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2022 Reports 1 to 5 of the Commissioner of the Environment and Sustainable Development to the Parliament of Canada – Canada’s carbon pricing approach essential to meet reduction targets but needs further improvement

Press Release

Ottawa, 26 April 2022—A report released today by the Commissioner of the Environment and Sustainable Development Jerry V. DeMarco concludes that Environment and Climate Change Canada had ensured that carbon pricing systems were in place in all provinces and territories. Though the department took steps in 2021 to address weaknesses in its initial approach that allowed some less effective provincial carbon pricing systems to be accepted, these were not all resolved and could hinder the overall effort to meet Canada’s emissions reduction targets.

“As is recognized by the Supreme Court of Canada and many international organizations, effective carbon pollution pricing drives changes in consumer and producer behaviour that in turn reduce overall greenhouse gas emissions,” said Mr. DeMarco. “Carbon pricing is therefore essential if Canada is to finally succeed in significantly reducing its greenhouse gas emissions.”

The audit found that weaker requirements for large emitters continue to undermine the ‘polluter pays’ principle in some parts of the country. In addition, despite efforts to lessen the burden of carbon pricing on some groups of people and industry, Indigenous groups and smaller businesses remained disproportionately affected. Though provinces and territories will have to report on how they use the revenues from carbon pricing, it is still unclear how the revenues will be used to alleviate the disproportionate burden felt by some groups across Canada.

The audit also found that Environment and Climate Change Canada’s public reporting on carbon pricing systems lacked the transparency needed to demonstrate their effectiveness and to guide policy changes. Notably, there was a lack of transparency on how the provincial and territorial systems compared to the federal backstop, on the impact of the various large-emitter programs.

“Canada’s carbon pricing approach needs further improvement to the support the achievement of Canada’s national emission-reduction targets, including transparent reporting so that Canadians can better understand the effectiveness and impacts of carbon pricing systems,” said Mr. DeMarco.

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The 2022 Reports of the Commissioner of the Environment and Sustainable Development, Report 5—Carbon Pricing—Environment and Climate Change Canada is available on the Office of the Auditor General of Canada website.

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