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Trudeau announces federal carbon taxes

The Canadian Prime Minister, Justin Trudeau has announced that there will be a federal system in place in the provinces of Ontario, New Brunswick, Manitoba, and Saskatchewan in 2019.
"The effects of climate change are everywhere, and they are a constant reminder of the need to act now. While climate change is the biggest challenge of this generation, it also provides the opportunity to do better while growing the economy," said PM Trudeau.

On October 23, PM Trudeau announced that there will be a federal system in place in the provinces of Ontario, New Brunswick, Manitoba, and Saskatchewan in 2019 as the next step in the government’s plan to protect the environment and grow the economy.

Households are to receive a Climate Action Incentive, which will give most families more than they pay under the new system. Funds will also be given to the provinces’ cities, schools, hospitals, businesses, and Indigenous communities to, for example, help them become more energy efficient and reduce emissions thereby improving local economies.

The effects of climate change are everywhere, and they are a constant reminder of the need to act now. While climate change is the biggest challenge of this generation, it also provides the opportunity to do better while growing the economy. We are investing in Canadian companies that are on the forefront of clean technologies, and are working with provinces, territories, and municipalities to provide Canadians with more clean energy options. Protecting the environment is a responsibility we all share. That is why we are taking action to promote clean energy and growth in Canada. Together, and only together, we can make a real difference for our planet’s future, PM Trudeau said.

The financial impact of climate change

According to the statement, climate change has already had financial impacts on Canada, and these costs will only continue to grow. In 2016, it was estimated that larger and more intense weather events will cost the federal Disaster Financial Assistance Arrangements program around CA$902 million each year.

The health costs of extreme weather are estimated to be over CA$1.6 billion a year. The cost of property damages from climate change averaged CA$405 million per year between 1983 and 2008, but have risen dramatically to CA$1.8 billion a year since 2009. That number is expected to grow as high as CA$43 billion by 2050.

Canadians know that polluting isn’t free. We are all paying the cost of storms, floods, wildfires, and extreme heat. Our government is ensuring a price across Canada on what we don’t want, pollution, so we can get what we do want – lower emissions, cleaner air, opportunities for businesses with clean solutions, and more money in the pockets of Canadians. We have a plan for a healthy environment and a stronger economy. Because, at the end of the day, it’s what we owe our kids, said Catherine McKenna, Minister of Environment and Climate Change.

Since 2015, the federal government has invested more than CA$9 billion in public transit for more than 1200 projects across Canada. Over the past two years, it has worked with provinces and territories “giving them the flexibility” to design their own climate plans that included putting a price on carbon pollution to incentivize citizens and businesses to make “cleaner choices” and “find clean solutions”.

The case is clear: Canada needs to cut greenhouse gas emissions that cause climate change, and the best way to do that is to put a price on carbon pollution. Pollution pricing encourages Canadians and businesses to innovate, invest in clean technologies, and take advantage of long-term growth opportunities. Our plan will cut pollution and grow the economy, for the benefit of all Canadians said Bill Morneau, Minister of Finance.

Alberta, British Columbia, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, and Yukon have “stepped up and shown leadership”, either by developing their own systems or choosing to adopt the federal pollution pricing system. Other provinces have not recognized the cost of pollution.

Three provinces that already have carbon pollution pricing systems – British Columbia, Alberta, and Quebec – were also among the top performers in GDP growth across Canada in 2017.

Canadians are seeing the effects of climate change, and know that we need to take real action to reduce greenhouse gas emissions and drive innovation. I am proud of the provinces and territories who have acknowledged the need to address climate change and are implementing their own plans or choosing to adopt the federal system. Where provinces have not taken leadership, our government is taking action to combat climate change and grow the economy, said Dominic LeBlanc, Minister of Intergovernmental and Northern Affairs and Internal Trade

Two components

The federal carbon pollution pricing system has two components: the fuel charge and the output-based pricing system (OBPS) for emissions-intensive trade-exposed industries. In the provinces in which the backstop applies, the OBPS will take effect on January 1, 2019, and the fuel charge will take effect in April 2019.

In Nunavut and Yukon, both components of the backstop will come into effect no later than July 1, 2019, at the same time as Northwest Territories’ price on carbon pollution. To address high costs of living and energy, a full exemption from carbon pollution pricing will be granted to diesel-fired electricity generation in remote communities, and for aviation fuel in the territories.

In addition, a full exemption for farmers and fishers from the fuel charge would be provided for eligible fishing and farming activities. Partial relief from the fuel charge would also be provided for eligible commercial greenhouse operators.

Furthermore, the government says that it will continue to work with Atlantic provinces to advance an interconnected and efficient clean electricity grid to support growth in the region.

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