Canada to Require Nationwide Carbon Pricing in 2018

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By Peter Menyasz

Oct. 3 — Canada will impose a federal price on carbon dioxide emissions nationwide in 2018, which could push tougher limits on provinces that already use a carbon tax or cap-and-trade program, and could require major new programs for other parts of the country, Prime Minister Justin Trudeau said Oct. 3.

The federal government will mandate a minimum carbon price in 2018 of C$10 ($7.62) per metric ton, increasing by C$10 annually to reach C$50 ($38.12) a metric ton by 2022, said Trudeau, speaking in the House of Commons on a motion to support Canada's ratification of the Paris climate change accord.

Canada's four most populated provinces have or are adopting carbon pricing, but may have to strengthen their rules under the new federal limits.

“Because pollution crosses borders, all provinces must do their share,” Trudeau said.

British Columbia currently has a carbon tax of C$30 ($22.86) per metric ton.

In June, Alberta passed legislation to implement a C$20 ($15.24) per metric ton tax effective Jan. 1, 2017, and increasing to C$30 per metric ton as of Jan. 1, 2018.

Quebec has a cap-and-trade system linked to California's.

And Ontario's cap-and-trade system, which will link with Quebec and California, is set to start in January 2017.

Many of Canada's 10 provinces and three territories have no price on carbon, and some officials criticized Trudeau's announcement.

‘Level of Disrespect.'

Alberta Premier Rachel Notley linked support for the national carbon pricing policy to federal action on major energy projects, some of which have been delayed because of environmental concerns.

“Alberta will not be supporting this proposal absent serious concurrent progress on energy infrastructure to ensure we have the economic means to fund these policies,” Notley said in a statement.

The announcement came as federal Environment and Climate Change Minister Catherine McKenna and her provincial and territorial counterparts were meeting in Montreal to develop a Canada-wide climate change policy framework.

Saskatchewan Premier Brad Wall said he “cannot believe” the timing of Trudeau's announcement from Ottawa.

“This [Montreal] meeting is not worth the carbon dioxide emissions it took for environment ministers to get there,” Wall said in a statement. “The level of disrespect shown by the prime minister and his government today is stunning.”

‘Lowered the Boom.'

Saskatchewan's economy, already dealing with low commodity prices, would be among those hit hardest by a carbon tax because its resource industries are exposed to strong international competition, according to Wall. “The national focus on carbon pricing holds the lowest potential for reducing emissions, while potentially doing the greatest harm to the Canadian economy,” he said.

Trudeau has “lowered the boom” on provinces and territories, said Member of Parliament Ed Fast, the Conservative Party's environment critic and a former federal trade minister. “Now it's my way or the highway.”

The federal government will work with provinces, territories and aboriginal groups during the next two months to finalize the carbon pricing policy and proposals to better support the growth of Canada's green energy sector, Trudeau said. The government will review its approach to carbon pricing in 2022, he said.

All proceeds from carbon pricing policies—even if they are directed by the federal government—will stay in the provinces and territories, according to Trudeau.

Too Little?

New Democratic Party environment critic Linda Duncan, who represents an Alberta constituency, said her party supports carbon pricing but is concerned that the government's current emissions reduction targets won't be enough to meet its commitments under the Paris Agreement.

And Toronto-based Environmental Defence said the government should make the carbon price even higher than planned. “To be effective, the federal carbon price needs to rise at the same rate beyond 2022,” said spokesman Dale Marshall.

But Clean Energy Canada, which represents the country's renewables sector, called the national carbon pricing policy a “huge step forward.”

And Quebec-based environmental group Equiterre said economic objections were overblown. “To the prophets of doom fearing the end of the economic world, I wish to remind them that Quebec has put in place a price on carbon and this has created jobs and increased the gross domestic product, all while reducing greenhouse gas emissions,” said co-founder and Senior Director Steven Guilbeault.

To contact the reporter on this story: Peter Menyasz in Ottawa at correspondents@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com

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