Citing competitiveness pressures, feds ease carbon tax thresholds

OTTAWA — Bowing to concerns about international competitiveness, the Trudeau government is scaling back carbon pricing guidelines for some of the country’s heaviest energy users, and signalling that more easing could come before the plan takes effect in 2019.

Environment and Climate Change Canada has issued new guidelines that increase the emissions threshold at which polluters will have to pay a carbon tax.

The revisions come as big industries face competitive threats from south of the border in the form of corporate tax cuts and protectionist tariffs, and as Ottawa prepares to replace Ontario’s cap-and-trade system with its own carbon levy.

The environment department says climate pricing remains a key component of its greenhouse gas reduction strategy.

But after meeting with industry stakeholders, it determined that four industries in particular — cement, iron and steel, lime and nitrogen fertilizer producers — face a high competitive risk and will have their carbon price thresholds adjusted.

Draft regulations issued in January indicated a benchmark for when industries would start to pay the carbon tax at 70 per cent of average emissions.

However, the new rules set to take effect in the new year will increase the carbon tax threshold to 80 per cent of emissions intensity.

The four sectors assessed in the high competitive risk category will not have to pay the tax until they reach 90 per cent of emissions.

The government says other sectors may see adjustments to their greenhouse gas output measures, depending on further review of the impact of carbon pricing on their domestic and international competitiveness, with revised draft standards expected by fall.