An April 9, 2025 webinar hosted by ClearBlue Markets addressed the uncertainty surrounding Canadian carbon markets as the federal election approaches. The discussion focused on potential policy shifts and their implications for industry and investors, further complicated by recent developments in the United States. The event was covered by Caron Pulse.
Read: BRIEFING: Expect changes to industrial carbon pricing, if not scrapped outright post Canadian-election as reported by Allison Gacad and Sarah Sobanski, Carbon Pulse.
The webinar featured insights from Michael Berends, CEO of ClearBlue Markets, Adi Dunkelman, Director of Carbon Policy at ClearBlue, and Tyson Dyck, Partner at Torys LLP. They explored the potential impacts of the upcoming election and the contrasting approaches of the two leading political parties regarding carbon pricing.
Download the recording: Navigating Uncertainty: The Canadian Election’s Impact on Carbon Markets
Key Discussion Points:
- Political Landscape: The webinar highlighted the significant shift in polling data, indicating a closer race than previously expected. The outcome of the election could lead to very different approaches to climate policy and carbon markets in Canada.
- Federal Carbon Pricing: The removal of the federal fuel charge was a significant development discussed. While this directly impacts consumers, the industrial carbon pricing systems (like the OBPS) remain a key point of divergence between the Liberal and Conservative parties. The Liberals under Mark Carney are expected to maintain and potentially strengthen industrial carbon pricing, viewing it as a crucial tool for emission reduction. In contrast, the Conservatives, taking a "technology over taxes" approach, have indicated their intention to remove industrial carbon pricing, leaving it to provincial discretion.
- Provincial Carbon Markets: The webinar touched upon the uncertainty in Alberta's Technology Innovation and Emissions Reduction (TIER) system, with the provincial government reportedly considering significant changes. These potential changes could impact the value of existing carbon credits and future investments. British Columbia's carbon pricing system is expected to remain stable regardless of the federal outcome. The Quebec cap-and-trade program recently received unanimous support from its National Assembly, indicating its continued operation.
- Impact of US Developments: Recent actions in the US, particularly an announcement from Donald Trump regarding state-level carbon pricing programs, have introduced new uncertainty into the North American carbon market, notably affecting the Quebec market. This external factor adds another layer of complexity to the Canadian landscape.
- Lessons from Ontario: The abrupt removal of Ontario's cap-and-trade system in 2018 serves as a cautionary tale regarding the risks of policy reversals and the potential for market disruption and loss of investor confidence. This historical example underscores the impact of political decisions on carbon markets and the importance of policy certainty.
- Federal Benchmark Review: The upcoming federal carbon pricing benchmark review in 2026 was highlighted as a critical point. A Liberal government would likely use this review to strengthen the stringency and consistency of industrial carbon pricing across provinces. It may also be a source of contention with the provinces that are seeking to have more control over their future program design such as Alberta.
- Market Volatility: The uncertainty surrounding policy and regulation is already causing volatility in carbon credit prices, as seen in Alberta and the California-Quebec market. This uncertainty can hinder long-term investments in emission-reduction technologies.
- Market Impacts: The Alberta carbon market has experienced a significant drop in credit prices due to political uncertainty and an oversupply. The California-Quebec market also saw price fluctuations following recent US developments. These market reactions underscore the sensitivity of carbon pricing mechanisms to policy signals and political developments.
The Canadian carbon market is currently facing a period of significant uncertainty driven by the approaching federal election and developments in the US. The outcome of the election will likely have a profound impact on the future of carbon pricing and related climate policies in Canada.
ClearBlue will continue to monitor developments in Canada and report back to clients on an ongoing basis. For information about working with ClearBlue, contact us.