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Made-in-Manitoba carbon tax response – make your voice heard

Published by CME Manitoba on May 05, 2017

Carbon tax remains a hot topic and CME recently hosted the second meeting in a series of member consultations to develop a coordinated industry response.

Background
The provincial government is consulting with industry groups across Manitoba to develop a response to the federal mandate given to the provinces to develop a carbon tax as part of a pan-Canadian framework by 2018. It’s important to note that the framework was developed at a time when both Canadian and US (Obama) administrations mutually supported measures intended to move industry toward cleaner energy sources. The Trump administration has signaled a departure from these policies, both in the media and by a number of executive orders signed during the first 100 days of the presidency.

Manufacturing industry response
Manufacturing is the backbone of the economy and is a primary driver of wealth and investment in the province. Moreover, manufacturing is global in nature and subject to intense competition from anywhere in the world. Jurisdictional differences can greatly impact the playing field and manufacturing cannot easily pass costs along to customers. In fact, competition is likely to increase given changes with our biggest market (i.e. a proposed lower corporate tax rate, potential renegotiation of trade agreements/potential tariffs, regulatory reform and the absence of carbon tax).

While manufacturing as a whole believes there is a need to be corporate, environmental stewards; the industry has a relatively small greenhouse gas footprint relative to other sectors. Manufacturers are already engaged in LEAN and green activities that drive out waste and improve efficiencies. We have reduced greenhouse gas emissions through investment in equipment, technology and process improvement and have done so at a faster rate than other sectors. But these investments can be costly and are directly and positively correlated to after-tax profitability.

Moreover, there isn’t an easy or clear corrective action available to manufacturers. Our geographically-isolated region and cold-weather climate makes us heavily dependent on fossil fuels and sectors that operate outside our immediate control (i.e. trucking).

When the above factors are combined with the fact that Manitoba has already invested heavily in a green energy through an investment in Hydro; the costs of which are projected to increase significantly over the next number of years based on questionable investment decisions, it is difficult to see how the proposed carbon tax will materially impact greenhouse gas emissions. In fact, reports from multiple jurisdictions are showing that carbon tax policy has not only fallen short on delivering on greenhouse gas reduction targets, but may have negative, unintended consequences (i.e. high economic costs, carbon leakage).

At this time, CME believes that a carbon tax will present significant economic costs with little environmental benefit. 

Next steps
With the support of our members, CME is actively developing a policy position statement; which should be available more broadly by month’s end. Moreover, while the collective voice of the industry is powerful, individual manufacturers raising their concerns to government will lend strength and credibility our position. To this end, we are also preparing a guide for manufacturers outlining key points to raise with MLAs, MPs and other government officials, along with a listing of contacts for your ease of reference. This guide will also be available by the end of the month.

We believe that there is an opportunity work with our partners in government to determine solutions that will further the environmental agenda without significant economic costs. We believe that manufacturers are in a strong position to help the government achieve its mandate of being the most improved province in Canada. In support of these ongoing discussions with the Manitoba government, we encourage manufacturers to share examples and success stories of initiatives they have undertaken to reduce their carbon footprint.

In the meantime, you can read a copy of a letter sent by Price industries outlining the potential impact of a carbon tax in Manitoba here.

 

 

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