Madam Speaker, Canadians know that polluting is not free. We see the costs of carbon pollution in the melting of ice in the Arctic, coastal erosion in Prince Edward Island, and the increasing frequency of extreme weather events.
In December 2016, Canada's first ministers and indigenous leaders finalized the pan-Canadian framework on climate change and clean growth. The framework is a collaborative plan to meet Canada's Paris emission reduction targets of 30% below 2005 levels by 2030 and to grow the economy.
The pan-Canadian framework is built on four pillars: pricing carbon pollution; taking action in each sector of the economy to reduce emissions; adapting and building resilience to climate change impacts; and supporting clean technologies, innovation, and jobs.
Pricing carbon pollution is a fundamental element of the pan-Canadian framework, but we also support the framework with a range of measures that will play a central role in achieving our Paris agreement objectives.
These include regulatory requirements to ensure the timely reduction of greenhouse gas emissions from key sectors, as well as investments in infrastructure, support to help households and businesses transition to cleaner technology and energy efficiency, investments to stimulate the development and deployment of clean technology and innovation, and new actions to build resilience to a changing climate.
Pricing carbon pollution is widely recognized as the most efficient way to reduce greenhouse gas emissions and promote clean growth.
Under the pan-Canadian approach, provinces and territories have the flexibility to shape their own carbon pricing policies, based on their particular circumstances.
Some 97% of Canadians live in provinces that already have a price on carbon pollution or are working toward one. Every province except one has indicated that it will have a price on carbon pollution to reduce emissions while growing the economy. A federal system will only apply in provinces and territories that do not have a price on carbon pollution that meets a national benchmark in 2018. This is an important point that the hon. member seems not to understand. The pricing of carbon pollution in the pan-Canadian framework builds upon the good work of many provinces. In the case of provinces and territories that are acting to price pollution in line with the national benchmark, there will be no federal system implemented, no direct or indirect federal price on carbon whatsoever.
That said, revenues from pricing carbon pollution will remain with the province or territory of origin. Provinces and territories that implement their own pricing systems will thus be able to decide for themselves how to use the revenue to best meet their individual needs. These revenues could be used in a number of ways; they could be invested in clean technology to cut taxes or even refunded.
Carbon pollution pricing systems create an incentive for households and businesses to reduce their consumption of carbon-intensive goods and fuels and to choose lower carbon alternatives. The cost to households of pricing carbon pollution will vary by province and territory, depending in part on the differences in energy and fuel consumption and electricity generation mix across provinces and territories. The cost to households will also depend on the design of carbon pollution pricing policies introduced in each jurisdiction, as well as on how the particular jurisdiction decides to use revenues from carbon pricing.
Estimates produced by Ontario and Alberta illustrate that costs can vary by province. The Ontario government published estimates that households will face an average increase in direct costs of $156 from pricing carbon pollution this year, and this figure is before consideration of how revenues will be utilized. Alberta estimated the direct impact of its carbon levy to range between $190 and $340 per year per household and the indirect impact from higher prices of goods and services to be about $50 per household.
These numbers suggest that the costs of carbon pollution pricing for households will be modest. However, these numbers do not tell the whole story. They do not account for the fact that pricing carbon pollution provides a signal to invest in energy efficiency and alternative sources of energy and to change behaviour to save energy and reduce carbon pollution. Any such investment will reduce the costs of pricing carbon pollution to the household that makes it.
In terms of impact on those less well off, the goods and services purchased by low-income families are usually not more carbon intensive than those purchased by higher income earners. However, as the federal-provincial-territorial working group on carbon pricing mechanisms observed in its report last year, because lower income earners spend a greater share of their income on energy, they may be disproportionately impacted by carbon pollution pricing unless specific measures are taken to compensate for the impacts.
There are many ways in which low-income Canadian families and vulnerable communities can be protected from the costs associated with carbon pricing. It is important to note that revenues generated by carbon pricing can be used to mitigate these impacts.
Provinces and territories can choose to use carbon pollution pricing revenues to compensate low-income and middle-income families for higher energy costs while still maintaining an incentive to reduce energy use, thereby helping to reduce emissions.
For example, British Columbia provides a tax credit for low-income families and has made its carbon tax revenue neutral by reducing income taxes for British Columbians and for businesses operating in the province.
Alberta's carbon pollution pricing system includes rebates for low- and middle-income households to offset the cost of the carbon levy on transportation and heating fuels. The Government of Alberta has estimated that six out of 10 households will receive a rebate. For example, the full rebate amount for a household with two adults and two children will be $360 in 2017. This exceeds Alberta's estimate of the total direct cost of the levy for a household with two adults and two children, which is $338 in 2017.
Alberta has stated it will provide the full rebate amount for couples and families earning less than $95,000 per year, and for singles earning less than $47,500 per year. In other words, the median Alberta household will receive a larger rebate this year than the amount by which its fuel costs increased. Households receiving these rebates will still have the incentive to reduce carbon pollution, and if they save energy by making their homes more energy efficient, they can save money and be further ahead.
The hon. member's motion proposes that the Standing Committee on Finance undertake a study to find methods to ensure maximum transparency for consumers related to the costs of carbon pricing, including a requirement for a dedicated line item on invoices and receipts.
Such a requirement is not part of the carbon pricing approach that was agreed upon by the Prime Minister under the pan-Canadian framework and would run counter to the flexibility that the framework aims to give the provinces and territories to develop and report on their own carbon pricing systems.
In fact, as I noted earlier, in jurisdictions comprising 97% of the Canadian population, provinces have moved or are moving to implement their own pricing systems. These are not federal systems, as the hon. member seems to be understanding. I would also note that some of the provinces with carbon pricing have in fact already chosen to require a carbon cost line item. It is certainly open for provinces and territories to choose to do so.
Federal, provincial, and territorial governments agreed to work together to review progress annually in order to assess the effectiveness of collective action. Programs and policies will be monitored, results will be measured, and actions and performance will be reported on in a way that is transparent and accountable to Canadians.
The pan-Canadian approach to pricing carbon pollution provides that jurisdictions should provide regular, transparent, and verifiable reports on outcomes and impacts of carbon pricing policies.
A separate study on pricing carbon pollution by the Standing Committee on Finance would run counter to the collaborative approach agreed to by federal, provincial, and territorial governments to implementing, reviewing, and reporting on carbon pricing measures. That is why we oppose the motion and instead support working collaboratively with provinces and territories to report on and review the pan-Canadian approach to pricing carbon pollution.
Our climate is already changing, and Canadians are already feeling the effects. Extreme weather, in the form of droughts and floods is increasing in frequency. North of 60, the average annual temperature has tripled, compared to the global average since the middle of the last century. Snow, sea ice, glaciers, and permafrost are all in rapid decline. We must address climate change now, for the well-being of our people, our communities, our economy, and most of all, our children and grandchildren.