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FINDING SUSTAINABLE PATHWAYS

OUR PROCESS

Our process helps Canada achieve sustainable development solutions that integrate environmental and economic considerations to ensure the lasting prosperity and well-being of our nation.

RESEARCH

We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking.

CONVENE

We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge.

ADVISE

We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canada’s economy and environment closer together.

Home / Parallel Paths – 4.5 Summary: Opportunities for Canada

Parallel Paths – 4.5 Summary: Opportunities for Canada

By exploring approaches to managing the risks for Canada from uncertain U.S. climate policy, Canadian climate policy opportunities become clearer.

IN SUMMARY, WE MAKE THE FOLLOWING FINDINGS :

  • LINKING CANADIAN AND U.S. cap-and-trade systems provides an opportunity to level the economic playing field between Canada and the U.S. in terms of harmonizing carbon prices while achieving targets. However, without a U.S. system in place, relying on linkage as an approach to address competitiveness and market access risks will mean delays in reducing emissions here in Canada. And, in the short term, the U.S. may not be interested in a fully integrated carbon market with Canada.
  • SPECIFIC POLICY design mechanisms like a technology fund, as well as international permits and domestic offsets, could represent an opportunity to harmonize carbon prices with those of the U.S. and contain costs. These approaches have trade-offs between realizing domestic emission reductions and reducing competitiveness risks by keeping financial investment in Canada, versus achieving emission reductions elsewhere and sending investment dollars offshore.
  • PERMIT ALLOCATION STRATEGIES can be used to develop a politically viable and equitable GHG mitigation policy for Canada for regions and industrial sectors. For example, recycling revenue to corporate taxes shows greater benefits for capital-intensive provinces such as Alberta and Saskatchewan while revenue recycling to labour or personal income assists population-intensive provinces such as Ontario and Québec. Similarly, free allocations based on an emissions-intensity benchmark reduce distributional risks for regions with emissions-intensive sectors such as oil and gas extraction in Alberta.
  • A CONTINGENT PRICING POLICY in which a safety valve is designed to limit the carbon price differential between Canada and the U.S. would walk a middle line between harmonizing with the U.S. on carbon price and on emission-reduction targets, balancing competitiveness and environmental risks. In particular, it would limit competitiveness risks, allow for immediate implementation of a Canadian carbonpricing climate policy, achieve greater emission reductions than exact alignment with the U.S. price, and generate money to invest in low-carbon technologies and longterm emission reductions in Canada.