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Carbon Pricing Durability and Industrial Competitiveness in Alberta and Ontario

Market-based climate governance operating within federal systems requires the careful calibration of carbon pricing mechanisms to balance emission reductions with the preservation of industrial competitiveness. The structural durability of subnational carbon regimes depends heavily on output-based allocations, revenue recycling strategies, and institutional insulation against political reversals across divergent economic landscapes. Comparative evaluation of resource-intensive and manufacturing-centred jurisdictions reveals the critical design parameters necessary to maintain long-term decarbonisation trajectories within intergovernmental frameworks.

Objectiu del treball

Examine how carbon pricing designs govern policy durability and industrial competitiveness across Alberta and Ontario.

Metodologia

Comparative institutional analysis of subnational policy frameworks, statutory instruments, and benchmark criteria.

Novetat científica

Delineates how output-based allocations and revenue recycling mediate regulatory durability under asymmetric federalism.

Previsualització del document

Aquesta és una previsualització breu. La versió completa inclou text ampliat per a totes les seccions, una conclusió i una bibliografia formatada.

PhD Dissertation

Degree:
Carbon Pricing Durability and Industrial Competitiveness in Alberta and Ontario

Author:

Group

First M. Last

Advisor:

Dr. First Last

City, 2026

Contents

Introduction
Chapter 1. Theoretical Foundations of Market-Based Climate Instruments and Regional Political Economy
1.1 Market Externalities, Carbon Taxes, and Emissions Trading Mechanics
1.2 Policy Durability, Institutional Lock-in, and Regulatory Reversibility
1.3 Industrial Competitiveness, Carbon Leakage, and Output-Based Pricing Systems
1.4 Multi-Level Environmental Governance in Federal Jurisdictions
Chapter 2. Methodological Framework and Comparative Policy Design
2.1 Comparative Policy Design and Case Selection Rationale
2.2 Document Corpus and Policy Archive Mapping
2.3 Analytical Criteria for Assessing Policy Durability and Industrial Exposure
2.4 Methodological Boundaries and Secondary Data Limitations
Chapter 3. Evolution of Carbon Pricing Regimes in Alberta and Ontario
3.1 Alberta's Transition from SGER and CCIR to the TIER Mechanism
3.2 Ontario's Cap-and-Trade Trajectory, Repeal, and EPS Implementation
3.3 Intergovernmental Tensions and the Pan-Canadian Benchmark Standards
3.4 Revenue Recycling Models and Corporate Acceptance Mechanisms
Chapter 4. Comparative Assessment of Industrial Competitiveness and Abatement Pathways
4.1 Emission-Intensive, Trade-Exposed Sectors in Heavy Oil and Manufacturing
4.2 Compliance Cost Incidence, Marginal Abatement, and Benchmark Thresholds
4.3 Technology Funds, CCUS Deployment, and Strategic Decarbonisation
4.4 Trade Vulnerability and Interprovincial Market Distortions
Chapter 5. Institutional Determinants of Policy Durability in Canadian Federalism
5.1 Electoral Cycles, Ideological Coalitions, and Regulatory Volatility
5.2 Federal Backstop Interventions and Judicial Clarifications
5.3 Stakeholder Alignment, Industrial Lobbying, and Policy Inertia
5.4 Path Dependency and Cross-Jurisdictional Equivalency Mechanisms
Chapter 6. Strategic Frameworks for Resilient Decarbonisation and Industrial Protection
6.1 Aligning Output-Based Benchmarks with International Border Carbon Adjustments
6.2 Long-Term Price Predictability Contracts and Investment De-Risking
6.3 Harmonising Interprovincial Credit Trading and Market Liquidity
6.4 Institutional Insulation Strategies Against Subnational Electoral Shifts
Conclusion
Bibliography

Introduction

Market-based climate policies represent essential regulatory mechanisms for internalising greenhouse gas externalities and steering regional economies toward low-carbon trajectories [4]. In federal systems, the dual imperative of securing structural decarbonisation while safeguarding industrial competitiveness presents distinct political and institutional tensions [2]. The durability of carbon pricing architectures depends not only on theoretical efficiency but also on how effectively design mechanisms buffer emissions-intensive, trade-exposed industries against competitiveness losses and capital flight [4], [5]. In Canada, subnational jurisdictions have adopted divergent trajectories, balancing industrial protection with federally mandated benchmarks [3]. Examining the institutional evolution in resource-dependent and manufacturing-oriented provinces provides critical empirical insight into the political economy of regulatory stability [1], [3].

