According to a report by the Pembina Institute, only British Columbia has set up a carbon pricing system that meets the minimum requirements set by the Canadian government.
Other provinces that have designed their own carbon pricing system, including Alberta, Ontario, and New Brunswick, have not met what Pembina calls the federal government’s strong benchmark for carbon pricing.
Isabelle Turcotte, federal policy director, Pembina Institute says “Reducing emissions from heavy-emitting industries like cement, oil and gas, and mining is critical to reaching Canada’s climate targets and to modernizing Canada’s economy.”
“As the global community works to reduce emissions, low-carbon products will be in higher demand. A strong industrial pricing system incentivizes innovation that will better position Canadian businesses to take advantage of the $26 trillion low-carbon economy.”
The report, Carbon Emissions: Who makes big polluters pay, examined the carbon pricing systems for heavy emitters from four provinces and the federal government to determine if they meet the two fundamental objectives of a pricing system for heavy emitters: to effectively reduce emissions and drive innovation; and address competitiveness concerns without limiting the effectiveness of the policy to reduce emissions.
Alberta is responsible for 38 per cent of Canada’s total emissions, followed by Ontario at 22 per cent. British Columbia and New Brunswick are responsible for nine per cent and two per cent of Canada’s emissions, respectively.
The report concludes that the Alberta government’s recently proposed system is weaker than the carbon pricing system it is replacing. Jan Gorski, analyst, Pembina Institute says “Alberta is moving backwards, risking the provincial economy’s competitiveness, and leaving opportunities to reduce emissions on the table.”
He adds the Kenney government’s system fails to meet the minimum requirements that would prevent imposition of the federal backstop, “and it fails to use market mechanisms to prepare Alberta’s industry for a 21st century economy.”
Meanwhile, the Pembina report says Ontario and New Brunswick are even more lenient and miss opportunities to grow the economy while cutting emissions.
Following the federal election in October, New Brunswick Premier Blaine Higgs committed to complying with the Trudeau government’s climate plan, including the federal carbon price, citing federal election results and noting that “the country has spoken” on climate action.
Brianne Riehl, senior analyst, Pembina Institute says “Our analysis proves that emissions can be reduced while growing the economy.” She adds “With its industrial pricing system, B.C. leads with the most comprehensive heavy emitter pricing system.”
The report also examined the systems’ treatments of the electricity system, as a clean grid is key to decarbonizing the transportation and building sectors. Pembina says a strong system seizes opportunities to accelerate the phase-out of coal (where relevant), and replace it with renewable energy, while avoiding natural gas lock-in.
British Columbia leads by pricing all emissions from electricity generation. Alberta’s proposed system, while weaker than its predecessor on most criteria, maintained strong incentives to green the grid. According to the report, the federal system’s approach should be strengthened to ensure better incentives to accelerate the 2030 coal phase-out.
When it reviews Alberta, Ontario, and New Brunswick’s proposed systems, it is the federal government’s responsibility to ensure the systems meet minimum requirements and keep Canada competitive with a global low-carbon economy.
Pembina argues that all jurisdictions need to ratchet up their ambition if Canada’s economy is to be decarbonized by mid-century. In the coming months, the federal government will evaluate the provinces’ heavy emitter systems to determine if they reach the minimum requirements. If not, those systems would need to be enhanced, or choose to have the federal backstop applied.
Examples of heavy emitting industries in Canada include cement, steel, lime, oil and gas, and mining.
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