Annex I: Federal investments and measures to support the transition to a low-carbon economy

Federal investments

The federal government will help catalyze the transition to a clean growth economy through significant new investments to complement provincial and territorial actions and investments, including investments in infrastructure, the Low-Carbon Economy Fund, and clean technology funding.

The federal government has collaborated with the Federation of Canadian Municipalities on the Green Municipal Fund (GMF) since 2000.

  • Budget 2016 provided an additional $125 million over two years including for projects that reduce GHG emissions.
  • Recently announced projects under the GMF include a $31.5 million investment for 20 new sustainable municipal projects, such as Canada's first net-zero municipal library and Halifax's ground-breaking Solar City project.

Federal carbon-pricing benchmark

The federal government outlined a benchmark for carbon pricing that reflects the principles proposed by the Working Group on Carbon Pricing Mechanisms and the Vancouver Declaration. Its goal is to ensure that carbon pricing applies to a broad set of emission sources throughout Canada with increasing stringency over time to reduce GHG emissions at lowest cost to business and consumers and to support innovation and clean growth.

The benchmark includes the following elements:

  1. Timely introduction. All jurisdictions will have carbon pricing by 2018.
  2. Common scope. Pricing will be based on GHG emissions and applied to a common and broad set of sources to ensure effectiveness and minimize interprovincial competitiveness impacts. At a minimum, carbon pricing should apply to substantively the same sources as British Columbia’s carbon tax.
  3. Two systems. Jurisdictions can implement (i) an explicit price-based system (a carbon tax like British Columbia’s or a carbon levy and performance-based emissions system like in Alberta) or (ii) a cap-and-trade system (e.g. Ontario and Quebec).
  4. Legislated increases in stringency, based on modelling, to contribute to our national target and provide market certainty.
    • For jurisdictions with an explicit price-based system, the carbon price should start at a minimum of $10 per tonne in 2018 and rise by $10 per year to $50 per tonne in 2022.
    • Provinces with cap-and-trade need (i) a 2030 emissions-reduction target equal to or greater than Canada’s 30 percent reduction target and (ii) declining (more stringent) annual caps to at least 2022 that correspond, at a minimum, to the projected emissions reductions resulting from the carbon price that year in price-based systems.
  5. Revenues remain in the jurisdiction of origin. Each jurisdiction can use carbon pricing revenues according to their needs, including to address impacts on vulnerable populations and sectors and to support climate change and clean growth goals.
  6. Federal backstop. The federal government will introduce an explicit price-based carbon pricing system that will apply in jurisdictions that do not meet the benchmark. The federal system will be consistent with the principles and will return revenues to the jurisdiction of origin.
  7. Five-year review. The overall approach will be reviewed by early 2022 to confirm the path forward, including continued increases in stringency. The review will account for progress and for the actions of other countries in response to carbon pricing, as well as recognition of permits or credits imported from other countries.
  8. Reporting. Jurisdictions should provide regular, transparent, and verifiable reports on the outcomes and impacts of carbon pricing policies.

The federal government will work with the territories to address their unique circumstances, including high costs of living, challenges with food security, and emerging economies.

Other recent federal measures

The federal government has recently announced new federal measures, including 

Page details

Date modified: