Premiers agree to study carbon pricing as part of national climate change plan

VANCOUVER – Prime Minister Justin Trudeau and the provincial premiers managed to bridge deep divides over carbon pricing Thursday en route to Canada’s first national consensus on pursuing climate policy.

But the deal hammered out in Vancouver by Trudeau and 13 provincial and territorial leaders appears destined to be relitigated in the months ahead as the hard details of the agreement take shape.

“The transition to a low-carbon economy will happen by a broad suite of measures, which will include pricing carbon,” Trudeau said at the conclusion of a scheduled five-hour meeting that stretched into more than six.

“That is something that we’ve all committed to.”

He said the first ministers will reconvene next fall, after four working groups report back on broad policy areas, “where we will finalize a pan-Canadian plan” to combat climate change.

READ MORE: Canadians unsure Trudeau can reach climate deal with provinces

The prime minister readily conceded that the first ministers have challenges ahead.

As B.C. Premier Christy Clark observed, the Vancouver Declaration’s agreement to examine carbon pricing mechanisms “can be interpreted pretty broadly.”

The federal government had been quietly insisting for weeks that a national carbon price, as promised in the Liberal election platform, would be imposed from above if provinces were unable to agree.

In the end, everyone appeared to get something of what they wanted.

Saskatchewan Premier Brad Wall said the specific language in the eight-page declaration clearly includes “market transactions related to (carbon) mitigation technologies” – a roundabout way of including Saskatchewan’s carbon capture and storage (CCS) technology.

“We’re doing that already, so that’s easy to agree to,” said Wall, the most vocal opponent of carbon taxation.

And he promised a fight if there is “some sort of notion” that there was any agreement here to set carbon taxes.

On the other side of the ledger, a senior federal official quietly grinned when asked about the compromise, saying it was enough to get everyone’s signature on a document that includes carbon pricing.

Alberta Premier Rachel Notley said the deal may “sound bureaucratic” but there are tight timelines for the working groups to report and a clear consensus on the need for policy action.

“Everybody was in the room and nobody was debating whether we needed to take action on climate change, no one was really debating whether some form of pricing in some fashion was going to be required to take action on climate change and everybody was very committed to the timelines,” said Notley.

In addition to carbon pricing mechanisms, the working groups will examine adaptation and resilience, such as clean infrastructure spending, clean tech innovation and jobs, and climate mitigation strategies.

Environmental advocates and carbon policy experts called the agreement a good start.

“They got a lot of the big issues right,” said Erin Flanagan of the Pembina Institute.

“We’d love to have this all nailed down. But we have to put this in the context of a new federal government. They haven’t had all that much time.”

Mark Jaccard, an energy economist at Simon Fraser University in Burnaby, B.C., agreed that Saskatchewan’s CCS technology does price carbon. He said the challenge for the working groups will be to get mechanisms that are stringent enough and broad enough to actually force provinces to emit less greenhouse gas.

“The issue is going to be, how high is that price, how tough or stringent? If the regulation is not really changing anything, the implicit price is zero.”

The Liberal government’s political opponents are circling.

The Vancouver meeting was supposed to be the venue where a new, ambitious national target for reducing greenhouse gas emissions was set following December’s international Paris climate accord.

There was no new target set Thursday and Trudeau referred to the existing 2030 goal set by the previous Conservative government as a “significant” challenge, “but it is one we are going to be able to reach.”

Conservative environment critic Ed Fast said struggling oil and gas producers are looking for certainty and what they got was more process.

“I believe there will be profound disappointment from those in the resource industry, those who will be impacted by carbon taxes, that there will be no further clarity about what that climate change framework will actually look like,” said Fast.

And NDP critic Nathan Cullen said Saskatchewan’s assertion that CCS meets the carbon pricing test is worrying.

“If the provinces are allowed to just claim effort for the things they’re already doing that may or may nor work in terms of tackling climate change, then we’re not going to get anywhere as a country.”

What exactly is carbon pricing? 5 things to know

1.  The point of carbon pricing is to charge producers and consumers for the cost of the carbon pollution they are discharging into the atmosphere, to discourage polluting behaviour, and reward innovation in energy efficiency.
2. Carbon pricing is done by the tonne. So what’s a tonne of CO2? It’s the amount of carbon produced by driving an average car 3,831 kilometres, or burning up 42 tanks of barbecue propane, according to the U.S. Environmental Protection Agency. A tonne of CO2 would be equivalent in volume to a cube roughly eight metres high, deep and wide.
3.  There are many systems for carbon pricing that fall under two basic models. Carbon taxes are levied by government by setting a price per tonne on the production of greenhouse gases, typically on the sale and use of fossil fuels depending on the carbon content of the fuel. Cap-and-trade systems set economy-wide limits on emissions and then establish a carbon market, within which industries are allotted permits for emissions which they can buy and sell, with the costs passed on to consumers.
4. British Columbia is the only Canadian province that currently charges a broad-based carbon tax. Alberta is adding a carbon tax in 2017. Since 2012, B.C.’s $30 per tonne tax has added 6.67 cents to each litre of gasoline purchased in the province and 7.67 cents to each litre of diesel. All revenues from the B.C. carbon tax are returned to citizens through tax cuts and low-income supplements. B.C.’s revenue-neutral carbon tax has not hampered economic growth.
5.  Quebec joined California in a cap-and-trade carbon market in 2014 and Ontario is set to start trading in the same market in 2017. Manitoba has said it intends to also join the same Western Climate Initiative market, which means B.C., Alberta, Manitoba, Ontario and Quebec — representing 85 per cent of Canadian citizens and about 90 per cent of GDP — will soon place a market price on carbon. The government of Newfoundland and Labrador also has said it intends to price carbon.

– With files from Bob Weber