Carbon pricing is now in effect across Canada. What is it anyway?

It will no longer be free to pollute
anywhere in Canada. In 2018, the federal government announced
that every province and territory must implement a carbon-pricing system this year. The move follows a commitment to
greenhouse gas reduction targets that the Trudeau government signed in 2015. Since then it has faced resistance from
some provinces, particularly Saskatchewan and more recently Ontario following the
election of Doug Ford as Premier. But what exactly is carbon pricing? It can take a couple of forms,
a cap-and-trade system or a carbon tax. A cap-and-trade system sets a limit on the amount
of carbon that companies are permitted to burn. That’s the ‘cap’ part. It also offers the option for companies to buy
the right to burn more than their quota by purchasing allowances, also known as carbon credits, from companies that burn less. By doing this, they exchange their
right to emit greenhouse gases. That’s the ‘trade’ part. The government makes money on those allowances because it options off a certain percentage of them. It also provides free allowances to
some companies that face competitive pressure. A carbon tax is different from
cap and trade. It’s a fee imposed on each tonne
of emissions from fossil fuels. That includes oil products such as gasoline
and diesel, natural gas and coal fired electricity. Under this system, everyone who buys a product that
creates greenhouse gases pays for their emissions. Companies also pay but those
that face competitive pressures get a special break. Both a carbon tax and
cap-and-trade have the same goal. To give companies and individuals a financial
incentive to reduce their emissions.

Stephen Childs

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