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Combatting climate change is a global imperative. Canada is doing its part by committing to ambitious climate targets and raising its price on carbon pollution to meet those targets. An emerging global challenge is how to address differing carbon prices among trading partners and more generally, differences in the tools nations use to address the challenge of climate change. 

Border carbon adjustments (BCAs) can level the playing field by ensuring that imported goods are subject to the same carbon costs as domestically produced goods. This, in turn, helps prevent potential carbon leakage, supports emissions reduction, and maintains Canada's global competitiveness.

Our objective

In fall 2020, the government announced its intention to explore the potential of BCAs and work with like-minded economies to consider how this approach could help Canada meet its climate targets, while ensuring a fair environment for businesses. In Budget 2021, the government signaled its intent to move forward with a two phase consultation process in support of this objective.

This initial exploratory phase of consultations will involve targeted discussions with the provinces and territories, as well as industry associations representing sectors most directly impacted (i.e. importers and exporters dealing in emission intensive goods). A limited number of labour and environmental organizations and academics with expertise on BCAs will also be engaged.

The broader Canadian public will be consulted this fall. Throughout the process, the government intends to continue its international engagement with trading partners and other like-minded countries who are taking climate action to ensure coordination among different policies and approaches.

Background paper

To inform discussions, the government is issuing a paper that outlines considerations around BCAs in the Canadian and international context. Specifically, feedback is being sought from three main perspectives:

1. Environmental outcomes
   • How adding BCAs to Canada's climate policy toolbox could build on Canada's existing climate change policies to deliver equivalent or better environmental outcomes.
2. Economic pressures
   • What economic impacts BCAs may have, and the distribution of those impacts across sectors and regions, including for consumers.
3. International engagement and trade relations
   • As a trade-dependent economy how BCAs may affect Canada's trading relationships and areas where further work is required for cooperation on BCAs with trading partners.

What's next?

Our conversation doesn't end here. These discussions will allow the government to hear initial views, issues and ideas on BCAs from Canadians. The feedback received will help to identify questions to be further examined in a broader public consultation that will be announced later this year.

Related links

• Government launches consultations on Border Carbon Adjustments
• Budget 2021: A Healthy Environment for a Healthy Economy
• Canada's Strengthened Climate Plan: A Healthy Environment and a Healthy Economy
• Canada's Climate Actions for a Healthy Environment and a Healthy Economy