{"id":701743,"date":"2026-05-29T14:45:08","date_gmt":"2026-05-29T14:45:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/701743\/"},"modified":"2026-05-29T14:45:08","modified_gmt":"2026-05-29T14:45:08","slug":"canada-prices-carbon-far-below-the-damage-it-causes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/701743\/","title":{"rendered":"Canada prices carbon far below the damage it causes"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Prime Minister Mark Carney participates in a signing ceremony with Alberta Premier Danielle Smith in Calgary on May 15. Ottawa recently reached an agreement with Alberta over industrial carbon pricing.Jeff McIntosh\/The Canadian Press<\/p>\n

Canada\u2019s climate policy increasingly resembles a tug-of-war between political convenience and planetary reality.<\/p>\n

Ottawa\u2019s recent agreement with Alberta over industrial carbon pricing reveals this tension.<\/p>\n

In response to separation threats from Alberta\u2019s government, Ottawa relented<\/a>, slowing the pace at which industrial carbon prices rise for Alberta and, by extension, the rest of the country. Critics<\/a> argue the deal weakens Canada\u2019s climate ambition substantially. Supporters<\/a> counter that Alberta \u2013 responsible for roughly a quarter of Canada\u2019s emissions \u2013 may now face a more credible pricing system than before, because the previous one looked tougher on paper than it worked in practice.<\/p>\n

Both arguments have merit. But one fact is unavoidable in this debate: The federal government\u2019s own estimates show that large emitters pay far less than the damage carbon pollution causes. Those unpaid costs do not disappear. They are passed on to younger and future generations.<\/p>\n

Part of the confusion stems from how industrial carbon pricing actually works.<\/p>\n

Carney dismisses environmental detractors, defends government\u2019s climate plan<\/a><\/p>\n

Large emitters do not pay carbon prices<\/a> on most of their pollution. Canada\u2019s industrial systems give companies large pollution allowances before any carbon price kicks in. As a result, the new $140 carbon price scheduled for 2040 overstates the actual costs paid by industry. Governments intentionally designed these systems to shield firms competing in global markets from paying carbon prices on a substantial share of the pollution considered typical for their industries.<\/p>\n

That distinction matters because many imagine industry paying the posted carbon price on every tonne emitted. Yet once the large free pollution allowances are factored in, the costs imposed on many emitters remain surprisingly small. Dave Sawyer, principal economist at the Canadian Climate Institute, estimates the Ottawa-Alberta agreement will add about 16 cents to the cost of producing a barrel of oil by 2030.<\/p>\n

None of this means industrial carbon pricing is unimportant. The Canadian Climate Institute still identifies it as the country\u2019s most important policy tool<\/a> for shifting Canada toward carbon neutrality by 2050. But by weakening pricing ambition, Ottawa has made that goal much harder to reach<\/a>.<\/p>\n

Politically, governments may pay little price for doing so. Polls<\/a> show Canadians prioritizing affordability, housing costs and economic insecurity over climate policy. With tariff threats and the Alberta referendum dominating headlines, governments fear being blamed for raising prices \u2013 even though research suggests industrial carbon costs<\/a> are too small, and global commodity markets too dominant, for most large emitters to pass those costs meaningfully on to Canadian consumers.<\/p>\n

Opinion: An environmental symbol slips out of Parliament<\/a><\/p>\n

The bigger problem is that nature does not care whether climate action polls well.<\/p>\n

Wildfires don\u2019t pause because affordability has become voters\u2019 top concern. Glacier melt does not slow because governments fear electoral backlash. The atmosphere responds to concentrations of greenhouse gases governed by chemistry, physics and biology \u2013 not political convenience.<\/p>\n

Economists try to capture this reality by measuring the \u201csocial cost of carbon,<\/a>\u201d which measures the total economic damage caused by emitting more pollution into the atmosphere.<\/p>\n

The Canadian government estimates that each additional tonne of carbon pollution will cause roughly $341 per tonne in economic damages by 2040<\/a>, including mounting costs from fires, floods, infrastructure damage, agricultural disruption and worsening health outcomes.<\/p>\n

Importantly, Ottawa formally requires federal departments<\/a> to use these estimates in regulatory cost-benefit analysis. So regardless of one\u2019s view of the Ottawa-Alberta deal, it is undeniable that Canada\u2019s industrial pricing system remains far below the damages our own government estimates carbon pollution will cause.<\/p>\n

This does not make Canada unique. Virtually no country prices carbon fully at the estimated social cost. <\/p>\n

But honesty requires us to name the tradeoff.<\/p>\n

Opinion: The real fight for Canada\u2019s energy future is being fought at a global scale \u2013 and the clean side is winning<\/a><\/p>\n

When we allow pollution at prices far below the damage it causes, we are not avoiding the costs. We are postponing them. Today\u2019s adults benefit from cheaper production and lower political friction. Younger and future generations inherit the liability.<\/p>\n

That liability includes more than disaster-recovery bills or rising insurance premiums. It includes instability in the very ecological systems that sustain human prosperity. Researchers at York University estimate that if everyone on Earth consumed at Canadian levels, we would require roughly five Earths<\/a> to sustain ourselves.<\/p>\n

Scientists now warn humanity has pushed beyond seven of the planet\u2019s nine major ecological boundaries<\/a> required to maintain the relatively stable conditions on which civilization depends.<\/p>\n

Politics can negotiate timelines, exemptions and compromises. Earth\u2019s systems negotiate with no one.<\/p>\n

We are free to debate what climate policy is politically achievable today. We are not free to decide whether younger generations will pay the price when political convenience collides with planetary reality.<\/p>\n

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze<\/a>, Canada\u2019s leading voice for generational fairness. You can follow Gen Squeeze on X<\/a>, Facebook<\/a>, Bluesky<\/a>, and Instagram<\/a>, as well as subscribe to Paul\u2019s Hard Truths podcast.<\/a><\/p>\n