Environment Minister Steven Guilbeault announces “social cost of carbon.” Could this mean a $247/tonne carbon tax?

Apr 19, 2023

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Environment Minister Steven Guilbeault announcing the new social cost. Twitter/Steven Guilbeault

First, the federal Liberal government said the carbon tax was going to be $50 per tonne for CO2 equivalent (CO2e). Then it implemented an escalator to increase that carbon tax to $170 per tonne by 2030, going up each year $15 per tonne CO2e, starting a few weeks ago on April 1.

On Wednesday, April 19, federal Minister of Environment and Climate Change announced a new “social cost of carbon.” In this video post on Twitter, he referenced a newly evaluated “social cost” of $247 per tonne of CO2. He noted that previously the cost of “carbon pollution” had been evaluated at $54 per tonne CO2e, which closely correlated with the original carbon tax level, as it was first announced.

(While Guilbeault clearly refers to in the video is as a “social cost on carbon,” it has also been referred to as a “social cost of carbon” in his press release, below.)

He made the announcement at the Net-Zero Leadership Summit in Ottawa on April 19. Other speakers included Mark Carney, Northwest Territories Premier Caroline Cochrane, GE Canada president and CEO Heather Chamber, Cenovus president and CEO Alex Pourbaix, former Liberal cabinet minister and current co-chair of Coalition for a Better Future Anne McLellan, her co-chair Lisa Raitt, a former Conservative cabinet minister, and more, which can been seen at this link.

Sometimes you have to hear it directly from the horse’s mouth, as it were. Click play to listen. The transcript is below.

Transcript:

“Hi Everyone just coming out of Canada 2020 conference and just announced a new tool that the federal government is going to use in the fight against climate change, which is something that’s called the ‘Social Cost on Carbon.’

“Basically, we’ve worked with scientists, economists, to calculate how much it costs every Canadians every time we put a tonne of CO2 in the atmosphere of carbon pollution. It used to be, the evaluation used to be that that cost was $54, just a few years ago, and now based on new science based, based on new data, we’ve evaluated that this cost is $247, every time a tonne of CO2 goes into the atmosphere. We emit millions of times, hundreds of millions of tons of CO2. So you imagine what the cost is to Canadian. And that enables us to put forward measures to fight climate change are more cost effective, and that are helping Canadians all across this beautiful country in the fight against climate change.”

In its story about Guilbeault’s comments at the Canada 2020 conference, the Canadian Press reported, “More than seven years ago an analysis estimated that by 2020 the cost would be about $54 a tonne in 2020. Guilbeault said the updated model suggests that figure was actually closer to $247.

“He said this year it’s even higher, at $261 per tonne of emissions, and by 2030 it will rise to $294.”

 

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Here is Guilbeault’s news release, verbatim:

 

The economic impacts from climate change are increasing every year as Canadians are confronted by more frequent and powerful storms, wildfires, flooding, heat waves and other consequences of climate change. These impacts are leading to expensive repairs to our homes, businesses, and critical infrastructure, and putting increasing pressure on public utilities. The impacts of climate change also continue to take a toll on human health.

Today at the Net-Zero Leadership Summit in Ottawa, the Minister of Environment and Climate Change, the Honourable Steven Guilbeault, announced that Canada has published an interim update on the “social cost of greenhouse gases,” a publication that helps Canada account for the economic costs of climate change to society and estimate the economic benefits of decreasing greenhouse gas emissions.” The updated values will help inform decision-making on approaches to reduce emissions across the economy.

The previous value of the social cost of carbon used by the Government of Canada started at $54/tonne for 2020 emissions. Those estimates were established in 2016. Now, based on the latest advances in scientific knowledge and economic evidence, the Government of Canada calculated the 2020 social cost of greenhouse gases to be $247/tonne, rising to $294/tonne in 2030. For 2023, every tonne of carbon we reduce saves society as a whole $261. This new value is in keeping with the latest science and criteria recommended by the U.S. National Academies of Sciences, Engineering, and Medicine in 2017. It also follows the U.S. Environmental Protection Agency’s interim guidance on the social cost of carbon.

Many of the changes needed to achieve a net-zero economy will require decisions that fully consider the economic costs of climate change to society. The ability to accurately assess the costs of emissions will strengthen Canada’s ability to make evidence-based decisions that will benefit our communities and future generations.

The guidance from Environment and Climate Change Canada will be used across all federal departments and agencies, with the final values expected to be finalized by the end of the year.

Quick facts

  • The Government of Canada committed in 2020 to update its guidance for calculating the economic costs to society from carbon emissions.
  • The social cost of greenhouse gas (SC-GHG) estimates, such as the social cost of carbon (SCC or SC-CO2) or social cost of methane (SCM or SC-CH4), are used to estimate the monetary value of the avoided costs (i.e., the benefits) of the changes in greenhouse gas (GHG) emissions that would result from a proposed regulation, project, or policy.
  • More potent greenhouse gases), which can store more heat than CO2 have even higher costs per tonne to society, such as methane ($2,396/tonne for emissions in 2023) and nitrous oxide ($73,932/tonne for emissions in 2023).
  • SC-GHG estimates have been used frequently in federal regulatory analysis dating back to 2010.

 

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UPDATE 9 a.m., April 20:

At about 8 a.m. on Thursday, April 20, Premier Scott Moe responded in a social media post linking Guilbeault’s video. Moe said, “What does Minister Guilbeault mean by a “social cost on carbon”?

“He is now saying the “social cost on carbon” (his term) is now $247/tonne – 5X higher than they previously thought – and that this is “a new tool the federal government is going to use.”
“Is this not just a 5X higher carbon tax?”

Also, as of 9 a.m., there is no press release about “social cost” or from Minister Guilbeault on this topic on the Government of Canada website, or federal Ministry of Environment web page. Pipeline Online could only find it on the Minister’s social media. And while there is a federal workers strike going on right now, press releases from other ministries and ministers are posted.

UPDATE: 11:10 a.m., April 20:

Guilbeault responded on Twitter to Moe’s above post. In it, he keeps referring to carbon dioxide as “pollution.”

Guilbeault said, “Social cost of carbon is not “my term” & it’s not new. It comes from the @EPA  and @theNASEM

“It’s simple: pollution costs us all & we should understand those costs to help us make smart policy choices. The price on pollution & the direct rebates to Canadians remain the same!”

 

 

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Cost of carbon emissions nearly five times higher than previously thought: analysis