Output-based carbon pricing system incentivizes innovation, provides certainty for industry

Pembina Institute reacts to the publication of final standards for heavy emitters under the federal pollution pricing plan

Environment Minister Catherine McKenna announced final regulations for putting a price on pollution for industry. Photo: @ec_minister

OTTAWA — Isabelle Turcotte, federal policy director at the Pembina Institute, made the following statement in response to the federal government’s announcement about putting a price on pollution for industry:

“We applaud the federal government on finalizing the design of the carbon pollution pricing system for large emitters in a way that incentivizes Canada’s heavy industry to innovate and reduce emissions while protecting competitiveness in international markets.

“By internalizing the cost of carbon pollution, the output-based pricing system (OBPS) begins to more accurately reflect the true cost of different sources of energy, helping to create a level playing field for renewable energy. The declining standard set for new natural gas plants means that by 2030 all emissions from these new plants will be priced, not just those over a certain level. This natural gas standard will boost our ability to have 90 per cent of our electricity generation coming from clean, non-emitting sources by 2030.

“Additionally, the OBPS provides a signal for Canada's heavy emitters such as cement, lime and steel producers to reduce their emissions by pricing carbon on the portion of their emissions above a sector-based emissions-intensity standard. A flexible compliance system effectively encourages progressively cleaner production across all heavy emitting facilities. Today’s announcement provides regulated sectors with the certainty they need to plan investments to adopt low-carbon technologies and develop innovative processes to meet or outperform the standard and ensure they maintain their ability to compete in a low-carbon economy.

“Combined, this output-based pricing system and the fossil fuel levy that make up the federal backstop apply a price on a broad scope of harmful pollutions to help reach Canada’s climate and economic objectives as cost-effectively as possible. We support the federal government’s approach to apply either or both elements of the carbon pricing backstop in jurisdictions that fail to step up and deliver the same benefits to Canadians. Today’s ruling from the Ontario Court of Appeal on carbon pricing echoes the Saskatchewan court ruling and reminds us that pollution knows no borders. The courts send a clear call to collective action that all governments should heed.”



Sarah MacWhirter
Communications director

Isabelle Turcotte (English/français)
Director, federal policy


Blog: We need to hold the line on carbon pricing (August 2018)

Op-ed: Ontario's economic investment outlook dims with new government energy actions (August 2018)

Blog and infographics: Breaking it down: how carbon pricing addresses climate change (August 2018)

Media release: Saskatchewan and Ontario reject most cost effective way to reduce carbon pollution (July 2018)

About the Pembina Institute

The Pembina Institute is a non-profit think-tank that advocates for strong, effective policies to support Canada’s clean energy transition. We have offices in Vancouver, Calgary, Edmonton, Toronto, and Ottawa. Learn more: www.pembina.org

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