Guidance on the pan-Canadian carbon pollution pricing benchmark


Pricing of carbon pollution is central to the Pan-Canadian Framework on Clean Growth and Climate Change (the PCF). It is an effective, transparent and efficient way to reduce GHG emissions at lowest cost to consumers and business and to support innovation and clean growth. The federal government is committed to ensuring the provinces and territories have the flexibility to design their own policies and programs, enabling governments to move forward and to collaborate on shared priorities while respecting each jurisdiction’s needs and plans.

The Government of Canada published the Pan-Canadian Approach to Pricing Carbon Pollution on October 3, 2016. That document  outlines the principles on which the pan-Canadian approach to pricing carbon pollution is based, and states that a federal carbon pollution pricing backstop will begin to apply in all jurisdictions that do not have a carbon pollution pricing system in place that meets the elements of the Benchmark by 2018.

This document provides further guidance on the carbon pollution pricing Benchmark to support governments’ efforts to have carbon pollution pricing in place throughout Canada in 2018.

Benchmark guidance

The carbon pollution pricing Benchmark includes the following elements. The October 3, 2016 Benchmark text is provided in bold. Where applicable, further guidance follows.

Timely introduction

All jurisdictions will have carbon pricing in place by 2018.

Additional guidance:

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.

Additional guidance:

Two systems

Jurisdictions can implement (i) an explicit price-based system (a carbon tax like British Columbia’s or a hybrid system comprised of a carbon levy on fuels and performance-based emissions trading system like in Alberta) or (ii) a cap-and-trade system (e.g. Ontario and Quebec).

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.

Additional guidance on explicit price-based systems similar to Alberta’s hybrid system:

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.

Additional guidance on cap-and-trade systems:

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.

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 principlesFootnote 1 and will return revenues to the jurisdiction of origin.

Additional guidance: As committed to in the PCF, the federal government will:

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.

Additional guidance:


Jurisdictions should provide regular, transparent, and verifiable reports on the outcomes and impacts of carbon pricing policies.

Additional guidance: the Federal government will:

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