Energy Based Carbon Emissions – Executive Summary – Section 7
Executive Summary - Economic Instruments for Long-term Reduction in Energy-based Carbon Emissions: State of the Debate
7. Lessons: The Experience with Assessing Fiscal Instruments
One objective of this NRTEE program on EFR and Energy was to test approaches, processes and methodologies that link fiscal policy with the issues of energy, climate change and technology development in order to generate findings that can inform policy development in the fiscal area.
Our efforts to assess fiscal instruments for application in the energy sector revealed several challenges. The ability to assess anticipated effectiveness, and hence to make sound policy, is severely constrained by the absence of reliable, timely and comprehensive data. The case studies proved highly sensitive to the price of fossil fuels and, in particular, the price of natural gas. But there were no up-to-date forecasts of commodity prices to use as a common baseline for calibrating the case study models. The path for long-term reductions in carbon emissions from energy use is inherently uncertain, because it will involve both proven and still-emerging technologies. Some of these technologies could be adopted on a gradual and incremental basis, other shifts may take place in a stepwise fashion, and still other technologies are likely to be fundamentally disruptive and unpredictable. Other uncertainties in developing the mid- to long-term scenarios include the likely depletion of non-renewable energy stocks, as well as non-price factors that will also influence the rollout of new technologies and fuels. Sub-national and international market settings will influence both the effectiveness and the unintended impacts of national fiscal measures to promote a lower-carbon energy future.
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Recommendation 7
The federal government should put in place a process to continuously evaluate and monitor progress in achieving the goals and to suggest adaptation of measures based on their effectiveness, as changes occur or as new opportunities start to develop.
Recommendation 8
To support a better ability to assess economic instruments for long-term carbon emission reductions:
1 The federal government should regularly update its energy and emissions outlooks, incorporating new price forecasts and the effects of new climate change initiatives as these are adopted.
2 Governments (federal and provincial) should support the development of reliable and comprehensive mapping of the technical and practical potential of emerging renewable resources.
3 Governments (federal and provincial) should support the gathering of timely data on installed capacity and market activity with respect to emerging technologies.
4 Governments (federal and provincial) should improve the data on the current capital stock of both energy supply and use systems and on its performance characteristics. |
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