Statement from Tim Gray, Executive Director


Toronto | Treaty Lands and Territory of the Mississaugas of the Credit First Nation, and the traditional territory of the Anishinaabeg, the Haudenosaunee, and the Wendat – Prime Minister Carney is seeking to deepen our ties with Europe at this week’s Canada-EU summit. But Canada isn’t meeting the environmental bar Europe sets for its partners. This misalignment could create a significant barrier to greater economic, environmental and social linkages with the EU.

Canada already faces a carbon tariff from the EU on nearly $2.8 billion of our steel, iron and aluminum exports. And those carbon levies are set to ramp up over the coming decade. If we don’t increase our carbon price to meet European standards, we will burden these key industries with a trade disadvantage at the very moment they need greater access to Europe.

Meanwhile, Canada’s Bill C-39, the “Bulldoze Nature Bill,” lowers environmental standards so significantly that it could actually violate Canada’s existing free trade agreement with Europe. We’re already seeing an example of how this might play out: Dutch groups are currently challenging the New Zealand government over its climate policy rollbacks under a similar trade agreement between the two parties.

Ultimately, Brussels will judge us on our laws, not our rhetoric. If Canada wants to build a real alliance with Europe, our Prime Minister must stop racing towards American-style environmental policy.

Background

 

  • On January 1, 2026, the European Union formally launched the world’s first carbon border levy, the EU Carbon Border Adjustment Mechanism (CBAM). This is a regulatory tool that applies a levy at the EU border on the greenhouse gas content of select carbon-intensive goods imported into the EU (including cement, iron and steel, aluminum, fertilizers and electricity), in order to match the carbon price that producers in the EU face. This ensures that there is no competitive disadvantage for EU producers compared to non-EU producers that do not pay a carbon price at home. For Canadian producers, it means that if domestic producers don’t face strong enough carbon pricing in Canada, they will need to pay a levy to access European markets. A credible Output-Based Pricing System (OBPS) therefore lowers border costs for Canadian steel, aluminum and fertilizer.
  • A core element of the Comprehensive Economic and Trade Agreement (CETA) is Chapter 24, on Trade and the Environment. It prohibits any party from lowering its nature or environmental standards to attract investments or to offer domestic actors unfair cost advantages in transatlantic trade.
  • On climate progress, Canada lags behind. Greenhouse gas emissions in Canada are higher today than they were in 1990, and the country is far off track to meet its weak 2030 target. In contrast, the European bloc has already reduced emissions by 40 per cent. At COP31, EU negotiators will be urging countries to speed up the global exit from fossil fuels, with several of the larger European countries having already released roadmaps for their own plans to transition off oil, gas and coal. European countries know these targets are not abstract, given this year’s devastating heatwaves that claimed over 50,000 lives.
  • The EU’s sustainable finance taxonomy serves as a global standard. Canada would do well to design its own taxonomy and reporting standards to map onto the EU’s sustainable finance framework. Doing so will help Canadian issuers attract European capital.
  • The European Parliament negotiating mandate for COP31 can be found here.

ABOUT ENVIRONMENTAL DEFENCE (environmentaldefence.ca): Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.

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For more information or to request an interview, please contact:

Lauren Thomas, Environmental Defence, media@environmentaldefence.ca