Federal Carbon Pricing Bill: What is it and how will it impact business? This week, the federal government released its long-awaited draft legislation on the federal carbon pricing regime. Provinces and territories must put into place carbon pricing systems that meet certain criteria, called a “benchmark”.
For those jurisdictions that do not meet these criteria, the federal government will impose its own carbon pricing regime – referred to as a “backstop.” The backstop has two parts. First, is a carbon levy that distributors of fuel will have to pay. It won’t be charged at the pump, although it will increase the price of natural gas and petroleum and, in some places, electricity. Second, is a separate regulation that will only apply to facilities that emit a large amount of greenhouse gases.
Since provinces and territories have until September 1, 2018 to outline their approach to carbon pricing, it is not yet certain where exactly the federal systems will apply. However, carbon pricing systems in BC, Alberta, Ontario and Quebec are generally expected to meet the federal government’s criteria and won’t be subject to the federal law as well.
The chamber network has supported carbon pricing since 2011. However, as mentioned in a letter to Prime Minister Trudeau and signed by the CEOs of the provincial and territorial chambers, we are concerned that government is choosing to layer regulation on top of carbon pricing policies. This approach not only adds costs but negates one of the main beneﬁ ts of carbon pricing: the ﬂ exibility it offers to business.
We’ll continue to make the case that, as Canada moves forward with ambitious climate policies, government should consider lowering costs elsewhere. A good place to start is comprehensive review of the Canadian tax system.