Environment and Climate Change Canada (ECCC) has announced the formal launch of a federal-provincial-territorial (FPT) working group tasked with improving cooperation and exploring linkage models across Canada’s fragmented regional carbon markets.
The initiative follows a mandate agreed upon by First Ministers in July 2026. Representatives nominated from each province, territory, and the federal government held their inaugural meeting to discuss a draft workplan designed to harmonize market function and foster clean industrial growth.
Since 2019, carbon pricing in Canada has operated via a decentralized framework under the Greenhouse Gas Pollution Pricing Act (GGPPA). While the federal government sets benchmark stringency criteria, individual provinces and territories retain the flexibility to implement custom output-based pricing systems (OBPS), cap-and-trade frameworks, or default to the federal backstop.
The FPT working group will focus on technical mechanisms to integrate regional compliance markets, aiming to provide long-term regulatory certainty for industrial emitters and capital investors while addressing internal trade barriers created by divergent provincial rules.
“This working group is an opportunity to consider how we can work together to better streamline and integrate the many distinct carbon markets operating in different provinces and territories across our country,” said Julie Dabrusin, Minister of the Environment, Climate Change and Nature.
The intergovernmental body operates independently from broader ongoing reviews regarding the federal carbon pricing benchmark.
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The working group is scheduled to conduct technical assessments over the next year and report back to First Ministers with detailed policy recommendations by July 2027.
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