On several occasions over the past two decades, the Canadian federal
government started and then halted the development of a climate-change
policy. Until very recently, the provinces have led in the development of
climate policies, especially economy-wide carbon prices that apply within
their jurisdictions.
As of early 2018, four Canadian provinces have carbon-pricing policies in
place. British Columbia implemented a carbon tax in 2008 that has been
effective at reducing per capita GHG emissions. The tax rate is currently
$35 per tonne of and is scheduled for gradual increases over the
next few years. The policy was initially designed to be revenue neutral;
the revenues generated by the carbon tax are used to reduce personal and
business income taxes by the same amount.
Quebec has recently put in place a cap-and-trade system that applies to a
large share of provincial emissions of COe and is linked (for permit
trading) to a similar system in California. The policy is designed to
become more stringent over time as the aggregate level of the emissions
cap declines gradually, thus pushing up the equilibrium price of permits.
In 2017 Ontario introduced a provincial cap-and-trade system that was
soon linked to both Quebec and California as part of the Western Climate
Initiative. In the summer of 2018, however, a change of government in
Ontario led to the repeal of that province’s cap-and-trade system.
Quebec’s cap-and-trade system remains in place, linked to California’s,
but Ontario’s entire climate policy is now being re-designed.
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