Government of Canada announces national price on carbon

Canada’s government will set a minimum price for carbon pollution beginning in 2018 to meet its Paris climate agreement targets, Prime Minister Justin Trudeau said today, Monday October 3rd, 2016. 

A minimum federal price of $10  per metric ton will be set in 2018, rising by $10 each year to $50 per ton in 2022 when it will be reviewed, Trudeau announced today in a speech to Parliament. Provinces and territories will have flexibility in deciding how to implement carbon pricing.

The following is a summary of the plan:

  • Provinces and territories with a direct price on carbon pollution, the price should start at a minimum of $10 per tonne in 2018, rising by $10 each year to $50 per tonne in 2022.
  • Provinces and territories with a cap-and-trade system will meet the benchmark by setting their annual caps to achieve at least the same amount of emissions reductions that would result from the carbon price in a price-based system. Cap-and-trade systems will also need a 2030 emissions reduction target equal to or greater than Canada’s 30% reduction target.
  • The provinces and territories will keep the revenues to use as they see fit.  This includes returning to consumers, helping vulnerable communities, or supporting businesses that innovate.

The approach will be reviewed in 2022 to confirm the path forward, including continued increases in stringency.

This announcement comes at a time when the Trudeau government will table the Paris climate agreement in Parliament for ratification.

“Pricing carbon emissions on its own wont enable Canada to reduce emissions in line with our targets—other complementary measures will be required. One such measure is for the federal and provincial governments to adopt and facilitate achievement of national targets for electricity generation that move us close to 100 per cent zero-carbon electricity by 2050.

Jacob Irving, Canadian Hydropower Association 

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