Low Carbon Economy
This Issue Summary brings together the body of evidence and analysis Sustainable Prosperity has developed on carbon pricing, to answer some of the key questions about how a carbon price could work.
Many Canadian companies, especially in the energy sector, are using a shadow carbon price in their current decision-making processes. A shadow carbon price is the expected future price of carbon, reflecting the expected market price or regulatory cost, or the cost of reducing or offsetting carbon emissions.
Competitiveness in the context of carbon pricing is generally narrowly understood as the impacts on emission-intensive and trade-exposed (EITE) industries. But competitiveness is a function of many factors, which is why a broader look, as in SP’s new Policy Brief which examines the overall economic impacts of the Western Climate Initiative (WCI) on Ontario, is warranted.
The UK’s approach to climate change is not just about reducing emissions, it endeavours to redesign the UK’s entire economy to be far less carbon-intensive than at present.
Certain jurisdictions that have implemented policies that promote the development of local renewable power generation have added domestic content requirements for equipment
sourcing to achieve economic objectives, such as job creation.
This Policy Brief explores the potential contribution of market-based Tradable Renewable Energy Certificates (TRECs) in promoting the deployment of renewable energy.
Climatic changes are likely to generate substantial economic, social and other costs.
Australia and Canada are similar in many respects. They are both large, sparsely populated, resource- and trade-dependent countries; they are both among the highest per capita greenhouse gas emitters in the world, have resource-based economies, and they are both expected to be strongly affected by the physical and financial impacts of climate change.
A cap-and-trade system can be effective in spurring the transition to a low-carbon economy, if the challenges associated with it, mainly price volatility, are managed.
A carbon pricing policy, in the form of a carbon tax or emissions trading system (ETS), is a critical tool for transitioning Canada to a low carbon economy.
Putting a price on carbon, whether through a carbon tax or a cap-and-trade system, will enable Canada to make significant reductions in greenhouse gas emissions.
The implementation of any carbon pricing instrument will generate revenue for the government. This brief explores the options for the use of this new revenue stream, as well as the institutional needs and considerations for each option. Considerations include the scale and reliability of revenue, options for revenue allocation, institutional capacity for revenue management, and models for new institutions where needed.
One of the key obstacles to implementing carbon pricing policies is the concern that energy-intensive and trade exposed (EITE) sectors will lose market share to companies located in regions without comparable policies in place, or that they will relocate altogether.
Existing taxes on fossil fuels act as implicit carbon taxes, though current tax rates in most OECD countries are inversely related to the carbon content of fuels. By not linking the current tax rate and the carbon content of the fuel, it implicitly encourages the consumption of carbon-intensive fuels, which is not aligned with broader stated government environmental, fairness and efficiency objectives.
It is commonly believed that energy and carbon intensive industries in Canada are uniformly opposed to carbon pricing since they would incur the highest costs of the policy. However, research on the policy preferences of these industries shows that not only are they largely in favour of carbon pricing; but they are more concerned about policy uncertainty than cost minimization.
This SP Policy Brief speaks to Canada’s Federal and provincial fiscal positions, which have worsened in recent years due to the need for massive stimulus spending to support the economy in the wake of the global financial crisis.
The purpose of this SP Policy Brief is to draw out key lessons from the evolution of feed-in tariffs (FiT) in the European context, where there is considerable policy experience with FiTs.
Sustainable Prosperity (SP) is pleased to release an SP Policy Brief authored by Roger Martin, dean of the Rotman School of Management at the University of Toronto, and Alison Kemper, research associate at the Rotman School ‘s Michael Lee-Chin Family Centre for Corporate Citizenship, on “Carbon Pricing, Innovation, and Productivity”.
The role of the SP Policy Brief "Carbon Pricing, Investment, and the Low Carbon Economy" is to establish a basic frame of reference for considering the positive role that carbon pricing can play in helping Canada achieve long-term sustainable prosperity.