PBO Defends Decision Not to Include Climate Change Impact Costs in Budget Analysis

Parliamentary Budget Officer Yves Giroux prepares to appear before a committee in Ottawa, on June 13, 2022. (The Canadian Press/Justin Tang)

The Parliamentary Budget Officer defended his decision not to include the impacts of climate change in his analysis of the upcoming federal budget, saying those costs are difficult to estimate and that global temperature changes would continue even in the absence of carbon emissions.

“Even though it would be ideal to have a cost-benefit analysis, the benefits are always not very tangible and not easily measurable,” Yves Giroux told the Government Operations Committee on March 27.

During the committee meeting, Mr. Giroux presented his findings from a March 7 report that analyzes the federal government’s Expenditure Plan and Main Estimates for 2024-25. Among the main findings were that federal spending on elderly benefits is set to surpass the $80 billion mark, the Canada Health Transfer is set to increase by $2.7 billion, and nearly $2.3 billion has been reallocated through the Refocusing Government Spending exercise.

Following his opening statement, Liberal MP Irek Kusmierczyk questioned why Mr. Giroux did not include the cost of climate change, citing an estimate from the Insurance Bureau of Canada that stated climate-related weather disasters cost insurers $3.1 billion in damage in 2023.

Mr. Giroux said while his mandate was to estimate the cost of government proposals, the costs of climate change was a relatively new area of study. He said his office had tried to estimate the cost of climate change under scenarios where all the global emissions commitments had been fully respected, and another scenario where only the actions taken to date were kept.

Mr. Giroux said while the scenarios found there would be a cost of climate change over a long period of time, he noted that greenhouse gasses have been emitted over several decades.

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“Even if the world was to stop emitting greenhouse gases today, there would still be global warming because the planet, according to climate scientists, has already warmed up,” he said.

“So if we are to stop emitting greenhouse gases, the forest fires that have presumably been attributed to climate change could continue. It’s not me saying that, it’s climate scientists.”

Carbon Tax

During the committee meeting, Mr. Giroux was asked about the economic impacts of the federal government’s carbon tax, which has become a contentious political issue in recent months.

Conservatives have argued the tax is harming Canadians during a cost-of-living crisis and have repeatedly called to “axe the tax,” while the Liberals have said the majority of families benefit overall through quarterly carbon rebate payments.

Mr. Giroux told the committee that while most Canadians receive more in rebates than they pay in taxes, the negative impacts of the tax on certain economic sectors mean they are worse off over the long term.

Mr. Giroux said if the carbon tax were to be cancelled and no similar measures were to be added, Canadians would “experience on average income growth that would be slightly faster than what will happen with a carbon tax.”

However, Mr. Giroux said that carbon pricing is an “effective way” of reducing carbon emissions, and that other policies that aimed to achieve similar goals would come with costs.

The carbon tax is expected to rise from $65 per tonne of greenhouse gas emissions to $80 per tonne on April 1, leading up to $170 per tonne in 2030. In a recent interview with The Epoch Times, Mr. Giroux said the carbon tax would lead to lower employment and lower corporate profits, as well as lower returns on investments.