Analysis Shows Impact Of Carbon Pricing Models In Canada

Sept. 7, 2016
New research shows carbon pricing can reduce emissions without harming economic growth.

New modeling from Canadians for Clean Prosperity and Deep Decarbonization Pathways Canada reportedly reveals that Canada can significantly decarbonize while protecting economic performance. The modeling analyzes what would happen if Canada adopted one of two carbon pricing models – either a straight carbon tax similar to British Columbia's or a hybrid carbon pricing model similar to the proposed new Alberta system – at the national level.

According to the group, both models would significantly reduce Canada's greenhouse gas emissions (to between 16% and 17% below 2005 levels by 2030), and the hybrid carbon price model actually boosts economic performance both Canada-wide and in most regions compared to the status quo. For energy producing provinces, an Alberta-style hybrid carbon price model at the national level (which provides some emissions allowances to industry based on their emissions intensity) would reportedly boost GDP by 1.43% in Alberta and 4.23% in Saskatchewan, compared to the results under the current set of federal and provincial policies.

The modeling also compared two options for recycling carbon tax revenues – either recycling all revenues as tax reductions, as is done in British Columbia, or allocating the revenues to increased spending on emissions reductions programs. These results reportedly showed that cutting taxes would lead to slightly better GDP performance while increased environmental spending would lead to slightly increased emissions reductions, but that neither recycling option was as significant for the environmental or economic outcomes as the type of carbon pricing system adopted.

"With the provincial and federal governments expected to announce a national climate change plan this fall, Canadians should be asking how we can we meet our targets at the lowest possible cost to the economy,” Clean Prosperity Executive Director Mark Cameron says. "Canadians for Clean Prosperity believes that adopting an Alberta-style hybrid carbon pricing policy, and British Columbia-style revenue recycling by reducing personal and corporate income taxes, represents the best way forward for Canada's environment and our economy."

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