CPA Public Affairs
March 2018

CPA Provides Comment on Proposed "Backstop" Legislation

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In May 2017, the Federal Government released a Technical Paper that outlined how the federal carbon tax will be implemented, including how the levy will be applied to fossil fuels, such as gasoline, diesel, and propane. 

The levy on emissions from industrial facilities will not start before January 2, 2019, and will only apply to facilities that emit 50 kilotonnes or more of greenhouse gases per year.

Provinces that already have a carbon tax or a cap and trade system will not be affected. However, the Federal Government has introduced draft legislation that will implement a carbon pollution pricing system – "A Backstop" – to be applied in jurisdictions that do not have carbon pricing systems that align with the federal carbon pricing benchmark.

On January 15, the Minister of Environment and Climate Change, Catherine McKenna, and the Minister of Finance, Bill Morneau, released draft legislative proposals entitled the Greenhouse Gas Pollution Pricing Act, relating to the proposed federal carbon pricing system for public comment. It confirms that the Act would apply in provinces and territories that request it and in those that don’t have a system in place that meets the federal standard in 2018.

The federal government also released for comment a regulatory framework describing the proposed federal approach to carbon pricing for large industrial facilities. This component of the federal pricing system would create a price incentive for large industrial facilities to reduce emissions while limiting the potential impacts of carbon pricing on their international competitiveness. 

On February 12, the CPA provided comment regarding the Greenhouse Gas Pollution Pricing Act.

Comments by the CPA included: 
  • Any large emitter exemption certificates and processes should be defined well in advance.  
  • End users (such as farms) that are deemed to be exempt should be exempt from propane in addition to diesel and oil.
  • The least burdensome administrative model should be used.
  • There should be allowances for fuel variances, particularly in Atlantic Canada where fuel variances (or line losses) can be significant.
The CPA also noted that it would be very complicated if the federal guidelines applied to compliant provinces. In other words, the government must ensure that the system is transparent and efficient. 

The CPA will continue to monitor the Greenhouse Gas Pollution Pricing Act as it is introduced and works its way through the legislative process.

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