Backgrounder Article from  Environment and Climate Change Canada

Government of Canada proposes pan-Canadian pricing for carbon pollution

The Paris Agreement and the Vancouver Declaration have set an ambitious course for climate action in Canada. On March 3, 2016, the First Ministers adopted the Vancouver Declaration on Clean Growth and Climate Change and committed to develop a concrete plan to achieve Canada’s international climate commitments and become a leader in the global clean growth economy.

As part of the Vancouver Declaration on Clean Growth and Climate Change, the First Ministers established working groups to identify options to address various aspects of climate change, including how to build pricing systems for carbon pollution. The working groups included officials from the federal government as well as each province and territory. Between April and September 2016, the working groups publicly collected input from all Canadians. The working groups also directly engaged and took input from National Indigenous Organizations and held a number of roundtable sessions with key stakeholders, including from environmental groups and industry.

Canadians played a key role by sharing more than 13,500 ideas and comments on the climate change interactive website and participating in town hall discussions across the country. Based on what they have heard from Canadians and the working groups, Ministers are working together and with Indigenous partners, to develop a comprehensive climate change plan.

At their meeting on October 3, the Ministers of the Environment discussed climate and clean growth with the national First Nation, Inuit and Métis leaders. The Ministers worked throughout the day and agreed on key elements that will be included in the Pan-Canadian Framework on Clean Growth and Climate Change. These key elements will include pricing carbon, as well as actions to reduce emissions across the economy, including from electricity, buildings and industry. Measures to build resilience to the impacts of climate change and create clean growth and good jobs through greater innovation in clean technologies will also be central to the pan-Canadian framework.

Indigenous and Northern perspectives will be especially important while developing these key elements. Taken together, these elements will be an integrated plan to take action on climate change and work with all Canadians to build a stronger country, a healthier environment and a low-carbon economy.

Carbon pricing is one of the most efficient ways to reduce greenhouse gas emissions. Clearly pricing pollution will stimulate innovation, clean growth and the creation of jobs for the middle class.

To accomplish this, the Government of Canada is proposing pan-Canadian pricing for carbon pollution, which would be implemented across the country by 2018.

Carbon pricing is not a new approach in Canada, but it is an essential one. Provinces have led the way, showing tremendous leadership. British Columbia, Alberta, Ontario and Quebec, representing over 80 percent of the population, have already introduced carbon pricing. But more action is needed; both to expand the application of carbon pricing and to ensure that it plays an increasingly significant role in reducing emissions, while fostering clean growth.

Under the proposed pan-Canadian approach, provinces and territories will have the flexibility to choose between two systems: a direct price on carbon pollution or a cap-and-trade system. Revenues raised remain with the provinces and territories and they will decide how to reinvest that money in their economies, support their workers and their families and minimize impacts on vulnerable groups.

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

Pricing carbon pollution will give Canadian businesses, investors and consumers a clear, predictable basis for decision-making. It will also foster investments in research and innovation, which will better position Canadian firms to compete in the rapidly emerging, low-carbon economy.

Canadians know that climate change is already affecting their lives. Pan-Canadian pricing for carbon pollution will build a better Canada for our children and grandchildren and help protect the health of all Canadians.

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Hon. Catherine McKenna Environment and Climate Change Canada Nature and Environment

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