The House of Commons Standing Committee on Environment and Sustainable Development met to study Canada’s industrial carbon pricing regime, hearing from nine witnesses representing academic, industry, and policy perspectives.
Mark Purdon, an associate professor at UQAM, argued that Canada’s federal output-based pricing system should evolve toward a cap-and-trade system based on absolute emissions accounting, using Quebec’s linked system with California as a reference. He cited transparency problems, noting that the effective price paid by large emitters is far below the headline rate, and said an absolute cap would provide better environmental integrity, market stability, and alignment with international systems like the EU’s emissions trading system and its carbon border adjustment mechanism.
Catherine Swift, president of the Coalition of Concerned Manufacturers and Businesses of Canada, said the industrial carbon tax is harming manufacturing competitiveness, driving businesses to leave Canada for the U.S., and feeding inflation. She argued that the tax adds red tape, that carbon credit prices have plummeted, and that Canada’s policies are making it harder to retain investment and jobs, especially for small and medium-sized enterprises. She stated that she does not believe climate change is caused by human activity.
Aaron Cosbey, senior associate at the International Institute for Sustainable Development, said industrial carbon pricing works and is Canada’s most effective climate policy tool, but that the current regime is in trouble due to weak effective prices and a lack of a strong post-2030 trajectory. He recommended differentiating stringency by sector vulnerability and complementing carbon pricing with green industrial policies, such as ensuring clean electricity and hydrogen supplies, to support long-term decarbonization investments.
Steven Haig, policy advisor at the International Institute for Sustainable Development, detailed ten urgent improvements needed in the current regime, including requiring minimum effective prices for credits in secondary markets. He noted that modelling shows a strong industrial carbon price reaching $380 per tonne by 2040 could reduce emissions by over 100 megatonnes while having manageable economic impacts, but stressed that carbon pricing alone cannot address the 60% of national emissions from sectors like transport, agriculture, and buildings.
Ross R. McKitrick, professor of economics at the University of Guelph, presented modelling showing that raising the federal industrial carbon price to $170 per tonne by 2030 would reduce GDP by 1.3% nationally and cost about 50,000 jobs, while cutting emissions by 14%. He argued that governments must be honest about the costs of decarbonization, that carbon pricing loses efficiency when combined with command-and-control regulations, and that Canada should coordinate policies with major trading partners to avoid carbon leakage.
Michael Bourque, president and CEO of Fertilizer Canada, said the fertilizer sector faces up to $1.32 billion in cumulative carbon costs from 2025 to 2030, with nearly 60% from indirect costs on energy and transportation. He noted that major competitors like Russia, Belarus, and the U.S. do not have comparable carbon pricing, putting Canadian producers at a competitive disadvantage and risking carbon leakage, and called for recalibrating the system to recognize fertilizer production as a high-risk sector.
Nadine Frost, vice-president of industrial relations at Fertilizer Canada, added that the sector lacks a global premium for lower-carbon fertilizer products and that investment tax credits have constrained scope and timelines. She recommended relief from tightening factors for emissions-intensive and trade-exposed sectors, and changes to how industrial process emissions are captured for feedstock use, to preserve capacity for future clean tech investment.
Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute, argued that overzealous climate policy has made Canadian industry uncompetitive and transferred capacity to nations with lower environmental standards, a phenomenon of carbon leakage. She recommended that industrial carbon pricing aim to make Canadian industry the best, not the smallest, and said Alberta’s TIER system strikes a reasonable balance between economic growth and emissions reduction, warning against making the system more stringent during a global energy crisis.
Jason Clark, vice-president of New Economy Canada, said a clear, predictable industrial carbon price is a competitiveness benefit that drives innovation and provides policy certainty for investors, especially as global markets increasingly price carbon at the border. He recommended enhanced federal-provincial collaboration, expanded carbon credit trading, and financial mechanisms like carbon contracts for difference to de-risk projects, and noted that Canada is well-positioned under the EU’s carbon border adjustment mechanism.
The meeting included no procedural debate, motions, or votes beyond routine approvals of headsets and witness lists.
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