The Government of Canada released a technical paper May 18 that outlines a proposed federal carbon pricing option for provinces that choose not to have their own system in place in 2018.
The Technical Paper On The Federal Carbon Pricing Backstop describes how the proposed Canada-wide carbon pricing system would be applied as a “backstop” in jurisdictions that do not have carbon pricing systems that align with what the federal government plans to set as a benchmark price. The “backstop instrument” will consist of a carbon levy applied to fossil fuels, and “an output-based pricing system for industrial facilities that emit above a certain threshold, with an opt-in capability for smaller facilities with emissions below the threshold.”
A sample from Table 2: Rates of Levy on Gaseous Fossil Fuels from 2018 to 2022:
| Gaseous fuel | Unit | 2018 ($10/tonne) | 2019 ($20/tonne) | 2020 ($30/tonne) | 2021 ($40/tonne) | 2022 ($50/tonne) |
| Marketable natural gas | ¢/m3 | 1.96 | 3.91 | 5.87 | 7. 8 3 | 9.79 |
| Non-marketable natural gas | ¢/m3 | 2.59 | 5 .17 | 7.76 | 10.34 | 12.9 3 |
“Companies across Canada, from banks, to transportation firms, to oil and gas industry, have called for a price on carbon,” the notice says. “They know pricing pollution makes good business sense.”
Whichever system is implemented – federal or provincial – revenues will remain in the provinces, the notice goes on to say. Revenues from carbon pricing can be used to lower taxes, as in British Columbia, or support low-and middle-income families, as in Alberta. Ontario and Quebec plan to invest their revenues in “innovative green programs that create good jobs.” For the federal carbon levy option, the government is still evaluating how best to return the revenues, for example, by giving it back to individuals and businesses in the province.
Comments on the proposed federal option are being invited until June 30, 2017, at
“Canadians know that polluting isn’t free,” said Catherine McKenna, Minister of Environment and Climate Change. “We know that it causes droughts, floods and extreme weather events, and affects our health. So it’s only fair that polluters pay, and that there is a price on pollution across Canada. This will reduce pollution, create incentives for companies to innovate and develop clean solutions, and provide certainty to businesses that we are moving to a clean-growth economy. That’s why we are working together with provinces, territories, Indigenous Peoples, businesses, communities and all Canadians to build a more sustainable, cleaner, more prosperous economy, and create good middle-class jobs now and for the future. Because it’s good for business. And because we owe it to our kids and grandkids.”
The technical paper is available at https://www.canada.ca/content/dam/eccc/documents/pdf/20170518-1-en.pdf.