ECCC Launches Critical Consultation on Industrial Pricing Benchmark

Before coming into power in 2025, Prime Minister Carney proposed a Made-in-Canada Industrial Competitiveness Strategy. Read ClearBlue's blog post on Carney's early climate ambitions

Since forming the government, competitiveness and industrial policy have become core tenets of Canada’s climate approach, reinforced through the Canada Competitiveness Strategy published in Budget 2025.

In a move toward operationalizing this agenda, on 19 December 2025 Environment and Climate Change Canada (ECCC) launched a consultation paper outlining proposed updates to the federal industrial carbon pricing benchmark, 'Driving Effective Carbon Markets in Canada'. Submissions are due January 30, 2026.

Overview: Driving Effective Carbon Markets in Canada

This paper marks a critical step in the scheduled 2026 federal benchmark review, setting the stage for national stringency standards through 2030.

The consultation initiates early and substantive engagement on the future direction of the benchmark and on the potential amendments provincial and territorial systems may need to remain compliant. The federal objective is to ensure the benchmark continues to deliver credible and durable incentives for decarbonization, while supporting clean technology investment and long-term industrial competitiveness without sacrificing flexibility in provincial and territorial system design.

ECCC’s paper outlines five core elements of an effective industrial carbon pricing system:

• Predictability and durability for long-term investment planning
• Cohesion and efficiency across jurisdictions
• Strong investment incentives for emissions reductions and clean growth
• Transparency to support informed compliance and investment decisions
• Competitiveness protection to limit carbon leakage risks

ECCC also highlights structural challenges facing Canadian carbon markets, including credit oversupply, weakened price signals, limited transparency, and market fragmentation, each of which undermines investor confidence and emissions outcomes.

The paper explores options to:

• Clarify and harmonize industrial coverage across jurisdictions, particularly following the removal of the federal fuel charge
• Reassess proceeds-return mechanisms to ensure they do not weaken credit demand or price signals
• Strengthen benchmark stringency to better manage oversupply risks, including banked credits
• Improve transparency and certainty in the benchmark assessment process

For regulated facilities, market participants, and investors this is a critical moment for engagement. Feedback to ECCC alongside participation in provincial consultations will help shape future compliance obligations, market design, competitiveness protections, and access to emissions-reduction funding.

Detailed Analysis: ClearBlue’s Special Report

To help our clients navigate the technical complexities of the proposal and inform a strategic response ahead of the submission deadline, ClearBlue Markets has prepared a Special Report providing a comprehensive summary of the proposed updates aimed at driving decarbonization and enhancing Canada’s climate competitiveness. 

By analyzing each section of the discussion paper, we provide our Market Intelligence - Canadian Markets subscribers a ClearBlue Market Commentary on how these changes may influence market design, provincial program alignment, and overall investment outcomes.

Contact us  today to learn more about the services we offer to help companies participate in the carbon markets with confidence. 

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