On October 3, Prime Minister Trudeau pre-empted climate
negotiations with Canada's premiers by announcing the federal
government's plan to impose a pan-Canadian price on carbon. The
plan requires all Canadian jurisdictions to have a system for
carbon pricing in place by 2018, with a view to ensuring Canada
meets its objective to reduce carbon emissions to 30% below 2005
levels by 2030.
Although provinces and territories will have the flexibility to
decide how they will implement carbon pricing, the federal
government will set a floor price for carbon emissions. For 2018,
the price will be set at $10 per tonne of greenhouse gases emitted.
That price will rise by $10 each year until 2022, when the
federally set minimum price will be $50 per tonne.
Under the proposed plan, provinces and territories that do not
opt for either a cap-and-trade system or a carbon tax will have the
federal pricing system imposed on them. The provinces and
territories that do opt for a particular system but do not respect
the federal price will be subject to a federal carbon tax to make
up the difference. In either case, revenues generated from the
federal tax will be returned to that province or territories.
Alberta's carbon tax regime puts a price on carbon at $20
per tonne beginning January 1, 2017, rising to $30 per tonne the
following year. British Columbia's system applies a $30 per
tonne carbon tax to the purchase or use of fuels and combustibles
when used to produce heat or energy. And it currently applies an
emissions cap on liquefied natural gas operations, as part of a
limited cap-and-trade system. Neither province anticipates the
price escalation of the federal regime.
Saskatchewan, Canada's fourth largest emitter of carbon,
does not support carbon pricing. To date, Saskatchewan has focused
on reducing its emissions from coal generation through carbon
capture and storage technology. Saskatchewan is also proposing to
increase its renewable energy generation from 25% today to 50% by
2030. It is not clear how Saskatchewan will further mitigate its
emissions in accordance with the federal plan.
Davies will continue to follow developments regarding the
proposed federal plan and how it proposes to deal with issues such
as the types of emissions that will be covered and whether
emissions-intensive and trade-exposed industries will be protected
to safeguard against carbon leakage.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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