Government of Canada Releases New Federal Climate Plan

  • December 17, 2020
  • Michael Fortier and Henry Ren, Torys LLP

The Government of Canada recently released its new federal climate plan, entitled “A Healthy Environment and a Healthy Economy – Canada’s strengthened climate plan to create jobs and support people, communities and the planet” (Plan).[1] Building on the 2016 Pan-Canadian Framework, the Plan boldly claims it will “do more to cut pollution in a practical and affordable way than any other climate plan in Canada’s history”[2], including to exceed Canada’s 2030 emissions reduction target under the Paris Agreement and achieve net-zero emissions by 2050.

The Plan is a key component of the federal government’s commitment in the 2020 Throne Speech to create over one million jobs and restore employment to pre-pandemic levels. The Plan includes 64 new measures and $15 billion in investments (in addition to the $60 billion committed under the Pan-Canadian Framework and the Canada Infrastructure Bank’s $6 billion clean infrastructure fund). Some of the key aspects of the Plan are highlighted below.

Carbon pricing

Under the Plan, the federal backstop carbon price will continue – and increase – beyond 2022, the year in which it is set to reach $50 per tonne of carbon dioxide equivalents under the Greenhouse Gas Pollution Pricing Act (GGPPA). Thereafter, under the Plan, this price will increase by $15 per tonne starting in 2023 and reach $170 per tonne by 2030. This assumes the Supreme Court of Canada will uphold the constitutionality of the GGPPA, a decision on which is currently pending.

The Plan reiterates the “revenue neutral” principle under the GGPPA, whereby the Government of Canada “will continue to return all fuel charge proceeds back to Canadian families and their communities”.[3] These payments will move from annual to quarterly payments beginning in 2022. In addition to households, schools and small/medium businesses can seek funding of up to 25% of eligible costs for energy efficiency projects.

To mitigate the risk of “carbon leakage”, the federal government plans to explore border carbon adjustments and “work with like-minded economies—including the E.U. and Canada’s North American partners—to consider how this approach could fit into the broader strategy to meet climate targets while ensuring a fair environment for businesses”.[4]