New federal climate plan proposes $170/tonne carbon tax by 2030

The federal government has rolled out its new major plan for addressing climate change, including a proposed increase in the federal carbon price to $170 per tonne by 2030, and the implementation of the Clean Fuel Standard.

Prime Minister Justin Trudeau, Environment Minister Jonathan Wilkinson, and several other cabinet ministers announced the plan on Friday, as MPs prepared to head into their holiday break.

The 79-page document outlines multiple new environment-focused programs, and changes to existing programs, that Ottawa says will result in Canada exceeding its greenhouse gas reduction target in the Paris Agreement. Environment and Climate Change Canada says the measures would reduce emissions by 85 million tonnes, in the range of 32 to 40 per cent below 2005 levels by 2030.

So what’s in it? Here are the main pieces relevant for Canadian agriculture, and what we know about them so far:

  • The Liberals say they plan to increase the carbon price by $15 per year, starting in 2023, rising to $170 per tonne of CO2-equivalent in 2030. (Starting from $50 per tonne in 2022.)
  • Federal officials estimate the rising carbon tax will raise the price of gasoline by an additional 27.6 cents per litre from 2022 to 2030.
  • The plan includes the implementation of the Clean Fuel Standard, which will introduce criteria on the life-cycle carbon intensity of gasoline and diesel. The actual regulations regarding the Clean Fuel Standard will only be published in Canada Gazette next week, but federal officials say the government has moved away from farm-by-farm compliance rules to national-level criteria, which is supposed to remove the need for on-farm verifications and address the major concerns farm groups had with the land use and biodiversity requirements in an earlier draft. Officials say the changes will make it much easier for crop-based biofuel feedstocks grown in Canada and the U.S. to qualify.
  • $1.5 billion for a “Low-carbon and Zero-emissions Fuels Fund” to boost production of low-carbon fuels, including hydrogen, biocrude, renewable natural gas and diesel, cellulosic ethanol.
  • The government says it’s committed to exploring the implementation of carbon border adjustments or tariffs on imports from countries without carbon pricing. U.S. President-elect Joe Biden has also indicated plans to move in this direction.
  • The plan includes setting a national fertilizer emission reduction target of 30 per cent below 2020 levels, noting “direct emissions associated with synthetic nitrogen fertilizer application have increased by approximately 60 per cent since 2005.” (There’s no mention of where this 60 per cent number comes from.) The government says it will work with fertilizer manufacturers, farmers, provinces and territories on how to reach the target, but no details have been given. The fertilizer emissions target is voluntary and aspirational, notes a government official.
  • There is no significant mention of carbon sequestration in agriculture.

More analysis and coverage of reaction to the climate announcement to come.

 

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