Striving for Equivalency Across the British Columbia, Alberta, Québec and Ontario Carbon Pricing Systems : The Pan-Canadian Carbon Pricing Benchmark

The Pan-Canadian Framework on Clean Growth and Climate Change is designed to put Canada on track to meet its Paris commitments. A key pillar of the plan is the introduction of a pan-Canadian carbon price by 2018. However, four Canadian provinces, nearly 85% of the Canadian economy and population, have already implemented carbon pricing systems. British Columbia (BC) has a carbon tax. Alberta has transitioned from an output-based allocation system for industrial emitters to a hybrid system combining a carbon levy and refined output-based system. Québec and Ontario have implemented cap-and-trade systems, linked to California. Recognizing these existing systems, rather than impose a single carbon pricing mechanism, the Pan-Canadian Approach to Carbon Pricing gives provinces and territories the flexibility to adopt a carbon tax, a hybrid system, or a cap-and-trade system. To address concerns relating to ‘fairness' and equivalency of carbon price, a federal carbon pricing benchmark establishes criteria relating to minimum ‘common scope' and ‘increases in stringency' that provincial and territorial carbon pricing systems must meet. This paper explores the design features of the existing Alberta, BC, Ontario and Québec carbon pricing systems, and considers how the benchmark affects stringency and addresses equivalency of carbon price across these different systems. *Tables excluded