Canada set to raise carbon price considerably over next decade

Enlarge / An oil refinery in Alberta. (credit: Kurt Bauschardt)

In 2018, Canada passed a federal carbon pricing law in an effort to reduce greenhouse gas emissions. The Greenhouse Gas Pollution Pricing Act was designed to not interfere with any provinces that had independently put a price on carbon, so long as a province’s system met the requirements of the federal law. In provinces that hadn't acted, the federal scheme would kick in instead.

That scheme involved a tax on fuels starting at CAD$20 per ton of CO₂, rising to CAD$50 by 2022.

On Friday, the government announced its plan for the program through 2030. Although the price was increasing by CAD$10 each year through 2022, it will now go up by CA$15 each year afterward. That means it would reach CAD$170 per ton of CO₂ in 2030—notably higher than current prices around the world. For this reason, the announcement also notes that the government will “explore the potential of border carbon adjustments”—a type of import tax meant to protect domestic industry from goods produced in countries without similar carbon taxes.

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