Achieving 2050: A Carbon Pricing Policy for Canada – Research
The National Round Table conducted original and comprehensive economic modelling of various carbon pricing mechanisms and how they affect provinces and other sectors. We examined the theory and practice of carbon pricing instruments and how they could work for Canada.
In its 2007 climate change plan entitled Turning the Corner, the Government of Canada announced ambitious long-term greenhouse gas (GHG) emissions reduction targets for Canada of 20% below 2006 levels by 2020 and 65% by 2050. In January 2008, the National Round Table on the Environment and the Economy (NRTEE or Round Table) released a report entitled Getting to 2050: Canada’s Transition to a Low-emission Future, recommending that the government implement a strong, clear, consistent, and certain carbon price signal across the entire Canadian economy as soon as possible in order to successfully shift to a lower GHG emissions pathway. We identified technology development and deployment as central to reducing emissions and determined that pricing carbon would foster this. Finally, we said the overall impacts on the Canadian economy, while significant for some sectors and regions, were manageable in the long run.
Our research went further than before in demonstrating that this policy approach was the most effective path to transition Canada to a low-emissions future. But important questions of actual carbon policy design and implementation demanded further attention. Which carbon pricing instrument was best for Canadian circumstances? How should it be designed and how would it work? How should the transition be managed and over what time period? What are the implications for Canada’s economy of achieving deep emission reduction targets and how can we address concerns about competitiveness and fairness? What are the international implications of one policy choice over another?
These all raise fundamental issues of carbon pricing policy design and implementation that governments will have to consider. Recognizing this need, the NRTEE embarked on a year-long research program to reinforce our Getting to 2050 report that would result in new advice on the most effective carbon pricing policy for Canada, in the form of this report. The Round Table implemented an ambitious and detailed research agenda comprising eight background studies, the formation of a national expert advisory committee to review our research along the way, and original economic modelling and analysis. Preliminary conclusions were tested with environmental and economic stakeholders in a series of regional consultations across the country. And at each step of the way, members of the Round Table reviewed the research and considered its implications culminating in this advisory note and a more detailed companion background technical report.
If policies aimed at reducing greenhouse gas (GHG) emissions are to succeed, they need to be carefully designed and implemented, with an eye to both environmental effectiveness and economic competitiveness. As indicated in its report released in January 2008, and entitled Getting to 2050: Canada’s Transition to a Low-emission Future, the NRTEE believes that strong, consistent and economy-wide pricing is required as soon as possible if cost-effective emission reductions are to be sustained to mid-century and likely beyond. Recognizing this, the Round Table engaged Canada’s leading experts on the issue to provide research and advice for the design and implementation of a national carbon emissions pricing package to achieve the Government of Canada’s medium and long-term emission reduction targets. Through original modelling, we are analyzing a number of interrelated issues, including the need for low-emission technology investments, competitiveness, sectorial and regional effects, and federal-provincial governance.
Start Date: February 2008
Report Released: April 16, 2009
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