Canada looks to protect industry with carbon proposal
San Francisco, 16 January (Argus) — The Canadian government is taking cues from Alberta to ensure that industries do not leave the country in response to a federal carbon price.
The country's environment and finance ministries yesterday shared details of a legislative proposal for a federal carbon pricing system that would include output-based benchmarks similar to those backed by the provincial government in Alberta.
Proponents say the measure is necessary to reduce the economic effects of prime minister Justin Trudeau's ambitious climate agenda, which sets a goal of cutting greenhouse gas (GHG) emissions 30pc below 2005 levels by 2030.
"We are following through on our commitment to put a price on carbon pollution across Canada, with federal legislation and a practical approach to protect competitiveness for large industry," environment minister Catherine McKenna said.
The provinces have until 1 September to demonstrate they will have a carbon pricing system that satisfies federal requirements. If they do not, the federal government could impose its own price, which starts at C$10/metric tonne ($8.05/t) this year and increases by C$10/yr until reaching C$50/t in 2022.
Under the plan, certain industries that emit 50,000 metric tonnes or more of CO2e/yr would not have to pay the carbon levy on fuels they purchase and would instead have to account only for GHG emissions above a specified level. An efficient facility that emits less than its limit could sell credits to other facilities that pollute more. Output-based standards would be developed for the oil and gas sector, food processing and mining, among other industries.
The measure may be a bid to attract provinces that have to date resisted the federal government's entreaties to set up their own carbon pricing system. Roughly 80pc of Canadians live in Alberta, British Columbia, Ontario and Quebec — the four provinces with some sort of carbon price already in place. But other provinces have fought against a carbon price or floated plans that would not satisfy the federal requirement.
Environmental groups largely applauded the inclusion of an industrial component to the federal carbon price.
"The global economy is shifting toward markets that reward low-carbon solutions, and by proactively driving industrial innovation toward this end, Canada is positioning local companies to compete in this new reality," said Dan Woynillowicz, policy director at the think tank Clean Energy Canada.
The environment ministry is accepting comments on the draft legislative proposal until 12 February.