Back in 2014, Australia became something of an international pariah when it canceled plans to introduce a carbon tax. Now, the Trudeau administration of Canada has done precisely the opposite, announcing this week that the liberal government will impose a carbon tax on emissions starting in 2018 as part of its drive to meet targets set by the Paris agreement.
“There is no hiding from climate change,” Prime Minister Justin Trudeau told the Canadian House of Commons, as reported by the Associated Press. “It is real and it is everywhere. We cannot undo the last 10 years of inaction. What we can do is make a real and honest effort – today and every day – to protect the health of our environment, and with it, the health of all Canadians.”
Canada’s carbon tax, which will come into force in 2018, will allow provinces to put a direct tax of $7.60 per US ton of carbon emissions, and will set up a cap-and-trade system. The latter involves both caps on carbon emissions and a trade network allowing companies to buy and sell allowances for higher temporary caps.
This way, if a company is able to cut emissions easily, it will be able to sell its “extra allowances” to other companies that are finding cuts difficult. In short, this system provides organizations with an economic incentive for cutting carbon emissions.
If a Canadian province or territory has refused to implement any of these carbon-cutting systems by the 2018 deadline, the federal government will impose a basic carbon tax of $10 per US ton on emissions, rising by $10 a year until it reaches $38.11 per US ton by 2022.
The Premier of Alberta, an oil-rich province, demanded that the federal government make progress on new oil pipelines along Canada’s coastline before it considers the specific carbon tax scheme being proposed. The Saskatchewan Premier claimed that the carbon tax will damage the regional economy.
However, Ontario and Quebec, the two most populous provinces, are joining a cap-and-trade program, and British Columbia already has a carbon tax.
Alberta's natural beauty is contrasted by the controversial work on developing new oil pipelines in the region. puttsk/Shutterstock