Canada sets September 2018 deadline for jurisdictions to plan $10 per tonne carbon price

Canadian environment minister Catherine McKenna. Image: Chatham House

Ottawa has set a deadline of September 1, 2018 for each jurisdiction in Canada to outline how they are implementing carbon pricing systems that meet the federal standard price of $10 per tonne.

The federal government will then determine whether the planned systems are on track to meet the standard, or whether the federal approach should be applied in that jurisdiction, according to a statement put out on behalf of Environment and Climate Change Minister Catherine McKenna and Finance Minister Bill Morneau.

Should jurisdictions want to implement the federal standard, they must advise of this by March 30, 2018.

“Pricing carbon pollution is one of the four pillars of Canada’s climate and clean growth plan,” the statement said.

“The pan-Canadian approach to carbon pricing, announced in October 2016, gives provinces and territories flexibility to choose which type of system to implement a direct pricing system, such as a carbon tax, like British Columbia has, or a carbon levy combined with a performance-based emissions system, as in Alberta, or a cap-and-trade system, as in Ontario and Quebec.”

Ottawa said the combination of existing carbon provincial pricing systems, new carbon pricing systems, and the federal approach will ensure a price on carbon across Canada. In direct pricing systems, that price will rise to $20 per tonne on January 1, 2019.

Alberta introduced a carbon price of $15 per tonne in 2007, increasing the levy to $20 per tonne effective January 1, 2017 and to $30 per tonne effective January 1, 2018.

Earlier this week the OECD stated that Canada’s decentralized approach to put a price on carbon is overly complex and will be difficult to implement.

Clean Energy Canada praised the approach following Wednesday’s pricing program announcement.

“In Canada, many provinces have already implemented and benefited from putting a price on carbon pollution—doing so in ways that meet their unique needs. After all, Canada is a country of vast and varied regions, which is why the federal government is offering flexibility—though not without the certainty of a federal backstop,” said Clean Energy Canada policy director Dan Woynillowicz.

“This approach strikes the right balance and will ensure Canada joins the ranks of other nations using carbon pricing as an efficient, effective way to encourage innovation and investment by consumers and companies.”

Canada’s Ecofiscal Commission urged that Canadian jurisdictions meet the federal benchmark with well-designed policies.

"Carbon pricing can reduce GHG emissions at lowest cost…as long as it is designed well,” said executive director Dale Beugin.

“To be effective, new provincial carbon pricing policies must drive additional emissions reductions above and beyond the progress those provinces have already made. If they don't, the federal government will step in to fill any gaps."