IETA GHG Market Sentiment Survey Report 2022

Published: June 21, 2022

Canada expected to establish a Border Carbon Adjustment (BCA)

In March 2022, the Canadian Government launched its 2030 Emissions Reduction Plan, providing a sector-by sector roadmap to achieve its NDC target of 40-45% emissions reduction by 2030. As part of the plan, the Government has updated its Pan-Canadian carbon pollution pricing benchmark, increasing the federal benchmark price on pollution by C$15 per year from 2023 up to C$170 per tonne by 2030.

In addition, Canada has committed to exploring measures that help guarantee the price of pollution, including the flagship Federal GHG Offset System. This system – launched in June 2022 – aims to encourage cost-effective domestic emissions reductions and removals from activities that are not covered by carbon pollution pricing. Survey respondents identified that “reaching agreements with provinces and territories” pose the biggest challenge to the implementation of Canada’s federal offsets system in the coming year. This was followed by “finalizing federal protocols establishing the approach for quantifying GHG emissions reductions for a given project” (15%) and “political instability” (15%). Over the coming year, federal consultations will occur on Canada’s Clean Electricity Standard and approach to Oil & Gas caps. Oil & Gas cap compliance along with potential future voluntary schemes, were deemed the largest future demand sources for Canada’s Federal offsets. Both were selected by 30% of respondents.

Last year, the Canadian Government signalled its intent to develop a Border Carbon Adjustment (BCA) mechanism. This included a public consultation process to gain feedback on the impacts of introducing a BCA in Canada. Survey respondents were optimistic about the likelihood of Canada introducing a BCA mechanism, with 48% of respondents expecting such a system to be introduced by 2030.

Read the Full Survey Here