Canadian Economists Push Provinces To Adopt Carbon Pricing Programs

Steam Tower

By Arman Kazemi

April 16, 2015

A group of Canadian economists is urging the provinces and territories to spearhead their own carbon pricing frameworks in the absence of strong federal action against carbon emissions.

Canada’s Ecofiscal Commission released a report last week outlining policy recommendations and best practices for reducing carbon emissions. Put together by a panel of 12 leading policy economists and backed by a multi-partisan advisory board, the report, called The Way Forward, puts the burden on provinces as the major actors for reducing Canada’s carbon output.

In doing so, the authors assert that, “the practical and cost-effective way forward for pan-Canadian emissions reductions is through provincial carbon pricing.”

While acknowledging that every province has a different emissions profile, as commission chair Chris Ragan told the CBC, the report does put forward a set of broad recommendations every province might adopt in achieving its own policy outcomes.

These include implementing policy structures around the principal of carbon pricing, whether it be a carbon tax like the one in B.C. or a cap-and-trade agreement like the one in place between Quebec and California, which Ontario recently joined.  

Other recommendations include expanding regulations to as wide a range of economic actors as possible—noting in particular Alberta’s narrowly defined carbon levy, which has failed to hold the province’s major emitters to task—as well as linking provincial systems within a nationally coordinated carbon pricing structure, with an eye toward federal involvement further down the line.

This report comes less than a month after a similar study by a coalition of Canadian scholars, which put forward policy approaches that the federal government could adopt to help meet its climate reduction goals for 2020 and beyond.

This latest report was likely timed to coincide with a meeting of most of the premiers and territorial leaders to discuss climate change earlier this week.

With an important international climate summit set for December in Paris, and a pending federal election, Canada’s response to climate change will be under greater scrutiny. But, as Chris Ragan said, “Not everything that is national needs to be federal.”

"The sooner we get policies in place that change corporate and household behaviour and start to drive those emission reductions, the better off we'll be," he concluded.

Of course, every carbon market in the world will soon be dwarfed by China, which plans to launch its national carbon pricing scheme in 2016. China plans for its emissions to peak and begin to decline around 2030.