Canada joins with partners to roll out the Global Carbon Pricing Challenge
November 15, 2022 – Sharm El-Sheikh, Egypt
Pricing pollution is widely recognized as the most efficient way to reduce greenhouse gas emissions and drive clean innovation. Carbon pricing works by putting a cost on the thing we don’t want—pollution—and adding value to the things we do want—clean air, reliable and affordable clean energy, and sustainable jobs—while providing flexibility for consumers and industries to find the lowest-cost solutions. Last year, at COP26, Prime Minister Trudeau issued a challenge to triple the global coverage of carbon pricing by 2030.
Today, at COP27, the Honourable Steven Guilbeault, Canada’s Minister of Environment and Climate Change, and the Honourable Maisa Rojas Corradi, Chile’s Minister of the Environment, officially rolled out the Global Carbon Pricing Challenge—a Canadian-led initiative that calls on all countries to adopt pollution pricing as a central part of their climate strategies. They were joined in a panel discussion by representatives from New Zealand, Sweden, and the United Kingdom, just a few of the countries that are considering or have already made carbon pricing key to their approach to fighting climate change.
This partnership of carbon-pricing champions aims to expand the use of pollution pricing by strengthening existing systems and supporting emerging ones. The Challenge will also create a forum for dialogue and coordination to make pricing systems more effective and compatible and to support other countries in adopting carbon pricing.
At present, about twenty percent of global greenhouse gas emissions are covered by carbon pricing. The Global Carbon Pricing Challenge encourages countries to work toward a collective goal of covering sixty percent of global emissions by 2030.
Every year, participating countries will gather to monitor their progress toward meeting the goals of the Global Carbon Pricing Challenge, share best practices, report new actions, and welcome new participants.
The impact and effectiveness of carbon pricing only increase as more countries adopt it. Through international cooperation, countries can send consistent signals to investors that pollution cannot be free.
Canada continues to be a global innovator in effective pollution pricing. For example, the Government’s recent Fall Economic Statement sets out a plan to establish carbon contracts for difference. These contracts would ensure that businesses can plan long-term investments in decarbonization and clean technologies, based on a predictable price on carbon pollution and carbon credits.
“Prime Minister Trudeau issued the Pollution Pricing Challenge a year ago in Glasgow and many have responded. Countries around the world are realizing that pricing carbon pollution can reduce emissions and fight climate change at the lowest cost while also spurring clean innovation. Working together with like-minded nations, we can triple the global coverage of carbon pricing as an important step toward achieving net zero by 2050.”
– The Honourable Steven Guilbeault, Minister of Environment and Climate Change
“Chile and Canada share a commitment to face the challenges of climate change today. Chile recognizes that Article 6 of the Paris Agreement is an important mechanism that allows countries to implement mitigation actions in a cost-effective manner. And it is one of the mechanisms that promotes participation from the private sector, which is key for increasing ambition. This partnership will be key to expanding the adoption of carbon pricing worldwide and make the system more effective and transparent.”
– The Honourable Maisa Rojas Corradi, Minister of the Environment, Chile
“The Glasgow Pact helped pave the way for international carbon pricing—encouraging increased ambition from all countries. I’m proud that the UK will be continuing that global leadership as part of the Global Carbon Pricing Challenge, which will ensure we create a long-term sustainable system of carbon pricing that is fair and effective for industrialized and developing countries alike.”
– The Honourable Graham Stuart, Minister for Climate, United Kingdom
“Pricing emissions can play a significant role in driving an efficient and effective climate change response. In New Zealand, we have one of the world’s longest-established emissions trading schemes. Funding from this scheme allows us to invest in our national climate response, driving projects to increase energy efficiency and reduce emissions.”
– The Honourable James Shaw, Minister of Climate Change, New Zealand
“To win the race against climate change, we must incentivize investments in clean technology and energy efficiency. Our research shows that a price on carbon delivered through tax, trading schemes, or regulations, gradually and predictably increasing over time, is the best way to influence investor and consumer choices toward decarbonization in line with the Paris Agreement. International collaboration is vital for success. So, it is fantastic to see initiatives like the Global Carbon Pricing Challenge that help us do just that by providing a platform to discuss how to strengthen and broaden carbon pricing at the national and international levels.”
– Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF)
“Putting a price on carbon pollution is one of the most efficient and flexible policies to support climate action. Pricing carbon creates a level playing field for businesses while providing the flexibility to make the investment decisions that work for them. Capital Power is making significant strides toward our goal of being a net-zero business by 2050, and Canada’s carbon pricing system is an important supporting factor. As more jurisdictions adopt carbon pricing, the business case becomes even more compelling and the benefits to our environment will grow.”
– Brian Vaasjo, President and CEO of Capital Power
According to the World Bank, there are sixty-eight carbon pricing initiatives currently in place across the globe, both national and subnational. Together, these initiatives cover twenty-three percent of global greenhouse gas emissions.
Canada is recognized internationally as a climate leader, in large part due to robust domestic carbon-pollution pricing. Canada’s approach gives provinces and territories the flexibility to implement their own carbon pricing systems that best meet their needs, while aligning with minimum national standards.
Canada is one of the few countries to have announced a carbon price trajectory all the way to 2030. Setting a long-term price trajectory sends a strong signal to drive low-carbon investment today and helps put us on a path to net zero by mid-century.
Canada is boosting its support for the World Bank’s Partnership for Market Implementation—which helps countries to design, pilot, and implement pricing mechanisms aligned with their development priorities—to $16 million. The Partnership is a linchpin initiative to help advance the goals of the Challenge and to help more countries realize the benefits of carbon pricing policies.
Office of the Minister of Environment and Climate Change
Environment and Climate Change Canada
819-938-3338 or 1-844-836-7799 (toll-free)
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