How Are Vulnerable Populations Impacted by Carbon Pricing Schemes in Canada?

By: Christie McLeod

One of the biggest injustices of climate change is that those least responsible for the greenhouse gas emissions contributing to climate change are often the most affected by climate change. This is true on both a global scale and within Canada’s borders. For instance, according to Sarah Trainor et al, many Indigenous peoples in northern Canada “rely on the availability of natural resources in mixed subsistence economies for nutritional and cultural survival and thus experience disproportionate burdens with respect to our changing climate.”

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The mandated arrival of carbon pricing schemes in Canada presents an exciting opportunity to both incentivize the reduction of emissions and mandate measures to address the disproportionate impacts of climate change and climate change policies on certain populations. While some provinces already have a carbon tax (British Columbia and Alberta) or a cap-and-trade system (Ontario and Québec) in place, the remaining provinces and territories must develop and announce their carbon pricing schemes by September 1, 2018 (Environment and Climate Change Minister Catherine McKenna recently extended and clarified this deadline). On January 1, 2019, the Liberal government will impose its forthcoming carbon tax system on any province or territory whose plan does not meet the federal benchmarks prescribed in the Pan-Canadian Framework on Clean Growth and Climate Change. While Saskatchewan was the only province who chose not to ratify the framework before the deadline to sign on passed (February 28, 2018), Minister McKenna remains hopeful that Saskatchewan “will change course ahead of the Sept. 1 deadline...”.

While there has been ample coverage on developing provincial pricing schemes and whether they will meet these benchmarks, there has been little discussion surrounding how these schemes will impact vulnerable populations in Canada. The provinces and territories developing their carbon pricing schemes can—and should—learn from the provincial plans already in place. By analyzing the impacts of existing carbon pricing schemes on vulnerable populations, provincial governments can strive to preemptively reduce anticipated negative impacts of these schemes.

Low-Income Tax Credits

Both B.C. and Alberta have allocated revenue from their carbon tax to create a low-income tax credit (B.C.) or a low and middle-income carbon levy rebate (Alberta) meant to negate the increased costs of goods and services that arise from this extra tax. There is one problem: to receive this credit in either province, you must file an income tax return. Many low-income Canadians choose not to file a tax return for a variety of reasons, including the fear of paying back taxes or disbelief that they would receive money. In provinces where a low-income credit is administered through the income tax system, many of those most in need of the offset will miss out, leaving these low-income Canadians to disproportionately shoulder the burden of the carbon tax.

Additionally, while Alberta’s carbon levy increased from 2017 to 2018, B.C.’s tax credit does not rise in proportion to its carbon tax rate, making its offset less effective with each passing year.

While a promising initiative on paper, provinces that choose to include a low-income tax credit in their carbon pricing schemes should:

  • Consider alternative avenues to administer this system
  • Increase efforts to assist low-income Canadians in filing tax returns
  • Ensure that the credit increases at the same rate as the tax credit

Designated Funding for Indigenous Communities

Recognizing that climate change poses unique challenges for Indigenous peoples who “depend on natural ecosystems for food supplies, traditional cultural practices, and their livelihood”, Alberta and Ontario have both set aside specific funding to help Indigenous communities transition to a cleaner economy. Alberta has committed $151 million of its projected $9.6 billion in revenues over the next five years, while Ontario, which expects to generate approximately $1.8 to $1.9 billion each year, has devoted $85-$96 million for 2016-2020. Further details are required to assess how effective this funding will be. How is an application for funding submitted? How are projects and partners chosen? Is there a maximum quota of funding per community, region, or issue? To what extent are Indigenous peoples involved in these decision-making processes? Alberta and Ontario should make this information publicly available, as should new carbon pricing schemes in which other provinces choose to set aside specific funds for Indigenous communities.

Mitigation Policies – For Some

Many provinces offer rebate programs to incentivize the installation of energy efficient appliances and other home upgrades (see Ontario’s rebate programs here). This is great, if you are a part of the 67.8 per cent of Canadian households who own their homes. However, as renters typically lack the decision-making power and the taxation incentives to make property improvements, nearly one-third of Canadians are typically excluded from these cost-saving opportunities.

The impacts of insufficient climate action will be felt most greatly by those who are most vulnerable to the impacts of climate change. The Canadian Environmental Law Association (“CELA”) notes that “of the 10 impacts that Ontarians can expect to see as climate change worsens, all of them represent pressures that will disproportionately affect seniors and those with pre-existing health problems, remote and First Nations communities, low-income individuals, and those marginalized within their communities.” As carbon pricing schemes are designed and implemented in Canada over the next several months, it is pivotal that careful consideration be made to avoid further burdening vulnerable populations in Canada.

Christie McLeod is in her second-year of Osgoode’s Juris Doctor/ Master in Environmental Studies (“JD/MES”) program.