On 16 and 17 November 2016, Canada, Germany, Mexico and the United States became the first countries to submit their long-term low greenhouse gas (GHG) emission development strategies (LT-LEDS), as stipulated under Article 4.19 of the Paris Agreement.

All four strategies endorse carbon pricing as an important pillar to achieve their medium- and long-term national emissions reduction targets. The U.S. submission states that efficient carbon pricing should be a priority for future policymakers, either by continuing with a subnational approach to carbon pricing or by moving to an economy-wide mechanism.

Canada’s strategy outlines a pan-Canadian framework (PCF) for clean growth and climate change in order to meet or exceed Canada’s GHG emissions target for 2030. This includes a carbon pricing framework that Canadian provinces and territories can adapt to their specific circumstances. The Canadian strategy also recognizes the relevance of the subnational link between the cap-and-trade programs in California and Québec in line with Article 6 of the Paris Agreement. Canada will account for these transfers as part of its international climate change contribution.

Mexico highlights the relevance of market-based instruments and reports that, in addition to the existing carbon tax, it is considering a national cap-and-trade system and is currently developing necessary technical and regulatory components. This is consistent with the announcement of the Mexican Environment State Minister at COP 22 to launch an ETS by 2017 and the recently launched national ETS simulation, which aims to build ETS readiness among key stakeholders.

The German strategy emphasizes the role of emissions trading as the key EU climate instrument for the energy and industrial sectors. Germany also supports strengthening the European Union Emissions Trading System (EU ETS) in the context of the current negotiations on a structural reform of the system in the lead up to Phase IV.