Policy Considerations When Carbon Taxes Meet Cap-and-Trade

As we recently reported, British Columbia's (BC) Climate Leadership Team prepared a report setting out 32 recommendations for BC's climate policy path forward. Recommendation 29 states that: If the majority of Canadian provinces opt for carbon pricing via emissions trading to cover greenhouse gases from large final emitters, a review should be undertaken of mechanisms to integrate a carbon tax with a cap and trade framework for the BC context.

According to the World Bank, approximately 40 national and 20 sub-national jurisdictions have put a price on carbon dioxide (CO2) using carbon taxes or cap-and-trade schemes – or a combination of both. The World Bank estimates that as of April 1, 2015, the value of global emissions trading systems was approximately US $34 billion, while carbon taxes were valued at about US $14 billion.