The Liberal government will move this fall to impose a minimum, national carbon price on provinces that fail to adopt their own pricing system for reducing greenhouse-gas emissions, a plan that is adamantly opposed by some key premiers.

Federal Environment Minister Catherine McKenna also indicated Sunday that the government will not commit to a more aggressive target for reducing emissions than the one adopted by the Harper government in 2015, though environmentalists argue that the goal is a weak one.

Ottawa will require provinces to adopt either a carbon tax or cap-and-trade approach and to meet a federally established minimum price, Ms. McKenna said on CTV’s Question Period. The federal government will impose its own system on provinces that fail to meet that minimum threshold, the minister said.

“It’s mandatory that everyone will have to have a price on carbon,” Ms. McKenna said Sunday. “If provinces don’t do that, the federal government will provide a backstop.”

Ms. McKenna said the government will outline its plan prior to a first ministers’ meeting this fall at which federal, provincial and territorial leaders aim to conclude a national climate strategy.

Ottawa is looking at options for a carbon levy – likely in the form of higher taxes on fuels – that would be imposed on provinces that refuse to adopt their own plans or fail to meet the federal minimum price, sources have told The Globe and Mail.

The government’s determination to implement a national carbon price is meeting with resistance and some outright opposition from premiers. Provinces that already have carbon-pricing regimes, notably Quebec, worry that Ottawa will intervene and force them to get tougher, while the premiers in Saskatchewan and Nova Scotia argue that they have their own climate plans and that the federal approach will hurt key industries and consumers.

Ms. McKenna said that provinces can choose a tax on greenhouse-gas emissions, which British Columbia and Alberta have adopted, or the cap-and-trade approach favoured by Ontario and Quebec.

The price will have to be sufficiently high to encourage businesses and consumers to conserve energy or switch to cleaner, renewable sources, she said. And it will have to rise over time.

British Columbia has a carbon tax of $30 per tonne of carbon-dioxide emissions, a level Alberta intends to reach in 2018. B.C. Premier Christy Clark announced last month her government would not increase its carbon levy – which has been frozen since 2012 – until other provinces move in lockstep.

In addition to a carbon price, Ottawa wants a national strategy to include a commitment to reduce methane emissions from oil and gas extraction, a new plan to phase out coal-fired power and a host of measures to encourage the adoption of clean-energy technology, sources say.

Prime Minister Justin Trudeau hopes to have a national plan in place ahead of the United Nations’ summit to be held in Morocco in early November.

The Prime Minister and premiers met in Vancouver in March and agreed on the need for a national climate plan that would reflect the country’s commitments made at the Paris climate summit last December, and would include some form of carbon pricing.

The government intends this fall to ratify the Paris agreement in which nations agreed to limit global temperature increase to below 2 degrees Celsius. As part of that effort, Canada committed to cut GHG emissions by 30 per cent below 2005 levels by 2030, a goal set by former prime minister Stephen Harper’s Conservative government.

While critics complain the target is the weakest among leading industrialized nations, the Liberal government has long signalled that it considers the goal to be ambitious. Ms. McKenna argues it is more important to focus on effective measures to reduce emissions rather than targets.

“We’re going to take real action. … The Harper target was a fake target because [the Conservatives] did nothing” to achieve it, she said.

Although Ms. McKenna expressed optimism about reaching a federal-provincial-territorial deal, some provinces and territories have expressed opposition to Ottawa’s plan for a national carbon price and its proposal to speed up the phaseout of coal-fired power.

Saskatchewan and Nova Scotia argue that they already have a form of carbon pricing – the prairie province through its major investment in technology that captures GHG emissions from coal-fired generating stations, and Nova Scotia through costly measures to reduce GHGs in its electricity sector.

Saskatchewan Premier Brad Wall has been the most vocal opponent to Ottawa’s climate strategy, saying Mr. Trudeau is reneging on his promise to collaborate with the provinces on the issue.

On Sunday, he questioned whether the country should meet its UN target, arguing that to do so could impose onerous costs on the oil-and-gas sector in Western Canada.

And he reiterated his opposition to any federally imposed carbon price. “If it’s some sort of universal price that will manifest itself as a tax and be disproportionately impacting the energy sector, which is already reeling, then we have a big problem in Saskatchewan,” he told CTV’s Question Period.

British Columbia and Alberta indicated they are not concerned with the federal carbon price plan because they expect it to be consistent with their existing policies. It’s not clear, however, whether the federal government will insist on a more aggressive increase in the carbon price than those governments would find comfortable. B.C.’s Ms. Clark faces a general election next May, while Alberta’s NDP Premier Rachel Notley faces stiff opposition to her government’s carbon pricing from conservative opposition parties.

“We support the adoption of B.C.’s price on carbon as a national benchmark and increasing that price together in an affordable way, once other jurisdictions catch up,” a spokesman for British Columbia’s environment ministry said in an e-mailed statement. “The tax can only increase if it remains revenue neutral and every dollar is returned to citizens in the form of tax relief.”

Alberta Environment Minister Shannon Phillips said the province is “well-prepared for whatever comes out of Ottawa” on climate policy, given its own strategy that was rolled out last year.

“This is why we took the time to consult with Albertans to establish a credible system that ensures carbon revenues are reinvested back in Alberta,” she said in a statement.

Ontario’s Liberal government applauded the federal role, even as it implements its own plan to establish caps on GHG emissions and join a market with Quebec and California in which companies can buy and sell carbon-emission credits.

“Ontario welcomes renewed federal leadership on combatting climate change and we are committed to working with them to build a plan that delivers on our national target,” said David Mullock, a spokesman for Environment Minister Glen Murray. “A pan-Canadian price on carbon is an important part of that.”

OTTAWA — The Globe and Mail
Published Sunday, Sep. 18, 2016 1:14PM EDT
Last updated Sunday, Sep. 18, 2016 7:30PM EDT

Carney discusses the impact of carbon pricing on the market (The Globe and Mail)

NOTE: For a lesson plan on this topic, please see this September 6. 2016 posting.