OTTAWA—Changes to the Trudeau government’s carbon tax plan that fuelled criticism this week won’t weaken Canada’s action on climate change, federal officials say.

John Moffet, a top-ranking bureaucrat with Environment and Climate Change Canada, said the government’s proposal to give wider tax relief to industries hit with the federal carbon price is “not a major policy shift.” There will be no “material impact” on greenhouse gas reductions, and companies bearing a lighter carbon tax load will still save money if they reduce their emissions, he said.

“It represents a fine-tuning of some of the policy details, and we expect it to have minimal impact on greenhouse gas reductions,” Moffet said during a policy briefing for reporters near Parliament Hill.

Under the Liberal government’s carbon price plan, a tax on emissions is scheduled to kick in Jan. 1 in provinces that don’t have their own pricing system, or whose regime doesn’t meet the federal standard. The federal carbon tax — which has not changed — is set at $20 per tonne of greenhouse gas emissions next year, and will rise to $50 per tonne by 2022.

However, Ottawa’s pricing plan has a second component for “emissions-intensive” industries that compete with companies based where there is no carbon tax. This component is meant to soften the impact of the tax so firms in these sectors remain competitive and don’t shift production to jurisdictions with less expensive regulations.

To do that, the government plans to exempt these industries from paying the carbon tax on a portion of their emissions. In January, Environment Canada proposed that share would be 70 per cent of the carbon tax paid by an average firm in each sector. Firms that can produce their goods and emit less than that “limit” would get credits for the difference. They can sell these credits to heavier emitters. Those heavier emitters would have the option of buying credits from other firms or simply paying the tax on their emissions above the average in their industry.

But on July 27, after months of consultation with industry players, researchers and environmental groups, the government quietly published a proposal to increase this tax relief. Now the plan is to give companies in four “high-competitive risk” sectors — cement, iron and steel manufacturing, lime production and nitrogen fertilizers — tax relief based on a 90 per cent industry average. Firms in other industries that emit at least 50 kilotons of greenhouse gas per year will get relief based on an 80 per cent average.

Conservative politicians at Queen’s Park and the federal level hailed the change as an admission by the Trudeau Liberals that the carbon tax is bad for business. On Thursday, federal Conservative Leader Andrew Scheer called it a surprising “retreat” that shows his Tory party is right to oppose carbon pricing.

“The only thing better than a watered-down version of the carbon tax is scrapping it altogether,” he said in a video posted on Facebook.

Environmental activists, as well as federal NDP Leader Jagmeet Singh, saw the change as another example of a Liberal government not truly committed to fighting climate change.

Chris Ragan, a McGill University economist and chair of the Ecofiscal Commission, said the increased tax relief is little more than a “tweak” to one part of a complex federal policy. He said industries receiving the tax break represent “about 5 per cent” of economic activity in Canada, and those in provinces with their own pricing systems (British Columbia, Alberta, and Quebec, for instance) won’t get the increased federal relief because they have their own carbon pricing systems.

“Competitiveness has been protected a little bit more, but emissions reductions will happen a little bit less,” he said. “It’s an interesting technical detail, and not much else.”

Isabelle Turcotte, director of federal program at the Pembina Institute, said she’s not surprised the government increased its carbon tax relief to certain industries, given ongoing trade talks on the North American Free Trade Agreement and the tariff dispute with the United States. Still, she said it will be important for Ottawa to set a timeline to scale back the tax relief for heavy-emitters, so they’re spurred to find ways to cut emissions over time.

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Moffet said the federal government has no schedule to reduce the tax relief, but said a mandatory carbon-policy review will take place before 2022. Meanwhile, the changes that caused a stir this week could change as consultations continue before the carbon tax comes into effect next year, he said.

“We’re not done. No final decisions have been made.”

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