Canada releases plans for a nationwide carbon tax

Provinces will have two years to create their own scheme.

Canadian prime minister Justin Trudeau. CREDIT: AP PHOTO/KOJI UEDA
Canadian prime minister Justin Trudeau. CREDIT: AP PHOTO/KOJI UEDA

Canadian provinces will have two years to implement their own carbon pricing scheme, otherwise they will have to adopt a nationwide carbon tax, according to a government statement released Monday afternoon.

The news came after the Ministers of the Environment met to discuss the country’s environmental and climate goals in advance of this year’s U.N. Conference on Climate Change, which will begin on November 7 in Morocco.

Canadian Minister of the Environment and Climate Change Catherine McKenna previously alluded to the idea that the national government might compel provinces to adopt some kind of uniform carbon price if the provinces themselves did not act to adopt one, but was vague on details. Four provinces — British Columbia, Alberta, Ontario, and Quebec — currently have some kind of price on carbon, representing 80 percent of Canada’s population.

British Columbia’s carbon tax, which was enacted in 2008, has been popular throughout the province, with polls showing support for the tax around 60 percent. But some Canadian lawmakers have been critical of the concept of a nationwide carbon tax, with Saskatchewan Premier Brad Wall leading the opposition — he has argued that the government should focus more on improving technology to reduce carbon emissions rather than pricing those emissions.

Under the proposed system, provinces would be able to choose between a direct price on carbon via a carbon tax, or a carbon market via a cap-and-trade system. Revenue would be recycled directly back to the province, which would be able to decide independently how best to reinvest that money. The minimum price on carbon pollution would be $10 per ton, and would rise by $10 annually to $50 per ton in 2022. For provinces that fail to adopt either system by 2018, the national government will impose its own system.

“Pricing pollution is one of the most efficient ways to reduce greenhouse gas emissions and to stimulate innovation. Already 80 percent of Canadians live in a province where there is pollution pricing. We want to continue this trend and cover the final 20 percent,” McKenna said in a statement. “We are standing at the threshold of an incredible opportunity to build a strong and clean economy, one that will protect our environment and create opportunities for middle class families today and in the generations to come.”

Provinces that choose to enact a cap-and-trade system would be required to set a cap on pollution consistent with Canada’s national emissions reduction goals for 2030. Those goals, however, have come under fire from environmentalists, who note that Prime Minister Justin Trudeau has failed to strengthen the reduction goals set by former Prime Minister Stephen Harper in 2015. McKenna has alluded to the fact that Harper’s figures are likely a minimum “floor” for Canada’s reduction goals, but official figures show that Canada is not even on track to meet those targets without implementing “radical” measures.