Next Federal NDP Leader Must Make Carbon Pricing Work for Saskatchewan

July 11th, 2017

Regina–Lewvan MP Erin Weir made the following statement regarding tonight’s federal NDP leadership debate in Saskatoon:

The biggest federal political issue in Saskatchewan is carbon pricing, in part because Premier Brad Wall has positioned himself as Canada’s shrillest opponent of putting a price on emissions. In May, the federal Liberal government outlined its plan to impose a carbon tax on Saskatchewan if the provincial government does not do so by next year. When federal NDP leadership candidates debate tonight in Saskatoon, they need to explain how they would help make carbon pricing work for Saskatchewan.

All of the NDP leadership candidates presumably support carbon pricing as a means of reducing emissions. Niki Ashton and Guy Caron will unveil their climate plans in the coming weeks. Charlie Angus has called for a “Federal Carbon Budget” without any numbers or any specific policies to implement it. Jagmeet Singh has released a more comprehensive climate plan, including a commitment to “ensure that carbon pricing is twinned with rebates to make it more affordable and fair for low and middle income Canadians.”

The Alberta NDP government’s carbon tax includes substantial income-tested rebates. Emulating this progressive approach would make carbon pricing more palatable in Saskatchewan and other provinces. Last month, I suggested that the federal government, which will collect GST from carbon pricing, provide a direct transfer to lower-income Canadians to help offset carbon costs.

However, none of the four remaining federal NDP leadership contenders has yet addressed the challenge of “carbon leakage.” While carbon pricing provides a needed incentive for industry to reduce emissions, it can also provide a perverse incentive for industry to relocate to jurisdictions without carbon pricing. Pushing carbon-intensive production to countries with weaker environmental policies would increase global emissions and eliminate Canadian jobs.

This challenge looms particularly large for Saskatchewan. Canada’s Ecofiscal Commission estimates that 79% of Saskatchewan’s emissions are from carbon-intensive, trade-exposed sectors – by far the highest percentage of any province. For example, Regina’s largest private-sector employers are a steel mill and an oil refinery. Both facilities are unionized and provide well-paid jobs. Both are carbon-intensive, but compete with even more carbon-intensive imports of steel and petroleum products from the US and offshore.

have proposed that the federal government extend its national carbon price to the carbon content of imports and rebate it on Canadian exports. Such border adjustments would ensure a level playing field and remove the incentive for industry to relocate to countries without carbon pricing. They would enable Canada to be more ambitious in using carbon pricing to reduce emissions and favour domestic production to the extent that it is less carbon-intensive than imports.

The federal government’s jurisdiction over international trade provides an opportunity to address the problem of carbon leakage and present a compelling response to Brad Wall’s objection to carbon pricing. Saskatchewan New Democrats will be watching to see whether and how our federal leadership candidates meet this challenge.