On 3 October 2016, Canadian Prime Minister Justin Trudeau announced that all Canadian provinces and territories need to introduce carbon pricing by 2018. Jurisdictions can either implement a price-based system (e. g. a carbon tax) or an emissions trading system (ETS), provided the ETS cap is in line with: (a) Canada’s national emissions reduction target of 30% below 2005 levels by 2030 and (b) the reductions expected from provinces with a direct price on carbon. In jurisdictions which opt for a carbon tax, the carbon price should start with a minimum of CAD 10 per ton (EUR 6.80) in 2018, rising by CAD 10 annually to reach CAD 50 (EUR 34) per ton by 2022. If neither a price-based system nor an ETS is in place by 2018, the national government will impose a carbon price in that jurisdiction. Pricing is to be applied to a common and broad set of sources to ensure effectiveness, and the policy will be revenue neutral for the national government. All revenues generated will remain in that province or territory.

Further details of the national carbon pricing plan will be finalized over the next two months among the provinces, territories, Aboriginal organizations and national government. The plan will also be reviewed every five years starting in 2022 to ensure it allows Canada to meet its national reduction targets.

Four Canadian provinces have already established a carbon pricing system. Québec and Ontario both have an ETS, while British Columbia has a carbon tax in place and Alberta has a combination of a carbon levy and performance-based emissions system.