July 2015

Although Canada’s CO2 emissions account for only two percent of the globe’s CO2 emissions, the country has enforced a series of federal and provincial regulations to lower carbon emissions. Prior to withdrawing from the Kyoto Protocol in 2011, Canada signed the non-binding Copenhagen Accord in 2009 and committed to reduce the country’s GHG emissions to 17 percent below 2005 levels by 2020. In July 2015 a new federal regulation on coal-fired power plants will come into effect, limiting emissions to 420 metric tons of CO2 per gigawatt-hour of electricity produced per year. This law applies only to plants built after the law’s implementation, but will require previously existing plants to adhere to the same standards by 2030, or 50 years after their date of commission.

While all eight of Canada’s US-bordering provinces have introduced environmental policies to meet their respective 2020 CO2 emission reduction targets, only five have implemented carbon pricing mechanisms. Canada’s four biggest economies, British Columbia, Alberta, Ontario and Québec, have all put prices on carbon, as has smaller economy Manitoba. Remaining provinces Saskatchewan, New Brunswick, and Nova Scotia have chosen alternative and more long-term plans for their emissions reductions.

British Columbia’s carbon tax policy has seen major success since its implementation in 2008. Within the first six years, B.C.’s per-person consumption of fossil fuels dropped by 16 percent while the province’s economy kept pace with the nation’s. This tax-neutral policy, which is collected at the point of retail consumption, returns tax revenue to citizens and companies in the form of tax cuts. It applies to virtually all fossil fuels burned within the province. This covers about 70 percent of the B.C.’s emissions, and is estimated to reduce said emissions by about three million metric tons annually through 2020.

Alberta, Canada’s biggest greenhouse gas emitter, has seen less success with its carbon tax enacted in 2007. This is due to a more flexible policy measurement of carbon intensity versus carbon output, as well as cheaper alternatives to emissions reductions such as the purchase of offset credits. As the policy currently stands, existing facilities that emit more than 100,000 metric tons of CO2 per year must cap their emissions intensity at 12 percent below their average for 2003-2005 or pay a designated carbon tax of $15 per ton. As of 2012, the tax has collected some $500 million that is available for deployment on technologies to reduce emissions.

Québec implemented a provincial cap-and-trade program in 2013 before joining with California’s program the following year. The policy covers about 85 percent of Québec’s emissions and will raise $2.8 billion by 2020, which will go into the province’s Green Fund to finance projects outlined in its Climate Change Action Plan. The first joint auction between Québec and California was held in November of 2014. Auctions transpire quarterly and include the sale of both present and advanced vintage allowances. As of January 2015, the transportation sector as well as industrial and electricity producers exceeding the emissions threshold of 25,000 metric tons of CO2 equivalent per year must purchase said allowances.

Ontario announced in April 2015 that it would proceed with the creation of a cap-and-trade system. Its implementation will mean that 75 percent of all Canadians are covered by provincial level carbon pricing. The province has yet to release any figures on its planned program and is still conducting consultations with environmental groups and industries at the time of publishing. Ontario’s provincial government has publicly announced that is in discussions with Quebec and California to join their existing cap-and-trade program.