Canada adopts federal carbon price for 2018, amid mixed reactions from provinces

On Friday (Dec. 9) the Canadian government agreed on a national carbon pricing plan, the first measure of its kind in the country. The carbon pricing plan is part of the Pan-Canadian Framework on Clean Growth and Climate Change proposed by Trudeau’s administration, which also includes measures to foster clean energy and climate resilience.  It was negotiated with the provincial ministers and ultimately adopted by eight of the ten provinces.

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The plan establishes a national minimum carbon price of 10 Canadian dollars per metric ton starting in 2018 and rising by 10 dollars per year to 50 dollars per metric ton in 2022. The national plan does not specify how the carbon price will be exacted but instead  leaves it up to the provinces to design their own carbon tax or cap-and-trade system.

The deal was struck amid much controversy. At the center of the argument was the need to ensure comparability and equivalency in the carbon price across provinces. Indeed, four of the Canadian provinces already have carbon pricing measures in place. British Columbia has had a carbon emissions tax since 2008, which is now at 30 Canadian dollars per metric ton. The neighboring Alberta will begin taxing carbon emissions at 20 Canadian dollars per ton starting on Jan 1 2017, and will raise the tax to 30 dollars in 2018. Quebec  and Ontario, on the other hand, have established a cap-and-trade system linked to California’s in the United States. British Columbia’s premier, Christy Clark, cited concerns that carbon prices would develop differently across provinces, variably impacting their economies, and only conceded  to sign on to the plan after a mechanism to assess price equivalency was agreed upon.

Saskatchewan’s Conservative premier has not signed the plan, arguing that the carbon price will make his province’s industries uncompetitive. He also argued that carbon pricing is especially risky for Canada on the brink of a Trump presidency in the U.S., as a rollback of carbon reduction commitments by the latter could further hurt Canadian industries’ competitiveness. Manitoba’s premier also refused to sign the plan at the summit of Dec. 9. He said he would sign the deal once the federal government meets provincial demands for increased financial support to the healthcare system. Two days after, it appeared that Manitoba was already beginning to reverse that decision, Carbon Pulse reported.

The carbon pricing plan is an important measure in Canada’s efforts to reach its international climate commitments. Prime Minister Trudeau had earlier announced that the federal government would impose a carbon price on provinces that refuse to sign the deal, although no specifications have yet been made as to how or when that might happen.

The Pan-Canadian Framework on Clean Growth and Climate Change stipulates that the carbon price will be implemented in 2018. For the six provinces that do not yet  have a carbon pricing policy in place, the task remains to plan and adopt the mechanisms through which the carbon price will be implemented.

 

(Image: Power plant. Photo credit: Frank Friedrichs/Flickr)