OTTAWA—Federal Conservatives are accusing the government of coddling big business with its levy on greenhouse gas emissions, a new line of attack that focuses on how the federal carbon price plan applies to some of Canada’s heaviest polluters.

For the third day in a row, the Official Opposition opened the skirmish of question period by accusing the Liberals of letting wealthy companies off the hook by exempting them from paying the carbon levy on a portion of their emissions. Ontario MP Pierre Poilievre dubbed the policy “high tax hypocrisy” and said it would make life more expensive for “soccer moms, suburban commuters and seniors,” while industrial polluters get a sweet arrangement.

“They have a separate deal for special interests that have powerful lobbyists,” he said. “Those that emit the most pay the least.”

Environment Minister Catherine McKenna defended the plan, in which Ottawa will introduce a $20-per-tonne levy on carbon emissions in the four provinces — Ontario, Saskatchewan, New Brunswick and Manitoba — that refused to devise their own pricing systems to meet federal standards.

“Everyone will pay the price on pollution,” McKenna said. “That includes large industry.”

The double standard alleged by the Conservatives comes as the Business Council of Canada, which includes chief executives from 150 companies that represent more than half the value of the Toronto Stock Exchange, welcomed the federal carbon price designed to discourage emissions that cause climate change and spur economic innovation toward greener technologies. On Wednesday, Conservative Leader Andrew Scheer accused the government of letting “large corporate polluters” off “scot-free” while everyday Canadians and small business “bear the burden of this new carbon tax.”

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The federal carbon price has two components. The first is what federal officials call a “fuel charge” on everything from airline fuel to gasoline at the pump. Revenues from this charge — expected to increase the price of gas by four cents per litre in 2019 — are forecast at $2.3 billion next year, and will be returned directly to citizens of the four affected provinces via rebates called “climate action incentives” on their tax returns.

The government says these refunds will outweigh costs of the carbon levy for 70 per cent of people in the four affected provinces. The average Ontario household will get $300 back next year, and $697 back in 2022 when the carbon levy increases to $50 per tonne of emissions.

But the Conservatives are homing in on the second part of the price plan that will apply only to heavy polluters, defined as companies that emit more than 50,000 tonnes of greenhouse gas per year. This is called the output-based pricing system (OBPS). The government hasn’t decided exactly how this will work, but promises to release final details in early 2019. The proposal — which was updated in August — would allow companies in certain industries to avoid paying the carbon levy on a portion of their emissions. Those that emit less than their industry allotment will get special permits from Ottawa. Those that emit more than their allotment can buy these permits from their competitors or just pay the carbon levy on their excess pollution.

This is meant to preserve the intended motivation to cut down on emissions and also ensure companies in heavy-emissions industries like cement production, or those with intense competition from firms in other countries, don’t close shop or relocate outside the country, where there is no carbon levy.

Tracy Snodden, an economics professor at Wilfrid Laurier University, said the government is being rightly “cautious” on behalf of industry. To impose the levy on all of their emissions would likely force some businesses to relocate and could cause a shock to the economy, she said.

“We do have to make some allowances for the fact that their competitors do not face that cost,” Snodden said.

Isabelle Turcotte, director of federal policy with the Pembina Institute, said the levy-free allotments to these industries can also be scaled down over time, as more international jurisdictions adopt carbon prices and Canada ramps up its effort to discourage emissions.

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“It’s a very conservative approach to making sure that they’re not going to be incurring any competitiveness risks,” she said. “They’re starting safe.”

The government is standing by its approach. McKenna told the Star this week that Canada needs to implement a system to price carbon and left the door open to ramp up efforts in the future to respond to the urgent warnings from the United Nations scientific advisory panel on climate change this month, which called for dramatic reductions that outpace Canada’s current targets under the Paris Agreement.

“We need to show progress, and then yes, we will be more ambitious,” she said. “But right now we need to deliver.”

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