Canadian government mulling national carbon price floor -paper

Published 12:54 on February 18, 2016  /  Last updated at 12:57 on February 18, 2016  /  Americas, Canada, Carbon Taxes, US  /  No Comments

Canada’s federal government wants to agree a deal with provinces to set a national carbon price floor of C$15 per tonne, the Globe and Mail reported on Wednesday, citing anonymous sources.

Canada’s federal government wants to agree a deal with provinces to set a national carbon price floor of C$15 ($10.97/€9.87) per tonne, the Globe and Mail reported on Wednesday, citing anonymous sources.

According to the newspaper, Ottawa would set a minimum price for CO2 emissions that would increase annually, helping to level the playing field between Canada’s provinces while attempting to prevent domestic carbon leakage.

Under the proposal, provinces that already have carbon pricing initiatives would need to abide by the floor.

Those provinces that don’t would either need to adopt the federal levy or impose at least an equivalent price themselves, which would allow them to keep any revenues collected and could, for example, come in the form of a market-based mechanism or a tax.

It was not clear what sectors would be affected by the proposed measures.

The move could have a substantial effect on existing provincial policies, which currently have a wide price range for carbon, while forcing the hand of those yet to impose pricing.

The Globe and Mail reported that while no firm decisions have been made by the government, Ottawa is looking to set the floor at least at the level used by Quebec, and soon Ontario and Manitoba, under the Western Climate Initiative.

“There has been no specific price and no specific mechanism identified … Our core commitment is to work with the provinces,” one senior federal government source told the paper.

Quebec and WCI partner California on Wednesday held their first allowance auction of 2016, selling a total 71.6 million vintage 2016 units for a minimum C$17.64/$12.73 each.

Meanwhile, British Columbia has a $30/tonne carbon tax, while Alberta will increase its CO2 levy to the same level in 2018 as it rolls out a hybrid tax and market regime and caps emissions from its heavy-polluting oil sands.

Canada’s four Atlantic provinces are also mulling introducing carbon pricing, either individually or in the form of a regional tax.

Saskatchewan, the nation’s fourth biggest emitter after BC, has thus far not announced any plans to investigate carbon pricing, saying instead that it would wait for federal guidance.

WORKING GROUPS

The Canadian government is also looking to establish working groups, including one on carbon pricing, and wants to finalise a new national climate strategy by September, the Globe and Mail added.

The groups will analyse different heavy emitting sectors, including energy, buildings and transportation, to determine the best policies for curbing their GHG output.

The country’s new Prime Minister Justin Trudeau has promised to announce new measures to combat climate change within 90 days of the end of December’s COP-21 talks in Paris.

He is to meet provincial premiers in Vancouver on Mar. 3 to discuss the strategy, but Canadian Environment Minister Catherine McKenna last week said an agreement is unlikely to be finalised there.

According to data published last month Canada’s environment ministry, the country is far off track from meeting its emissions reduction targets for 2020 and 2030 – goals that were set by the previous Conservative government and which some observers say were very lax to begin with.

Environment and Climate Change Canada said national emissions are estimated to hit 768 million tonnes of CO2e in 2020 and 815 million tonnes by 2030 – levels way above the respective targets of 622 million and 524 million for those two years.

By Mike Szabo – mike@carbon-pulse.com

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