The Greenhouse Gas Pollution Pricing Act

Spotlight Activity: The Greenhouse Gas Pollution Pricing Act

The national Greenhouse Gas Pollution Pricing Act, GGPPA, was adopted June 21, 2018 as Canada’s carbon pricing system. It establishes a greenhouse gas emissions (GGE) pricing standard as a core element of Canada’s strategy to meet its Paris Agreement targets. As of January 2019, the Act applies to any provinces and territories without a carbon tax, cap-and-trade system, or where existing plans fail to meet federal stands, as regulatory framework.

When compliance has not been met, the provinces and territories therein are known as backstop jurisdictions. The GGPPA serves, then, as an insurance policy when two parties cannot reach agreement or when there is agreement to the backstop in this case to reach the federal standard. The Act has two parts – a) a fossil fuels levy of $10 per tonne of GGE for 2018, increasing by $10 yearly to $50 per tonne in 2022. This process is revenue neutral in returning the monies back to Canadians, collected from various fuel producers, distributors and importers and b) an output-based pricing system (OBPS), a cap-and-trade approach for large industrial emitters with yearly emissions equal or greater than 50,000 tonnes of CO2e. With the OBPS, these emitters are not subject to a carbon tax, but to yearly GGE limits, a national trading platform being expected next.

As succinctly summarized by Blakes’ environmental law firm, under Part 1 of the Act, the Canada Revenue Agency will administer a fuel “charge” in Saskatchewan, Manitoba, New Brunswick and Ontario starting April 2019 and the Yukon and Nunavut in July 2019. Under Part 2 of the Act, Environment and Climate Change Canada will administer the OBPS in Ontario, New Brunswick, Manitoba, Prince Edward Island and Saskatchewan starting January 2019 and the Yukon and Nunavut in July 2019.

Alberta (until 2021), British Columbia, Ontario, and Québec have carbon strategies approved for federal standards last fall but Ontario’s recent change of government has since introduced a strategy without carbon pricing, a taxpayer-funded “Ontario Carbon Trust” to finance development of green technologies. Alberta signing on was always contingent to the Trans Mountain pipeline moving forward which is still planned for but some impediments remain outstanding. Yukon and Nunavut are adopting the backstop agreeably to reach compliance. Nova Scotia, Newfoundland/Labrador, and Northwest Territories also had their carbon strategies approved federally last fall. Prince Edward Island has a carbon tax and is adopting the OBPS to reach the federal benchmark.

The GGPPA, effective April 1, thus affects Ontario, Saskatchewan and New Brunswick who are challenging the federal government’s authority to impose a carbon tax, and Manitoba. None have carbon pricing systems in place. Saskatchewan asked its appeal court to rule if the federal plan is constitutional, arguing this falls under provincial jurisdiction. They see their own climate change plan, without a carbon tax sufficient to reduce emissions. The case is set for February 13-14. Ontario has also filed with its appeal court, set for April 15-18. New Brunswick has filed intervention notices in both Ontario and Saskatchewan court challenges. Manitoba investigated constitutional authority finding ‘strong likelihood’ the federal government would be favoured in the courts. Manitoba withdrew its own carbon tax plan last October, and does not support the application of the backstop. Further developments are being monitored.

Pricing carbon pollution is central to the plan to support Canada’s COP21 target of reducing GGE by 30% below 2005 levels by 2030. The constitutional question is whether the GGE Pollution Pricing Act, if enacted, will be declared unconstitutional in whole or in part this year.

Status: Right Direction

Take Action

Please send the following message to the policymaker(s) below.

To request action supporting the GGPPA with Minister Catherine McKenna, please contact her, with the following message:

The narrative on a carbon tax has drastically changed in recent months. Although ideas vary, we can’t afford not to do anything. The good news is that many provinces see a price on carbon pollution reduces pollution at the lowest cost to businesses and consumers.

The GGPPA’s implementation is important towards reaching our Paris Agreement targets. Canada has a rather modest policy considering the social cost of carbon is many times higher. Every option needs to be evaluated in raising its effectiveness recognizing Canada’s recent commitment to raise Canada’s targets for the Paris Agreement just before COP24. Please prioritize this in moving the GGPPA ahead as research still shows no country has performed well enough to keep temperatures within 1.5°C of pre-industrial levels.

The Honourable Catherine McKenna, Minister of Environment and Climate Change
200 Sacré-Coeur Boulevard
Gatineau, Quebec K1A 0H3
Tel: 819-938-3860 or toll-free: 1-800-668-6767
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