VICTORIA—Mark Zacharias, executive director at Clean Energy Canada, made the following statement in response to Conservative Party of Canada’s announcement that it would scrap Canada’s industrial carbon price:
“Removing Canada’s industrial carbon pricing system, as proposed by the Conservative Party of Canada today, makes little economic sense if Canada’s goal is to diversify our export markets. Forty-eight nations, including some of Canada’s largest trading partners, have industrial carbon pricing systems. If Canada is to increase trade with these nations, we need to match their ambition and not simply parrot the Trump administration by scrapping policies that build a clean economy.
“Industrial carbon pricing has been a key component in bending Canada’s emissions trajectory, with analysis showing it would account for 20% to 48% of national emissions reductions in 2030—the largest impact of any policy. Only last October, a group of Canadian industry and manufacturers signed an open letter supporting industrial carbon pricing. Their request was not to remove the system but to break down provincial barriers and differences in application. The federal industrial carbon price applies only in Manitoba, PEI, Nunavut, and Yukon, meaning provincial systems in Canada’s largest provinces would be unchanged by this announcement. Vacating federal leadership in this space can only serve to increase differences at a time when the country is trying to pull together.
“Federally, the system, known as the Output Based Pricing System, allocates a limit on pollution for large industrial facilities relative to their production, meaning they are charged—or rewarded—based on the efficiency of their operations, rather than overall output. Any emissions produced over this cap incurs a fee, which creates an incentive to increase efficiency and competitiveness, and any unused allocations earn credits, a further economic incentive. Some operators are even able to earn net returns from selling credits generated under the system.
“Today, most provinces operate their own industrial carbon pricing system. Alberta, with the majority of Canada’s oil and gas production and the largest share of the country’s emissions, has had an industrial carbon price since 2007, the first in North America. This was brought in with the same goal, to improve competitiveness and increase efficiency.
“Going forward, making sure our industries are reducing emissions will be key to boosting export opportunities with like-minded trade partners—for example, with the EU bringing in carbon border adjustment mechanisms, which are essentially a tariff on high-carbon products. Scrapping the policy puts Canada offside many of our key allies outside the U.S.—partnerships we should be building up right now.
“The Conservative Party suggests its plan would involve expanding the eligibility of the Clean Technology and Clean Manufacturing Investment Tax Credits and rewarding low-carbon producers in Canada with additional tax cuts, but that is what the industrial carbon price already does. It rewards companies that reduce emissions per-unit of production. This change would simply create additional confusion, uncertainty and paperwork for industry during economically turbulent times.
“The consumer carbon price was permanently rescinded last Friday for being, in the words of the new prime minister, ‘too divisive.’ But going forward, Canada needs to be clear-eyed about who its trusted trade partners are and where the world is headed.”
