We have said repeatedly that as a market-based measure, the carbon tax is not well suited to commercial aviation in general and is particularly ill-suited in the Canadian context. We believe it would exacerbate commercial and emission leakage, curb growth in the visitor economy, and as it is currently slated to be rolled out, would cause significant market distortions.
That is why we urge the government to adopt a carbon offset system for domestic air travel that would align with the international model.
For us, these are not theoretical considerations. Allow me to illustrate with one example taken from a study we released earlier today that breaks down the cost of a carbon tax on air travel for Canadian families, as well as some of its impacts on our economy.
First, with a carbon tax on air travel, a family of four travelling to visit grandparents in B.C. from Ottawa would see the cost of a non-stop flight from Ottawa to Vancouver increase by $150 in 2022, almost $300 by 2026, and almost $400 by 2030. If they were unable to fly non-stop and had to connect through Toronto Pearson, the federal carbon tax on air travel would add $200 to the cost of their flight in 2020, $350 in 2026, and almost $500 by 2030.
By way of context, under the federal plan, that Ontario family—that same family—would be entitled to a $718 carbon tax rebate in 2022, meaning that 28% of that family's annual carbon tax allowance would be spent to offset the cost of one flight to visit grandparents in British Columbia.
According to our study, by 2030, a domestic carbon tax on air travel would add over $800 million to the cost of air travel in Canada. It's easy to appreciate the dampening effect this would have on a domestic tourism sector which, according to a recent study by Destination Canada, already struggles because of the high cost of air travel.
We want to propose an alternative flight plan to achieving clean growth in air travel.
First, it involves recognizing the cumulative effect on our industry, on our economy, and on Canadian families and communities of what Transport Minister Garneau calls the panoply of taxes and fees. From our perspective, a tax is a tax is a tax. It is an economic instrument, a tool that must be used wisely and effectively. Adding the word “carbon” to the word “tax” does not transmogrify it into something different or make it somehow inherently virtuous.
A carbon pricing plan for Canadian aviation must be pragmatic and reflect the particular economic circumstances of our sector and of the role it plays in Canada today, and the role it will play in Canada tomorrow.
Second, domestic policy must be aligned with the international consensus on carbon pricing as reflected in the 2016 CORSIA agreement.
Finally, it involves recognizing the breakthrough potential of commercially available biojet in contributing to decarbonization of air travel. If we're going to have a real breakthrough, given the maturity of our sector, it will be through the introduction of commercially available alternative low-carbon fuel.
Commercialization of biojet, unfortunately, has proceeded at a pace that is at odds with its potential breakthrough impact on our sector's carbon footprint. With demand for air travel projected to double over the next 20 years and a global imperative to reduce carbon emissions from all sectors, reducing our industry's global carbon footprint will require the development of a commercially viable supply of biojet. Yet the government's current approach seems more focused on achieving paper results than on addressing the challenges and embracing the opportunities that a biojet advantage mentality could create for Canada.
Canada would have an important natural advantage if it were to embrace a leadership role in biojet and biofuel development. It has sustainable feedstock, commercially available production technology, and an engaged and committed airline industry. Unfortunately, what appears to be missing is political will at this time.
To some, the backstop carbon tax is slated to come into effect on April 1. When it comes to air travel, there is still time for Canada to choose a better way forward. There is still time for an alternative that puts a price on pollution, produces real carbon emission reductions, incentivizes commercialization of low-carbon fuels, and achieves this without putting air travel out of reach for many Canadians.
Thank you.