The March 2017 federal budget promised a consultation paper on carbon pricing “in the coming months.” According to the Pembina Institute, release of that paper is imminent, and it is weighing in with its own recommendations on the direction it should take.
Ottawa is planning legislation, likely to be introduced before the year is out, that will establish a national minimum carbon price of $10 per tonne of CO2 equivalent, rising by $10 per tonne increments every year through 2022. But the legislation will have to do more than merely set a floor price. It will have to create a mechanism to ensure that provincial pricing schemes (and it is expected that all provinces except Saskatchewan will have their own distinctive carbon pricing scheme) are equivalent and that some consideration is given to the post-2022 period.
Pembina is urging Ottawa to consider seven points in its national carbon pricing strategy:
- Legislation should provide guidance on the treatment of emission-intensive, trade-exposed (EITE) sectors and protection of vulnerable Canadians
- EITE treatment should minimize carbon leakage and mitigate impacts to competitiveness
- Coverage should be as broad as is accurately measurable, and benchmarks should be updated periodically as new quantification methods become available
- Terms of the scheduled 2020 progress review should be made clear
- The national benchmark should require that provincial caps decline in line with the federal commitment to cut emissions in 2030 to 30% below 2005 levels. Jurisdictions (such as Nova Scotia) that are expected to outperform the federal commitment should have incentives to introduce further carbon cuts
- Carbon pricing and policies should be regularly and consistently reviewed
- The federal government should begin laying the groundwork for carbon price increases in the 2022 to 2030 period in order to provide certainty to industry and further drive innovation.
The Pembina Institute’s recommendations are available here.