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Policy
| 02/25/16

Saskatchewan, Yukon reject Ottawa plan for national carbon price

TCE

Ottawa wants to set a Canada-wide minimum price on carbon of $15 a tonne in an effort to stitch together the country’s patchwork of differing provincial approaches to greenhouse-gas (GHG) mitigation.

Environment minister Catherine McKenna outlined on Friday the federal government’s intentions ahead of a summit in Vancouver on 3 March between the prime minister and his provincial and territorial counterparts where a national climate and energy strategy is to start being hammered out.

Under the plan, Ottawa would set a floor price for carbon pollution, matching the level set by Quebec’s cap-and-trade system and soon to be adopted by Ontario. This floor would then increase annually. Provinces that want to go further, such as British Columbia—which imposes a $30 per tonne, economy-wide carbon tax—are free to do so. Alberta plans to establish a $20-per-tonne carbon levy, rising to $30 in 2018. Provinces that currently do not have carbon pricing mechanisms would have the option of developing their own programmes whereby they would keep the revenues.

In December, Manitoba signaled its intentions to adopt a cap-and-trade plan. And this week, Ontario introduced new legislation that sets GHG reduction targets and establishes a cap-and-trade system that will fund various emissions reduction projects.

Details for the national plan have been left deliberately vague, according to media reports, with no preference for carbon taxation or emissions trading.

By setting a common minimum price across the country, the government also hopes to prevent what is termed ‘carbon leakage’, whereby carbon-intensive industries move from a province with tougher carbon regulation to one with a lighter touch.

Newfoundland and Labrador announced earlier this month that it is exploring different policy options, and the four Atlantic provinces as a whole have said they want to work together on a regional carbon pricing scheme.

Both Saskatchewan and the Yukon, neither of which have any form of carbon levy, immediately rejected McKenna’s proposal. Saskatchewan has opted instead for funding the world’s first commercial-scale carbon capture and storage (CCS) operation at Boundary Dam, which aims to scrub carbon dioxide from the emissions from a coal-fired power plant.

“Let’s be clear that it would be a tax, and that’s the very last thing the economy needs right now,” Saskatchewan premier Brad Wall told reporters. “We think technological investment should be a higher priority than fiscal instruments or new taxes that would hurt economic growth and potentially cost jobs here in Saskatchewan and across the country.”

Yukon premier Darrell Pasloski also came out swinging against a national carbon price. “Canada’s northern economies are small and developing,” he said in a press release, “where burning fuel for heat and transportation is a necessity, not a luxury.”

The leaders of the Northwest Territories and Nunavut for their part have not responded to Ottawa’s proposal, but in 2012, Yellowknife’s Department of Finance investigated the impact of carbon pricing and concluded that the lowest income individuals and those in small, remote communities would be “disproportionately burdened” due to their heavy reliance on diesel-powered electricity generation and heating.

The federal government wants agreement on a national strategy by September.

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