How a break at the pumps is a reverse carbon tax — and could make climate change worse

In the wake of the Russian invasion of Ukraine, the long-standing dispute over how governments should be spending our tax dollars in the oil and gas sector has become more complicated and, if possible, more heated.

As Canadians wait to hear Ottawa's spending plans in today's budget, there are conflicting views worldwide over whether countries should be producing more oil and gas to help Europe — or saving the world from climate change and leaving fossil fuels in the ground.

At both the federal and provincial levels, Canadian governments are trying to have it both ways.

And Canadians remain widely divided, "a new two solitudes" according to one well-known economist, over whether producing more fossil fuels is entirely good — or entirely bad. But that same economist, Christopher Ragan, says it doesn't have to be that way.

The climate report released this week by the Intergovernmental Panel on Climate Change, however, suggests the answer is unequivocal. With the world on a path to climate destruction, the time has come to stop all spending on new oil and gas facilities.

"Investing in new fossil fuel infrastructure is moral and economic madness," UN Secretary General António Guterres said as he released the report.

WATCH | Why climate change researchers say we need to slow fossil fuel use:

Clearly there are other views, and one of them was expressed this week in quite a different report by Deloitte Canada titled Strategic transitioning: The future of oil and gas in a decarbonized world. 

While the report sees this industry in Canada making a gradual shift toward reducing climate change, the path to that goal includes an increase in oil and gas production to feed world demand — and help Europe fend off Moscow's political and economic death grip, Andrew Botterill, one of the report's authors, said in a telephone interview.

"We have these sources, Europe is wanting them right now because of their energy crisis, but at the same point we are trying to decrease emissions and increase production," Botterill said. 

He thinks it is fair for governments to be helping with that, partly to help the industry deal with future uncertainty but also to help Canadians struggling with higher prices. 

"We'd hate for individuals to have to worry about [if they can] heat their homes and still get their groceries," Botterill said.

Elsewhere there has been widespread outrage, including in the main editorial in the Globe and Mail this week, over moves by provincial governments to subsidize the price of gasoline. Like a pro-carbon tax — a kind of reverse carbon pricing — it takes your own tax money and gives it back to you if you spend more on fossil fuels.

For Canadians who have been flooded or burnt out, and those who take the IPCC report to heart, that is discouraging. Especially when economists know there are plenty of ways to help people suffering from high fuel prices, and help the industry, without subsidies being connected to making climate change worse.