About carbon pricing in Canada

Canada employs a dual carbon pricing approach consisting of a consumer carbon price and an industrial carbon price for large emitters. To prevent carbon leakage and protect trade-exposed industries, Canada utilizes large-emitter trading systems (LETS), which primarily take the form of intensity-based systems or cap-and-trade. There are nine LETS across the country, including the federal output-based pricing system (OBPS) and Alberta's Technology Innovation and Emissions Reduction (TIER) Regulation, the latter being the largest due to Alberta's share of industrial emissions. Quebec operates the only cap-and-trade system in Canada, which is integrated with the Western Climate Initiative. The Northwest Territories uses a unique fuel levy with rebates rather than a trading system.

• Canada's industrial carbon pricing is managed through large-emitter trading systems (LETS), which allow facilities to pay only a portion of the carbon price on total emissions to maintain trade competitiveness and prevent 'carbon leakage', where production moves to jurisdictions with weaker emissions rules.
• LETS generally fall into two categories: intensity-based systems, where facilities earn or buy credits based on performance against emissions intensity standards, and cap-and-trade systems, where facilities must obtain permits through free allowances or auctions under a declining system-wide cap.
• Alberta's Technology Innovation and Emissions Reduction (TIER) Regulation is the largest LETS in Canada because Alberta is responsible for approximately 60 per cent of Canada's industrial emissions.
• Quebec operates Canada's only cap-and-trade system, which is linked to the Western Climate Initiative and includes California. This integration provides higher market liquidity and low-cost offsets, leading to a lower carbon price in Quebec compared to other Canadian jurisdictions.
• The federal output-based pricing system (OBPS) serves as a backstop and is currently applied in Manitoba, Prince Edward Island, Nunavut, and Yukon.

APA

Canadian Climate Institute (2024). About carbon pricing in Canada. https://climateinstitute.ca/carbon-pricing-large-emitter-trading-systems-canada/

Chicago

Canadian Climate Institute. About carbon pricing in Canada. 2024. https://climateinstitute.ca/carbon-pricing-large-emitter-trading-systems-canada/.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=About carbon pricing in Canada |date=9 December 2024 |url=https://climateinstitute.ca/carbon-pricing-large-emitter-trading-systems-canada/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2024about, author = {{Canadian Climate Institute}}, title = {{About carbon pricing in Canada}}, institution = {Canadian Climate Institute}, year = {2024}, month = dec, url = {https://climateinstitute.ca/carbon-pricing-large-emitter-trading-systems-canada/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }