Pan-Canadian carbon pricing approach

All Canadian jurisdictions will have put a price on carbon pollution by 2018, according to a speech earlier this month by Canadian Prime Minister Justin Trudeau. The federal government's "pan-Canadian approach" sets a nationwide benchmark, while giving provinces flexibility to choose a cap-and-trade system or a direct price on carbon pollution.

On October 3, Prime Minister Trudeau announced the approach.  He proposed a minimum pricing of $10 per tonne in 2018, rising by $10 each year to $50 per tonne in 2022.  Provinces and territories may choose a direct carbon tax consistent with that pricing, or may elect a cap-and-trade system capable of yielding emissions decreases in line with both Canada's federal target of 30% emissions reduction by 2030, and the reductions expected in jurisdictions that choose a price-based system.  For any jurisdiction failing to adopt price or cap and trade by 2018, the federal government will implement a price.  As announced, the policy will be revenue neutral for the federal government; all revenues will stay in the province or territory where they originated.

In further releases, the government called for a "common scope," meaning that pricing of greenhouse gas emissions will be applied to a common and broad set of sources to ensure effectiveness and minimize interprovincial competitiveness impacts.  The categorization of sources subject to British Columbia's carbon tax is cited as a minimal example of this scope.

The plan calls for a review of the carbon pricing program in 5 years, to ensure its effectiveness, confirm future price increases, and account for actions by other countries.

As of 2017, four provinces will already have carbon pricing compatible with these standards: Alberta, British Columbia, Ontario, and Quebec.  Meanwhile, U.S. efforts to regulate carbon emissions from the electric power sector -- through the Environmental Protection Agency's Clean Power Plan -- remain under judicial challenge.