Regional divergence between Alberta and Ontario exemplifies the friction between subnational economic structures and decarbonisation mandates [3]. Alberta's sustained reliance on baseline-and-credit mechanisms, evolving from early intensity standards to the Technology Innovation and Emissions Reduction framework, contrasts sharply with Ontario's adoption and abrupt cancellation of a cap-and-trade system [3], [5]. These conflicting trajectories reveal that policy durability is constrained by industrial profile, regional voter alignment, and federal backstop interventions [5]. Unstable policy environments create severe regulatory risks, undermining long-term capital allocation for low-carbon technologies and clouding abatement predictability [2], [8].

This study investigates the structural determinants of carbon pricing durability and industrial competitiveness across Alberta and Ontario. Utilising a comparative institutional approach supported by secondary policy frameworks and market evaluations, the research examines output-based pricing systems, revenue recycling mechanisms, and cross-jurisdictional equivalency criteria [2], [3], [4]. By tracing how industrial exposure and electoral shifts shape provincial regulatory choices, this dissertation establishes the governance conditions required to sustain decarbonisation trajectories without eroding competitiveness [4], [8].

Ultimately, the analysis bridges environmental economics and comparative federalism to demonstrate how regulatory architecture dictates policy survival. Establishing stable, equivalent carbon pricing frameworks remains vital for mitigating carbon leakage and driving heavy industry decarbonisation across divergent provincial economies [3], [4].

2.1 Comparative Policy Design and Case Selection Rationale

This study employs a structured, comparative case design to examine how subnational institutional architectures mediate carbon pricing durability and industrial competitiveness across Canadian provinces. Alberta and Ontario serve as critical, highly contrasting cases within a shared federal framework. Alberta represents a resource-intensive economy with long-standing, facility-level performance standards and output-based allocations designed to mitigate carbon leakage while maintaining industrial continuity. Conversely, Ontario exemplifies a diversified manufacturing economy that transitioned from an economy-wide cap-and-trade mechanism linked with international partners to an emissions performance system following electoral volatility. By contextualising both provinces against the Pan-Canadian carbon pricing benchmark, this methodological approach isolates how regulatory stringency and equivalency criteria interact with divergent political economies (Sawyer & Stiebert, 2018). Furthermore, evaluating these distinct trajectories enables an operational comparison between explicit carbon taxation, baseline-and-credit architectures, and emissions trading systems (Introduction to Carbon Pricing, 2024). Integrating institutional durability metrics with competitiveness criteria permits systematic process tracing of how stakeholder coalitions, revenue recycling designs, and policy feedback mechanisms either entrench or destabilise market instruments over successive political cycles (Jenkins, 2019). Consequently, this comparative framework controls for national constitutional parameters while assessing subnational resilience across distinct industrial profiles.

References

  1. An Introduction to Carbon Pricing: Carbon Tax, Cap & Trade, ETS and Internal Carbon Price
    Isabelle DAO, Thierry Roncalli, Raphaël Semet
    Lien DOI
  2. Setting a price for carbon for implementing a carbon tax or a cap and trade system for controlling carbon dioxide emissions
    Wenfa Ng
    Lien DOI
  3. Striving for equivalency across the Alberta, British Columbia, Ontario and Québec carbon pricing systems: the Pan-Canadian carbon pricing benchmark
    Sharon Mascher
    Lien DOI
  4. Carbon Taxes vs. Cap-and-Trade as Responses to Greenhouse Gas Externalities A comparative secondary research paper on the EU Emissions Trading System and Sweden's carbon tax
    Chaarvi Parasher
  5. Policy perspective:Building political support for carbon pricing—Lessons from cap-and-trade policies
    Leigh Raymond
  6. Optimal Dynamic Strategy for Emission Reduction and Operation Considering Hybrid Carbon Policy with Carbon Tax and Cap-and-Trade
    Linlin Zhang, Jiaqi Ren, Guoqing Zhang
  7. Carbon Emissions Reduction Strategies in a Dual-Channel Supplychain Under Tax-and-Subsidy and Cap-and-Trade Policies
    Arjun Kumar, Sri Vanamalla Venkataraman
  8. Carbon Pricing and Emissions: Causal Effects of Britain's Carbon Tax
    Klaus Peter Gugler, Adhurim Haxhimusa, Mario Liebensteiner

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