Canada’s Carbon Program: Leadership in Need of Refinement
Driving Improvements for a Fair and Effective Carbon Future
Canada’s carbon pricing program has set a global benchmark for climate action, offering a structured approach to reducing emissions. However, refinements are necessary to enhance fairness, transparency, and public trust. This blog explores what’s working, what needs fixing, and how Canada can lead with a more effective carbon pricing strategy.
What Worked Well
- Predictable Price Increases: Clear annual price increases through 2030 have helped businesses and households with the clarity needed to plan for emissions reduction. Extending this predictability to 2035 could further encourage long-term investment in sustainable practices.
- Encouraging Sustainable Alternatives: By putting a cost on carbon, the carbon pricing program has spurred interest in sustainable alternatives and creating confidence in business plans, though adoption remains slower than desired.
- Revenue Return: Federal carbon levy rebates offset energy costs, especially for low- and middle-income families who receive more. This “carbon dividend” rewards greener practices and ensures most households get back more than they pay, supporting fairness and climate goals.
What Needs Fixing
- Simplifying Exemptions: Complex dual pricing systems and industry carve-outs create inconsistencies that undermine climate goals and should be streamlined.
- Better Revenue Allocation: Funds should prioritize investments in clean energy, public transit, and support for vulnerable communities. Improved transparency is crucial to rebuild trust and showcase the program’s benefits.
The Path Forward
- Adjust Annual Increases for Feasibility:
The current $15/tonne annual price increases have proven to be material and have sparked resistance. A $10/tonne annual increase, successfully tested in the Output-Based Pricing System (OBPS), could balance progress with affordability.
- Introduce a Tiered Pricing Cap:
The cap should be reevaluated. While Canada’s carbon pricing isn’t the most expensive globally, it’s tied for third. A revised approach could set a $100/tonne cap for households while keeping $170/tonne for high-emission energy and industrial sectors by 2030. This tiered structure would balance affordability for households with strong incentives for emissions reductions in heavy-polluting sectors.
Canada’s carbon pricing framework remains a global benchmark for climate action. By refining exemptions, increasing transparency, and directing funds toward impactful projects, it can continue driving meaningful emissions reductions while ensuring fairness and public support.
Let’s Continue the Conversation on Carbon Management
For over 20 years, Blackstone Energy has partnered with organizations to measure, track, and reduce their carbon emissions using data-driven strategies and advanced technology. Our experts can help your business map emissions profiles, calculate Scope 1 and 2 emissions, and navigate carbon accounting principles seamlessly.
Let’s discuss how we can support your sustainability journey. Reach out to us at policyandregulatory@blackstoneenergy.com to learn more about how we can help your business take control of its environmental impact.
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