Photo: Alex Vye
Canada’s Environment Minister Catherine McKenna says the country will implement a national price on carbon by the end of 2016.
Canada is one of the top 10 greenhouse gas emitters, by country, and exhibits the highest per capita carbon footprint globally.
“The most powerful move that a government can make in the fight against climate change is to put a price on carbon,” declared Rachel Kyte, World Bank’s VP of sustainability.
Prior to the 2015 Conference of the Parties in Paris, the World Bank promoted a resolution, signed by 74 countries and over 1,000 businesses including China, Shell, British Airways and Nestlé, encouraging governments to enforce legally binding carbon prices. Neither the United States nor Canada signed the agreement.
Canada wants to change that. Although there are several state-run carbon trading initiatives in the United States – like the California Cap-and-Trade Program and the Regional Greenhouse Gas Initiative (RGGI) – it is unlikely that the States will develop a national price on carbon in the near future.
The literature predominantly supports two carbon-pricing structures: an emissions tax or a cap-and-trade system. With a tax system, emitters would pay a certain amount of money per ton of CO2-equivalent gas emitted into the atmosphere. The cap-and-trade system provides a market-based approach in which a regulatory body sets a cap on the total amount of emissions per year then allocates permits to emit. Polluters can choose to reduce their emissions or purchase the credits to meet emissions standards.
Over the next several months, Canada’s lawmakers will consider various carbon-pricing schemes and, in October, will publish an emissions reduction plan. Although the carbon pricing policy is not set in stone, the country’s Prime Minister Justin Trudeau and some of Canada’s major corporate players like Air Canada and Suncor Energy Inc. support the action.
“I feel we are really creating the momentum and the stars are aligning and industry is aligning with us,” McKenna told Bloomberg.