{"id":18321,"date":"2025-08-28T13:08:36","date_gmt":"2025-08-28T13:08:36","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=18321\/bridging-the-imagination-gap-how-canadian-companies-can-become-global-leaders-in-ai-adoption"},"modified":"2025-09-08T20:16:08","modified_gmt":"2025-09-08T20:16:08","slug":"carbon-pricing-competitiveness-steering-canadas-climate-policies-amid-trade-shocks","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/climate-action-institute\/energy-reports\/carbon-pricing-competitiveness-steering-canadas-climate-policies-amid-trade-shocks\/","title":{"rendered":"Carbon Pricing & Competitiveness: Steering Canada\u2019s climate policies amid trade shocks"},"content":{"rendered":"\n
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Even as the world reels from tariffs, there\u2019s a new levy lurking on international borders: a carbon duty on imports.<\/p>\n\n\n\n

The EU rolled out its Carbon Border Adjustment Mechanism (CBAM) in 2023; Mark Carney\u2019s government is considering a Border Carbon Adjustments (BCA) to level the playing field for domestic energy and heavy industry against foreign competitors; and a handful of bills in the U.S. at the federal and state level are proposing fees on imports with weaker climate compliance.<\/p>\n\n\n\n

The idea of a border carbon fee is simple: ensure that manufacturers from, say, Montreal or Berlin, that spend money and effort to adhere to their domestic robust carbon policies are not disadvantaged against competitors that benefit from weak climate policies in their jurisdictions. Combined, a domestic carbon policy and a border carbon fee is a one-two punch that forces foreign competitors to raise their environmental standards, and ensures domestic industries are not unduly penalized for pursuing decarbonization strategies. Think of Ottawa taxing coal-powered Chinese steel to ensure its not unfairly advantaged against Canadian steel that\u2019s forged by low-carbon but highly capital-intensive electric furnaces. <\/p>\n\n\n\n

While a border carbon fee would be a natural extension to Canada\u2019s industrial carbon policy, its implementation is tricky. For starters, it could further inflame Ottawa\u2019s already tense relationship with the Trump administration, which has cracked down on climate policies.<\/p>\n\n\n\n

Canada\u2019s carbon policy is in a state of flux, too. Earlier this year, the federal government scrapped a fuel charge\u2014widely known as a carbon tax, followed soon after by British Columbia that had one of the longest and most stable emissions pricing systems globally. The past year has seen Canadian policymakers wobble on industrial carbon pricing: commitment to carbon pricing in Quebec and British Columbia all the  while  Alberta froze its carbon price at $95\/tCO2e earlier in the year, and Saskatchewan cancelled its industrial carbon pricing system.<\/p>\n\n\n\n

Canada\u2019s industrial carbon policy has had mixed success to date\u2014it has helped fund renewable energy projects, but with limited direct impact on emissions reduction to date. As the federal government and some provincial jurisdictions look to adjust their industrial carbon pricing strategy, they will also need to factor in shifting trading patterns, changing global economic priorities and the competitiveness of Canada\u2019s industries.<\/p>\n<\/div>\n<\/section>\n\n\n\n

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Carbon pricing crosses the border<\/h2>\n\n\n\n

Canada is one of 40-plus countries that have deployed a version of carbon pricing, covering 28% of global emissions.1<\/a><\/sup> Several are now also exploring or advancing domestic carbon pricing systems in response to the European Union\u2019s CBAM:<\/p>\n\n\n\n