Inflation continues to soar in Canada, with the Consumer Price Index (CPI) hitting 8.1 per cent in June, the highest level in nearly 40 years. Rising costs have pushed the Bank of Canada to rapidly raise its benchmark interest rates, putting further pressure on households across the country.
Persistent inflation may present a challenge for the government's climate change policy ambitions, says the Public Policy Forum's Sean Speer. The federal government is targeting net-zero emissions by 2050, and a 40 to 45 per cent reduction in emissions by 2030.
"As household budgets tighten, and as we potentially fall into recession, one can't help but think that Canadians concerns about the environment will fall in turn, and demands for short term help on on some of these price issues will will trump long term concerns about the environment," Speer said.
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- It kind of comes back to a point I made earlier about the Bank of Canada's mandate, that when times are good and people are feeling generally optimistic about the economy as a whole and their own personal finances, they have the ability to kind of focus on secondary concerns or secondary issues. And it's in those circumstances where we see climate change rise as a political priority in public polling. As household budgets tighten and as we potentially fall into recession, one can't help but think that Canadians' concerns about the environment will fall, in turn, and demands for short-term help on some of these price issues will trump long-term concerns about the environment, which just at a fundamental level has always been the biggest challenge with ambitious climate action-- that the long-term benefits of meeting our emissions targets are significant, but they are benefits that won't fully accrue for decades.
And even then, calling them benefits is a bit complex, because what we're really talking about is that we won't suffer these negative consequences, right, of climate change, and global warming, et cetera. And you kind of-- that, in some ways, is in conflict with the immediate short-term costs of action, especially against a backdrop of challenging economic circumstances. So I guess it's a very long way-- I apologize for rambling-- but a very long way of saying that I think there'll be a limit on the part of Canadians to accept rising costs associated with the long-term goals of climate change when they're facing really short-term pressures on their household budgets.