Canada ready to impose pollution caps, fuel tax on provinces | Reuters

By David Ljunggren

OTTAWA Canada said on Thursday it planned to impose a cap on pollution in provinces that refuse to adopt a national price on carbon, setting up a potential fight with the country’s powerful energy-rich west.

Last December the Liberal government of Prime Minister Justin Trudeau reached a deal with eight of the 10 provinces to introduce a carbon price as part of a push to curb emissions of greenhouse gases.

Trudeau said at the time he would impose carbon pricing on holdout provinces.

The federal environment ministry on Thursday proposed a levy on fossil fuels that would increase annually and also said it wanted to set limits on pollution. The more a facility exceeded its target, the more it would pay.

“Making polluters pay is a critical part of any climate plan,” Environment Minister Catherine McKenna told reporters, saying every penny raised would be returned to the provinces.

Canada has the world’s third-largest proven crude reserves, much of which lies in Alberta and Saskatchewan in the west.

Saskatchewan premier Brad Wall says a national carbon price would boost firms’ costs at a time when U.S. President Donald Trump wants to cut corporate taxes. Wall is threatening a lawsuit against the federal government.

The central province of Manitoba has not yet decided what it plans to do.

Under Trudeau’s plan, carbon pollution would cost C$10 ($7.35) a tonne in 2018, rising by C$10 a year until it reaches C$50 in 2022. The provinces can either implement a carbon tax or a cap-and-trade market and eight have already announced plans to go for one of the two options.

One of the eight is Alberta, where the left-leaning New Democratic Party government backs the idea of pricing carbon.

But as McKenna spoke on Thursday, Alberta’s two right-leaning parties announced plans to merge. The move would create a serious challenger ahead of…

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