The focus on the carbon price on consumer fuel like gasoline is drawing much attention in Canada, with the federal minimum carbon price set to increase from $65 per tonne to $80 on April 1. However, a new study from the Canadian Climate Institute (CCI) suggests that the industrial policies, known as large-emitter trading systems (LETS), are actually responsible for a significant portion of Canada’s emission reductions. The CCI report found that LETS is the biggest driver of Canadian emission reduction, contributing 20 to 48 per cent of the emission cuts, while the fuel charge contributes about eight to 14 per cent.
The federal fuel charge is in place in several provinces and territories, while the industrial carbon price only applies in Manitoba, the Yukon, and Nunavut. The other jurisdictions have their own LETS system that incorporates the federal backstop. British Columbia, Quebec, and the Northwest Territories have their own commercial and industrial fuel charges that meet the federal backstop. Despite the focus on the fuel charge in debates, the CCI report emphasizes the importance of the industrial carbon price in achieving emission reduction targets.
Conservative Leader Pierre Poilievre has been leading rallies against the carbon tax, advocating to “axe the tax” and “spike the hike.” However, the CCI report highlights the importance of existing policies, including the industrial carbon price, oil and gas emission cap, methane regulations, fuel charge, and waste methane capture, in reducing emissions. The report projects that these policies will reduce emissions by about 40 per cent below 2005 levels by 2030, demonstrating the effectiveness of the current climate policies in place.
When asked about the industrial carbon price, Poilievre stated that he would not impose a new carbon tax and instead focus on incentivizing industry to become greener and cleaner. While the Conservatives have not unveiled a full climate platform, CCI president Rick Smith emphasizes the need to maintain industrial emissions regulations to meet emissions targets and remain competitive in the global economy. Smith highlights the economic incentives for Canada to maintain industrial emissions regulations, as other countries are also implementing similar policies to meet emissions reduction targets.
In conclusion, the focus on the carbon price on consumer fuel has dominated debates in Canada, but the industrial carbon price and other policies are also significant contributors to emission reductions. The CCI report underscores the importance of the industrial carbon price, LETS, and other existing policies in achieving emissions targets. Maintaining industrial emissions regulations is crucial for Canada to meet its emissions targets and remain competitive in the global economy. While debates continue on the carbon tax, the effectiveness of existing policies in reducing emissions should not be overlooked.
