Premiers ready to work with Trudeau on climate, but wary of carbon tax

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Prime Minister Justin Trudeau won agreement from the premiers on a broad strategy to reduce greenhouse-gas emissions and build Canada's clean economy, but could not gather enough support for a national minimum carbon price.

In a first ministers' summit on Thursday, the Prime Minister and premiers agreed that additional action is needed to meet and exceed Canada's international commitment to reduce GHGs by 30 per cent from 2005 levels by 2030.

The Vancouver summit fulfilled a Liberal election promise to hold a first ministers' meeting on global warming within 90 days of the Paris climate conference, in which 196 countries concluded an agreement aimed at holding global warming to less than 2 degrees Celsius above pre-industrial levels to avert the worst impacts of climate change.

But Mr. Trudeau was unable to win support for another of his election pledges: to establish a minimum carbon price that would apply across the country but allow provinces to choose the approach and collect the revenue. Leaders endorsed the need for some form of carbon pricing on Thursday – but there was no consensus on what approach to use, or whether there should be a national floor price.

The Prime Minister and premiers had a frosty opening to the meeting, sources said Thursday, with provinces and territories concerned the federal government was determined to impose its carbon-price plan on them. Instead, they found compromise language – endorsing the need for "carbon pricing mechanisms adapted to each province's and territory's specific circumstances" – and agreed to work out details over the next six months.

The heavily qualified language was necessary to win consensus from premiers such as Saskatchewan's Brad Wall and Nova Scotia's Stephen McNeil, who argued they are following different approaches to reduce carbon emissions.

Federal, provincial and territorial officials will now work over the next six months to forge a concrete national plan that leaders hope to endorse at another summit in October. They will concentrate on four key areas: clean technology, innovation and jobs; carbon pricing mechanisms; specific opportunities to slash emissions; and measures required to adapt to a changing climate and severe weather.

"Building on our progress today, we are confident we are setting the country on a path toward long-term, clean growth; critical emissions reductions, and a healthier, more prosperous future," Mr. Trudeau said after the meeting. The Prime Minister declared it a success that premiers endorsed the concept of putting a price on greenhouse-gas emissions.

"We have agreed to carbon pricing mechanisms right across the country," the Prime Minister said after the meeting. "Every single premier signed onto the Vancouver Declaration, which highlights that there will be different approaches but pricing carbon is part of the solution that this country and all of its premiers will put forward."

Mr. Wall said he can agree to carbon pricing under a broad interpretation of that phrase. He said his province captures carbon dioxide from a coal-fired power plant and sells it to oil companies for use in extracting crude – a form of "carbon pricing," he said.

But he said he would oppose any effort to impose a broad-based carbon tax or cap-and-trade system on his province.

"Carbon pricing" is an imprecise term. Typically, it refers to measures that establish an explicit price on carbon – either a tax or a cap-and-trade system. Under that definition, British Columbia, Alberta, Ontario and Quebec either have or are adopting a carbon price.

But government regulations and subsidies for renewable energy or clean technology development act as a hidden "price on carbon," paid for by industry, taxpayers and power customers.

Mr. McNeil argued that his province also has a form of carbon pricing – it is reducing its dependence on coal-fired power and purchasing more expensive but cleaner electricity from the Muskrat Falls project in Newfoundland. "We believe our carbon tax is actually in our power rates," Mr. McNeil told reporters prior to the session.

After a rough opening, the premiers began working more constructively when they focused on the gap between what Canada promised in Paris – the 30 per cent target first proposed by the former Conservative government – and the measures now in place to meet that objective. Mr. Trudeau produced an Environment Canada forecast that showed that, under current measures, Canada's emissions would be at least 765 megatonnes in 2030, while the target is 524 megatonnes.

The federal government also invited Loblaw Cos. Ltd. chief executive Galen Weston to give an address over lunch. Mr. Weston told the leaders that Canadian business needs clear signals from government that carbon emissions will face increasingly more stringent pricing over time, Ontario Premier Kathleen Wynne said in an interview.

"That was not something we had a national consensus on and I think now we do," Ms. Wynne said. "I think it is a significant signal to everyone in the country that that is the direction we're moving."

Alberta Premier Rachel Notley said she was pleased that leaders recognized the "urgency of moving Canada's resources to market in a responsible, timely, predictable and sustainable way." She said she will be working with the Prime Minister, and premiers from British Columbia and Quebec, to win approval for oil pipelines to the west and east coasts.

Heading into the meeting, B.C. Premier Christy Clark urged her colleagues to focus less on the acrimonious issue of a minimum carbon tax and more on concrete actions they could agree on.

"This is not the end; I understand that," she said. "But I hope Canadians will look and say: 'They got together; they made progress.' It's a start and you can only get to the end if you have a start."