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With the exception of Saskatchewan, Canada's First Ministers have agreed upon a Pan-Canadian framework on climate change, which includes a commitment to the introduction of a federal carbon floor price.
The Pan-Canadian Framework on Clean Growth and Climate Change was adopted following a December 9 meeting of Canada's First Ministers.
In the Framework documentation, it is stated that carbon pricing should be one of its central components, and that the approach should be flexible and recognize policies already implemented or in development in the provinces and territories. It is also noted that carbon pricing policies should be introduced in a timely manner to minimize investment into assets that could become stranded and maximize cumulative emissions, and that price increases should occur in a predictable and gradual way to limit economic impacts.
The federal Government has proposed a benchmark for pricing carbon pollution, to be implemented by 2018. The aim is to ensure that carbon pricing applies to a broad set of emission sources across the country.
The federal Government will permit provinces and territories to implement either an explicit price-based system or a cap-and-trade-system. British Columbia currently operates a carbon levy, while Alberta has a performance-based emissions system. Ontario and Quebec each have cap-and-trade systems.
The Framework documentation explained that for jurisdictions with a price-based system, the carbon price should start at a minimum of CAD10 (USD7.62) per tonne in 2018 and rise by CAD10 per year to reach CAD50 per tonne in 2022.
Provinces with a cap-and-trade regime will be required to have a 2030 emissions-reduction target equal to or greater than Canada's federal 30 percent reduction target, and declining (more stringent) annual caps to at least 2022 that correspond, at a minimum, to the projected emissions resulting from the carbon price that year in price-based systems.
Revenues will remain in the jurisdiction of origin, with each permitted to use revenues according to their needs. The federal Government will introduce an explicit price-based carbon pricing system that will apply in jurisdictions that do not meet the benchmarks.
In addition, federal, provincial, and territorial governments will "work together to establish a review of carbon pricing, including expert assessment of stringency and effectiveness that compares carbon pricing systems across Canada."
This review will be completed by early 2022. An interim report will be published in 2020, which will be reviewed and assessed by First Ministers.
Saskatchewan is not adopting the Pan-Canadian Framework. Writing on Twitter, Premier Brad Wall warned that a carbon tax would "harm and render less competitive" the energy, mining, and agricultural sectors.
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