Canada announces federal carbon price

OREANDA-NEWS. October 04, 2016.  Canadian Prime Minister Justin Trudeau (L) today proposed imposing a federal price on carbon emissions starting in 2018, marking the country's first major federal plan to combat climate change.

Trudeau proposed a minimum initial carbon price of \\$10CAD/tonne (\\$7.83/t) in 2018 that would rise by \\$10/y to 2022. The proposal would give provinces and territories flexibility to decide how they would price carbon, including placing a direct tax on carbon or through a cap-and-trade system. The Canadian government said that all revenues from any carbon pricing mechanism would remain with the provinces and territories to use "as they see fit."

The proposal marks the first major national plan in Canada to curb climate change and follows on a series of provincial plans to cut carbon emissions. British Columbia has had a carbon tax in place since 2008 and Quebec has a cap-and-trade program, which holds joint allowance auctions with California.

"Pricing pollution is one of the most efficient ways to reduce greenhouse gas emissions and to stimulate innovation," Catherine McKenna, Canada's minister of Environment and Climate Change, said.

Critics have called Canada's climate policies piecemeal and have said that even in aggregate, provincial policies would not be sufficient to meet the national target to cut carbon emissions to 30pc below 2005 levels by 2030. Environmental groups have challenged the federal government to establish a plan for meeting the 2030 target.

Canadian environmental think tank the Pembina Institute called the plan an "important milestone" and said it will "help the country's environment and economy as we compete for the rapidly growing global demand for clean energy."

The government of Alberta promptly challenged the proposal. Premier Rachel Notley (NDP) said the provincial government would not back the plan without federal support for a pipeline from her province to the coast. Alberta had previously contributed to previous national climate initiatives and would not pay more "absent serious concurrent progress on energy infrastructure, to ensure we have the economic means to fund these policies," Notley said.