The Government of Canada has issued a background paper and launched public consultations on border carbon adjustments (BCAs). The initial exploratory phase of consultations will involve targeted discussions with provinces and territories, as well as industry associations representing sectors most directly impacted (i.e., importers and exporters dealing in emissions-intensive goods). A limited number of labour and environmental organizations and academics with expertise on BCAs will also be engaged.
The government intends to consult the broader Canadian public this fall and continue international engagement with trading partners and like-minded countries.
Feedback is sought in relation to:
- 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.
- Economic pressures. What economic impacts BCAs may have, and the distribution of those impacts across sectors and regions, including for consumers.
- 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.
The federal government has indicated that four main inter-related objectives are driving its consideration of BCAs: (i) reducing the risk of carbon leakage; (ii) maintaining the competitiveness of domestic industries; (iii) supporting greater domestic climate ambition; and (iv) driving international climate action.
The government signalled its intent to move forward with a two-phase consultation process on BCAs in Budget 2021. Canada’s recent focus on BCAs is aligned with work on similar policies in the European Union and the United States and we anticipate that BCAs will be a topic of significant discussion at COP26, beginning November 1, 2021 in Glasgow.