Carbon pricing is no longer just a climate policy tool, it’s increasingly shaping trade, competitiveness and investment decisions around the world. Early findings from the report, Carbon Pricing at the Border, compare carbon pricing frameworks across major jurisdictions, including Canada, the European Union, the United Kingdom, California-Québec, Korea, China and Australia. Together, these systems represent a significant share of the global economy, and carbon pricing mechanisms now cover approximately 29 per cent of global greenhouse gas emissions.
As countries increasingly incorporate carbon costs into trade and industrial policy, businesses are facing growing pressure to demonstrate the carbon intensity of their products and supply chains.
What is Canada's competitive challenge?
The research examines how well different carbon pricing systems position industries to compete as carbon costs become more closely linked to trade and investment. The preliminary findings suggest that fragmentation across Canada's carbon pricing systems may become increasingly important as international markets place greater emphasis on emissions performance.
Differences in provincial pricing approaches, electricity emissions profiles and compliance requirements could affect how Canadian goods are understood and assessed in international markets. While Canada has one of the world's most comprehensive carbon pricing frameworks, variations across provincial systems may create challenges for demonstrating comparable carbon costs and emissions performance across the economy.
Canada's clean electricity advantage also varies significantly by region. Producers operating in provinces with low-emissions electricity systems may have a competitive advantage in markets where buyers, investors and policymakers increasingly value low-carbon production.
What do the findings show on trade and competitiveness?
For economic resilience, trade competitiveness and investment certainty, the report evaluates jurisdictions based on trade readiness, policy certainty, consistency and comparability, and investment attractiveness.
The findings suggest that trade alignment is emerging as both a significant risk and a major opportunity for Canada's economy. As carbon costs become more embedded in trade policy, the most competitive jurisdictions may not be those with the highest carbon prices. Instead, success may increasingly depend on the ability to demonstrate credible emissions accounting, comparable carbon costs, consistent compliance systems and clear industrial decarbonization pathways.
The next phase of research will test these preliminary findings through engagement with emissions-intensive industries, industry associations, subject matter experts and other stakeholders to better understand the practical implications for competitiveness, investment and trade.
Key facts
- 29% of global greenhouse gas emissions are covered by carbon pricing systems.
- Canada ranks fourth, behind the European Union, the United Kingdom and California-Québec, on trade alignment based on factors such as trade-readiness, policy certainty, consistency and investment attractiveness.
- Canada's clean electricity advantage is not uniform. Goods produced in provinces with low-emitting electricity systems may have a significant competitive advantage in carbon-conscious markets.
- The EU's Carbon Border Adjustment Mechanism (CBAM) entered its definitive regime on January 1, 2026, applying carbon costs to certain imported goods based on the EU's domestic carbon pricing system.
