Federal ‘backstop’ carbon pricing system to apply to nearly half of Canada’s population
On October 23, 2018, the federal government signalled its intention to move forward with a federal carbon pricing system beginning in 2019. While it was initially meant as a backup plan for the few jurisdictions that did not implement their own carbon pricing mechanisms, amendments to Part 1 of Schedule 1 of the Greenhouse Gas Pollution Pricing Act will make Ontario; New Brunswick; Manitoba; Saskatchewan; Yukon; and Nunavut subject to the Act.
Once in force, the federal carbon pricing system will apply to almost half of the Canadian population, although legal challenges recently launched in Ontario and Saskatchewan may yet influence final implementation.
The Greenhouse Gas Pollution Pricing Act, sets out a carbon pricing system that consists of a two-pronged approach:
- a carbon levy or tax on fossil fuels (to be administered by the Canada Revenue Agency), and
- an output-based pricing system (OBPS) for emissions-intense industrialfacilities (to be administered by Environment and Climate Change Canada [ECCC]).