Volts podcast: Gerald Butts and Catherine McKenna on Canada's carbon tax
In this episode, Gerald Butts and Catherine McKenna discuss their experiences passing a carbon tax in Canada, as advisor to prime minister Justin Trudeau and minister of the environment respectively. In particular, we focus on a key feature of the Canadian tax: all the revenue collected goes back to the province from which it was collected, mostly as per-capita dividends. Butts and McKenna believe that feature was central to selling the public on the policy.
Full transcript of Volts podcast featuring Gerald Butts and Catherine McKenna, February 16, 2022
(PDF version)
David Roberts:
In 2015, after nearly a decade of conservative rule, Justin Trudeau and his Liberal Party won a majority of seats in the Canadian parliament and control of the federal government. Part of Trudeau’s election platform was a carbon tax.
The proposed tax had a few key features. First, it would only be imposed on provinces that did not have their own pricing system that met a few minimum requirements. And second, all the money collected from a province would be returned to that province as carbon dividends.
After years of vigorous advocacy and negotiations, Trudeau’s liberals got the tax passed through parliament. It was implemented in early 2019, just before another federal election that became widely seen as a national referendum on the tax.
Liberals won again. The carbon tax was affirmed. It’s going to stick — and rise to a whopping $170 a ton by 2030.
This is a startling success story for climate policy that was largely overlooked in the US. We, uh, had some other stuff going on. But it’s worth taking a closer look at how Canada pulled it off.
Two people at the core of the tax pitch were Gerald Butts, who was principal secretary to the prime minister from 2015 to 2019 and Trudeau’s closest personal advisor, and Catherine McKenna, who was the minister of environment and climate change during the same period.
Butts and McKenna were in the trenches and they have the scars to show for it. Both of them noticed the piece I published on Volts in January on carbon tax refunds — and they objected to the conclusion that dividends did not make the carbon tax more popular in Canada.
So I had them on the pod! We talked about how the carbon tax was conceived, what enabled it to secure majority support (yes, they say, refunds were important), and where the politics of carbon pricing stand as we move into the 2020s. Not only were my spirits lifted — it’s nice to know there’s a sane country out there somewhere — I learned an enormous amount. I think you will too.
Without further ado, Catherine McKenna and Gerald Butts, welcome to Volts. Thanks for coming.
Catherine McKenna:
Very happy to be on.
Gerald Butts:
It's great to be here.
David Roberts:
When Justin Trudeau announced his candidacy [for prime minister of Canada] in 2015, the carbon tax was part of his initial pitch. How far back does the carbon tax idea go? Who got it in Trudeau’s ear? How long had it been bouncing around up there before it made its debut on the national stage?
Gerald Butts:
The first time it was a real issue in Canada was during the federal election campaign in 2008. Important for the context of the story, for reasons I'll go into later, is that the Liberal Party proposed something called the Green Shift, which was an elaborate take on a carbon tax, under the leadership of Stéphane Dion. But it was easily caricatured as a regional wealth redistribution program, because the revenue from the tax was paid into the consolidated revenue fund at the federal government, and it was redistributed by the federal government to programs of its own choosing, not all of which were environmentally related.
To me, there were a lot of reasons beyond the Green Shift that the Liberal Party lost the election in 2008, but that was the fundamental flaw in th
