Canada’s Carbon Pricing Strategy Moving Ahead

Canada’s Carbon Pricing Strategy Moving Ahead

The national Greenhouse Gas Pollution Pricing Act (GGPPA) adopted June 21, 2018 as Canada’s carbon pricing system, 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, for any provinces and territories without a carbon tax, cap-and trade system or where their existing plan failed to meet federal standards, the Act applied to them as a regulatory framework.

The Act has two parts – a) a fossil fuels levy of $10 per tonne of GGE since 2018, increasing $10 yearly until it hits $50 a tonne in 2022. This process is revenue neutral and returns 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.

Under Part 1 of the Act, the Canada Revenue Agency administered a gasoline fuel “charge” in Saskatchewan, Manitoba, New Brunswick and Ontario as of April 1, 2019. New Brunswick (NB), as of April 1, 2020, will switch to a provincial system involving a price per tonne on carbon. Saskatchewan and Ontario (including New Brunswick filings) lost their court cases and are now appealing to Canada’s Supreme Court. Manitoba has a judicial review underway asking for consideration of its renewable hydro-electric power system. Albertans began the federal levy January 1, 2020, they are also challenging it. Alberta had a fuel levy in place from 2017 until its repeal May 30, 2019 given a new government. Ontario’s change of government in 2018 has since ended its climate plan, and cap-and trade pricing system, introducing without carbon pricing, a taxpayer-funded “Ontario Carbon Trust” to finance green technologies.

The Yukon and Nunavut opted to use the federal levy, starting in July 2019. The Yukon was allowed to collect its revenues. The levy applies to all fuels but exempts aviation gasoline and aviation turbo fuel in both territories. This approach to pricing pollution takes into account their unique circumstances, including high costs of living and energy, challenges with food security, and emerging economies.

British Columbia’s (as of 2008), and Québec’s (cap-and-trade since 2013) carbon strategies were approved under federal standards. Nova Scotia (cap-and-trade), Newfoundland/Labrador (NL), Prince Edward Island (PEI) and Northwest Territories (NWT) also had their carbon strategies approved last fall. The NWT has various rebates and offsets to aid residents similar to approaches in the Yukon, Nunavut, NL and proposed for NB.

Under Part 2 of the Act, Environment and Climate Change Canada administered the OBPS in Ontario, NB, Manitoba, PEI and Saskatchewan in January 2019 and the Yukon and Nunavut in July 2019. Alberta was the first province to put an OBPS in place, in 2007. The federal government monitored the new Alberta government’s revisions for big emitters and gave approval in December 2019. NB has recently proposed its own version. Saskatchewan’s OBPS partially meets compliance, thus Ottawa prices what is not subject to the provincial system.

Visit the Greenhouse Gas Pollution Pricing Act at https://laws.justice.gc.ca/eng/acts/G-11.55/FullText.html

Pricing carbon pollution is central to the plan to support Canada’s COP21 target of reducing GGE by 30% below 2005 levels by 2030.


Activity Rating: **** Moving Ahead

A national shift by households, businesses and industry to cleaner technologies increases the demand for energy-efficient products shifting the damage from GGEs back to those responsible to create greener practices.  Carbon pricing results are shown to be predictable, and cost-effective.


Take Action

To request action, please contact Minister Wilkinson, with the following message:

Canada has a cost-effective but rather modest GGPPA policy considering the social cost of carbon is many times higher. A recent Canada Ecofiscal Commission report (November 2019) says, if governments want to meet their climate goals at least cost, they should rely on increasingly stringent carbon pricing. The report continues to say Canada will need to quadruple its carbon tax to C$210 per tonne by 2030, enough to raise gasoline prices by about 40¢ per litre, if the government relies solely on pricing to hit its 2030 Paris Agreement target, and rebate the revenues to consumers. We ask that you give this high consideration when devising the means by which to achieve Canada’s net zero target by 2050.

Contact

The Honourable Jonathan Wilkinson, Minister of Environment and Climate Change

Email: Jonathan.Wilkinson@parl.gc.ca

Mail: House of Commons, Ottawa, ON K1A 0A6

Tel: 1 613 995-1225


For more information, please email Climate Scorecard Canadian Country Manager: Diane Szoller at Canada@climatescorecard.org.

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