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The pan-Canadian framework: Carbon cap and trade

Tuesday, July 17, 2018 @ 9:14 AM | By Gary Goodwin

As previously discussed, Canada’s Greenhouse Gas Pollution Pricing Act (Act) contains two mechanisms for pricing carbon. The first involves straight taxation. The second mechanism uses cap and trade.

In a cap and trade system, the government sets carbon emission caps on the regulated sectors. The government then issues certain emission allowances by an auction process. Those businesses purchase the allowances to allow for a certain amount of carbon emissions. If the business exceeds those levels of allowances, then it has to pay a charge on the...