## Canada’s Carbon Price Floor

_IMF Working Papers, March 8, 2018_

## Source details

**Canonical URL:** [Canada’s Carbon Price Floor](https://www.imf.org/en/publications/wp/issues/2018/03/08/canadas-carbon-price-floor-45684)

## Other formats

- [Markdown version](/en/publications/wp/issues/2018/03/08/canadas-carbon-price-floor-45684/index.md)
- [Structured JSON version](/en/publications/wp/issues/2018/03/08/canadas-carbon-price-floor-45684/index.json)
- [Bundle manifest](/en/publications/wp/issues/2018/03/08/canadas-carbon-price-floor-45684/bundle-manifest.json)

## Bibliographic details
- Authors: Ian W.H. Parry, Victor Mylonas
- Published: March 8, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484345191.001

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### Overview
- Pan-Canadian approach to carbon pricing announced in October 2016, ensuring carbon pricing applies throughout Canada in 2018, with increasing stringency over time to reduce emissions.
- Provinces and territories may implement either:
  - an explicit price-based system—with a minimum price of CAN $10 per tonne of carbon dioxide equivalent in 2018, increasing to CAN $50 per tonne by 2022; or
  - an equivalently scaled emissions trading system.
- Paper length: 27 pages.

### Rationale and Design
- Discusses the rationale for, and design of, the price floor requirement.
- Flexibility: allows provincial/territorial choice between downstream price-based systems and equivalently scaled emissions trading systems.

### Environmental, Fiscal, and Welfare Impacts (Provincial-level)
- Examines provincial-level:
  - environmental impacts (emissions reduction objectives tied to increasing stringency over time);
  - fiscal impacts (pricing provides significant new revenues);
  - economic welfare impacts (general conclusion: welfare costs are manageable).
- Keywords tied to analysis include: aggressive pricing, backstop system, carbon price, Carbon tax, competitiveness impacts, differentiated pricing, downstream pricing, effective carbon price, emissions pricing, firm, Fuel tax, Greenhouse gas emissions, incidence, Non-renewable resources, price floor, upstream pricing, welfare impacts.

### Monitoring and National Incidence
- Addresses monitoring issues necessary to implement and enforce pricing regimes.
- Considers national-level incidence of the carbon price floor.

### Conclusions and Policy-Relevant Finding
- General conclusion: welfare costs and implementation issues are manageable, and pricing provides significant new revenues.
- Key challenge: the floor price by itself appears well short of what will be needed by 2030 for Canada’s Paris Agreement pledge.

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## Content in this bundle

- **Canada’s Carbon Price Floor, WP/18/42, March 2018**
  - [Canada’s Carbon Price Floor, WP/18/42, March 2018 (Markdown version)](/-/media/files/publications/wp/2018/wp1842.pdf.md){rel="alternate" type="text/markdown"}
  - [Canada’s Carbon Price Floor, WP/18/42, March 2018 (PDF)](/-/media/files/publications/wp/2018/wp1842.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2018/03/08/canadas-carbon-price-floor-45684_