pursued by the Liberal Party under Justin Trudeau.

Carney’s stated rationale for revising the current carbon tax system is that the carbon tax is “not working”, as it has become “too divisive”. It is unclear how a tax that has had disproportionately adverse effects on Canada’s resources industries, especially in western Canada, ever since it was introduced in 2018 has only suddenly become “divisive”. Accordingly, a Mark-Carney-led government would “immediately remove the consumer carbon tax and instead create a system of incentives for making greener choices”.

In fact, the continuation of the OBPS on large industrial users assures that the affected companies will be obliged to pass those increased costs on to consumers in the form of higher prices. Further, the Carney assessment seems to have forgotten the effects of the Clean Fuel Regulations. The Parliamentary Budget Office estimated that the cost of the regulations to households will range from $231 per year for lower income households to $1,008 per year for higher income households, and that the end-user effects would be “broadly regressive”, because lower income households generally spend a larger share of their income on transportation and other energy-intensive goods and services compared to higher income households.

The counterpart to the claim that the revised policy would reduce consumer costs is that it would enhance consumer benefits by subsidizing actions that reduce emissions and doing so in new, innovative ways. Yet, those subsidies do not appear out of thin air; they are funded by taxes on all Canadians.

Carney’s proposed policy would only increase the severity and cost of the existing regulations.

The proposed Carbon Border Adjustment Mechanism would seem tailor-made to aggravate the Trump Administration in the United States and virtually guarantee the application of the punitive American tariffs that Canadian federal and provincial governments are now seeking to head off. It would, like most of the Carney proposals, require a major expansion in the federal bureaucracy to design, manage and administer it.

Canadian climate policy has long been characterized by the use of a multitude of policy instruments imposed by federal, provincial and territorial governments to pursue reductions in greenhouse gas emissions according to arbitrary targets set after international conferences. While nominally centred on the use of carbon pricing, the federal government climate policy regime in fact includes over 140 different measures that run the gamut from taxes, tax incentives to subsidies, regulations, information programs and others. The policy regime proposed by Mark Carney claims to mark a departure from that approach, but it in fact is more of the same. It is just-like-Justin.