Canada joins ICAP as an observer
ICAP is delighted to welcome Canada as the 6th jurisdiction with observer status. The Honourable Jonathan Wilkinson, Minister of Environment and Climate Change of Canada, has signed the ICAP political declaration, making Canada an ICAP observer as of 14 September 2021.
Canada has demonstrated strong leadership in carbon pricing and emissions trading in the past few years. The adoption of the ‘Pan-Canadian Framework on Clean Growth and Climate Change’ (PCF) in December 2016 marked the introduction of Canada’s first ever federal-provincial-territorial plan to fight climate change. The PCF includes pricing carbon pollution across Canada as a foundational pillar.
Under the PCF, Canadian provinces and territories have the flexibility to implement their own pricing systems, as long as they meet the federal benchmark, currently CAD 40 (USD 31.57) and rising to CAD 170 (USD 134.19) in 2030. Provinces and territories can choose to implement either a cap-and-trade system, an explicit price-based system, or a combination (‘hybrid’) of a charge on fossil fuels and an intensity-based baseline-and-credit system for industrial emitters. A federal carbon pollution pricing ‘backstop’ system applies in jurisdictions that request it or do not implement systems that meet the federal benchmark. This system includes two instruments: a regulatory charge on fossil fuels and a performance-based system for covered industries, known as the federal Output-Based Pricing System (OBPS).
At present, the federal backstop fully applies in four and partially in another three provinces/territories. Six additional provincial/territorial systems are in place and fully meet federal requirements, with ICAP members Québec and Nova Scotia each having a provincial cap-and-trade system implemented.
Canada is also an active player in a number of international efforts to promote the uptake of carbon pricing and emissions trading, such as the World Bank’s Carbon Pricing Leadership Coalition and the Carbon Pricing in the Americas Declaration.