Canada's Climate and Environment Minister Julia Dabrusin has defended industrial carbon pricing as a vital tool for cutting emissions and shielding businesses from unfair competition, but she stopped short of explicitly backing the European Union's carbon border tax. Her comments come as Brussels and Ottawa tout a new era of cooperation following the EU-Canada summit in Montréal in late October.
In an interview with Euronews, Dabrusin said that industrial carbon pricing is essential in a low-carbon economy, but added that "these are conversations for us to have... those are conversations that are still to be had." Her cautious wording reflects a delicate balancing act: Canada supports carbon pricing at home, yet it is wary of the EU's Carbon Border Adjustment Mechanism (CBAM), which has been in force since January 2026 and imposes a carbon cost on certain imports to protect European producers from competitors with weaker climate rules.
When pressed on whether Canada would endorse CBAM, Dabrusin offered no explicit support. According to an internal document from Canada's trade and foreign affairs ministries, dated December 2025 and seen by Euronews, Ottawa is effectively seeking an exemption from the levy. The document states that "Canada continues to seek a practical agreement with the EU to reduce CBAM's administrative burden for Canadian exporters," and notes that the Prime Minister's Personal Representative to the European Union is fully engaged on the issue.
At the summit's closing press conference on 30 October, Canadian Prime Minister Mark Carney said that "a series of trade issues that had been bubbling along" were discussed, but he declined to provide specifics. "We are working together to find common solutions (on CBAM and other trade issues)," Carney told reporters.
Carney has been trying to diversify Canada's trade away from its heavy reliance on the United States, making access to the EU market increasingly important. However, the internal document identifies CBAM as a potential obstacle to expanding exports to Europe, particularly in aluminium, steel, critical minerals, and hydrogen. It warns that "Canadian exports are not exempt from CBAM and exporters will face carbon charges and complex administrative requirements that could create market access risks and potential competitiveness challenges in the EU market."
Seeking a practical deal, not a full exemption
Canada does not qualify for a full exemption from CBAM, despite its existing carbon-pricing policies and its close trade relationship with the EU under the Comprehensive Economic and Trade Agreement (CETA). Under EU rules, a full exemption is tied to participation in, or a connection with, the EU Emissions Trading System (ETS) — a condition Canada does not currently meet. Moreover, the EU's carbon price is significantly higher than Canada's domestic carbon price trajectory.
Instead, Ottawa is pushing for Brussels to recognise its domestic carbon-pricing system as sufficiently comparable to the EU's, which would reduce the administrative and financial burden on Canadian businesses. Although the legal obligation to pay CBAM falls on EU importers, critics argue that these costs are likely to be passed on to exporters through commercial agreements.
Stephanie Kusie, the Canadian Conservatives' shadow minister for international trade, has raised concerns about the impact on Canadian businesses. "Canada is facing an EU carbon tariff in the coming months that could affect $3 billion in Canadian exports. Instead of fixing the issue, the PM has spent months distracting Canadians with talk of the EU," she said.
Between 2021 and 2024, Canadian exports of goods covered by CBAM averaged C$28 billion a year, representing 7.4% of Canada's exports to the bloc, according to the document. Minister Dabrusin said the Canadian government supports industrial carbon pricing, which it has had in place for years and intends to strengthen. She argued that it is among the most effective ways to reduce emissions while keeping businesses competitive in a global economy shifting towards lower-carbon production.
The EU-Canada summit took place as the EU seeks to build a network of trusted economic partners amid souring relations with the United States under Donald Trump's administration. Carney told the summit that Ottawa aims to become an associate member of the EU by June next year. However, several member states, led by Germany, have voiced divergences over the definition of associate membership. EU leaders agreed to define the concept by the 2027 summit.
Dabrusin told Euronews that, for Canada, delivering on substance rather than semantics is what matters. The debate over CBAM underscores the broader challenge of aligning climate policies across borders, even as the EU and Canada deepen their energy alliance. As the EU looks to diversify its energy partners, the outcome of these negotiations will be closely watched in both Brussels and Ottawa.
