Quebec and Ontario may be exempt from Trudeau’s Carbon Tax plan

in Canada/Other News by

Justin Trudeau has said that all provincial premiers must agree to impose or raise their carbon tax targets to the federal level. 

Quebec and Ontario may be exempt from some carbon tax rules since Quebec is already operating cap-and-trade systems. 

Quebec is already a partner with California in a carbon-trading system called the Western Climate Initiative (WCI) and Ontario says they will partner soon. 

From Finacial Post

Currently the permit price for carbon emissions in Quebec under the WCI is around $16 per tonne, higher than the federal tax’s introductory level. By 2020, however, the minimum national carbon tax will have risen to $30 while the floor price for permits in Ontario and Quebec is projected at just $19 per tonne. That gap is expected to grow. By 2022, when the national carbon tax hits $50, the WCI permit price is estimated at below $24. People in Alberta and B.C. will thus be taxed twice as much as Ontarians and Quebecers. Differences that large will pose a major threat to constitutional harmony.

What explains this massive price difference? California Scheming.

To smooth over political objections to pricing carbon, California deliberately created a vast oversupply of emissions permits in its electricity sector, pushing down prices and leaving the state awash in excess permits until at least 2026. The opportunity to harvest this crop of cheap permits is what’s driving Quebec and Ontario’s participation in the WCI — and why these permit prices will be substantially below Trudeau’s carbon-tax minimums. Without access to California’s low-cost permits, Ontario’s own research shows its permit prices would rise to a stunning $157 per tonne in just two years, destroying any argument for cap and trade.

Cap and trade thus offers Quebec and Ontario an enormous competitive advantage over provinces subject to Trudeau’s mandatory carbon tax, namely B.C., Alberta, and perhaps Saskatchewan and Newfoundland. How’s that for a national plan?

According to a federal policy backgrounder, provinces with cap-and-trade systems can avoid the minimum national tax if they meet two criteria. In addition to aligning themselves with federal 2030 emissions-reductions goals, cap-and-trade provinces must also have emissions targets for 2022 that “correspond, at a minimum, to the projected emissions reductions resulting from the carbon price that year in price-based systems.”

This seems to be a unfair advantage to the rest of Canada, do you agree?